Keeping up appearances in 1929

The London stock market stumbled in 1929. Some of the small stocks floated during the boom of 1928 began to fail and in amidst growing uncertainty over the possible outcome of the imminent general election, share prices fell. Outwardly, Hatry’s appeared to be continuing successfully. He was able to launch Associated Automatic Machine Corporation, a combine of companies operating coin machines in public places, Allied Ironfounders, a combine of small light casting foundries, and a loan stock for Melbourne, his first loan stock issued by an authority outside the United Kingdom. These deals were followed up by Hatry’s largest scheme: the purchase and recapitalisation of United Steel as a step towards rationalisation of the steel industry. Privately, his group was running short of cash. Not only had the stock market falls limited the scope to make profits by selling his shares in Photomaton and other issues, they were obliging him to buy back shares to support the market price. As time went by, it became more difficult to find the cash his business needed. Nonetheless, public appearances were preserved because it suited both Hatry and his bank creditors to keep knowledge of his difficulties out of public sight. In consequence, when the collapse of his companies was announced late in September 1929, there had been little warning. It was a profound shock. Clarence Hatry and his principal company, Austin Friars Trust Limited, continued to announce new corporate transactions as if the market falls had not disrupted the business at all. Hatry’s overtures eventually found one company, United Steel Companies Limited, which was prepared to talk about a new combine, albeit on its own terms. The directors had seen in Hatry’s intervention a chance of avoiding the drawbacks of the conventional approach to a capital reconstruction. For the syndicate Hatry was organising to finance the scheme, the total cash cost of acquiring the old companies would depend upon the number of shareholders who opted to receive shares in the new company. Hatry and his group attracted little attention until August, when a series of coincidences returned attention to the Photomaton companies. If more shareholders opted not to accept shares in the new holding company, Hatry would need more cash immediately to pay them.