Portfolio
EXCERPT FROM
No Ceiling On Effort: The Harvey C. Fruehauf Story, by Kathi Ann Brown
Chapter 1: An Eloquent Silence
On Friday, July 17, 1953, business media in Detroit and New York City buzzed with news of a deal involving one of the Motor City’s oldest manufacturers. The previous evening, Harvey C. Fruehauf, long-time chairman of Fruehauf Trailer Company, had quietly consummated a deal to sell the bulk of his personal holdings in his family’s company in a single transaction worth approximately $3 million.1
The sale was both a surprise and eye-catching in its scale. The chairman’s 131,000 shares composed the largest block of company stock held by any individual. The sale transferred control of approximately nine percent of the trailer company’s outstanding 1.5 million shares.
Of interest to Detroiters was the buyer in the deal: George J. Kolowich, a former Detroit banker and current president of Detroit & Cleveland Navigation Co. Kolowich was a well-known figure in the local community. His investment portfolio included ownership of Detroit’s swanky Whittier Hotel on Burns Drive, overlooking the Detroit River, as well as the Denver-Chicago Truck Lines. He had spent 15 months in prison in 1933 for embezzlement, but the passage of two decades had repaired his reputation.
On the surface, the stock deal looked neat, tidy, and logical … if unexpected. Casual readers of the newswire stories likely concluded that the 59-year-old Fruehauf had decided to cash out and enjoy an early retirement. Kolowich certainly appeared to benefit, too. The chance to buy in one fell swoop a significant stake in the world’s premier trailer manufacturer would have appealed to someone with existing investments in the long-haul transportation industry. In buying the stock, Kolowich secured what the Detroit Times called “a commanding position” in the company. He was entitled to a seat on the Board of Directors, if he requested it.
More savvy readers would have been intrigued by certain aspects of the deal … and wisely surmised that there was more to the story than the relatively few details that appeared in print. Most interesting was the fact that the long-time head of a family-led company had sold his shares to an outsider, a move that significantly diluted family control. The stock sale reduced the Fruehauf family’s stake in the trailer company from 19.72 percent to just over ten percent: 156,000 shares spread out among a handful of family members. The remaining stock was held by more than 9,300 small shareholders.
The $64,000 question was obvious: Why hadn’t the other Fruehauf family members purchased Harvey Fruehauf’s 131,000 shares?
The answer?
Not so obvious. And no one was talking.
Roy Fruehauf, Harvey’s youngest brother and president of the company, claimed he had no knowledge of the transaction before it was announced in the newspapers.
George Kolowich declined to comment on his purchase, especially on the question of whether he would seek an active role in company management.
No other company executives or major shareholders offered a public explanation at the time of the announcement.
As for the man who had set the milestone deal in motion, Harvey C. Fruehauf? What did he have to say about the biggest stock transaction of his life?
Publicly, not a thing. Harvey was “vacationing” at the time the deal was announced, according to the Detroit Free Press, and “could not be reached for comment.”
Privately—at least in his own daybooks—the same: silence. The diary pages covering the two-week period before and after the announcement are blank.
One person who was sitting on the sidelines the day the deal was announced did let his thoughts be known. One of Harvey Fruehauf’s stockbrokers, Edward T. Bennett, Jr. of Manley, Bennett & Co., sent his client a simple handwritten note with an enclosure:
“Mr. Fruehauf: Thought you might be interested in seeing the enclosed news report which appeared on the Dow Jones ticker today. Congratulations. EB.”
Whether and how Harvey Fruehauf replied to Bennett isn’t known, but his actions—at least in this case—spoke more loudly than words: “Mr. Fruehauf” tucked away his stockbroker’s congratulatory note in a file for safekeeping.
1 Drawn from three newspaper articles preserved in files at the HCF Enterprises’ office in St. Clair Shores (MI): Detroit Free Press, July 17, 1953, no page number; Detroit Times, July 17, 1953, by James Boynton, business section, no page number; Dow Jones ticker report, July 17, 1953.