Saturday, June 29, 2013

The collapse of B. B. Stylo

The Bird Bill Pen Company (previous post here) had little success with its namesake product, but found a solid seller in its stylographic pen, the B. B. Stylo. At the beginning of the 1920s it all seemed very promising, yet in the space of some two years something went wrong and by the end of 1924 the company had gone bust.
Office Appliances, Dec 1921, p. 122
There are still many pieces missing from the puzzle, but the reason for the collapse now seems clear. While B. B. Stylo was making pens, the real action was in flogging its overpriced stock to naive investors. It seems the prime culprit was Arthur A. Smallwood, an operator best known for his machinations in the early film industry ("greedy" and "scheming", in a modern historian's assessment, along with his brother Raymond C.). Smallwood's connection to the company becomes visible only relatively late in the game, when he joins Albert S. Zimmerman and his son Albert I. (replacing his mother, Cora D.) as a B. B. Stylo director in the 1922 Brooklyn and Queens, New York, Copartnership and Corporation Directory (p. 390). Yet the shenanigans had already begun years before, as the following ad from the New York Herald (Nov 2, 1919, p. 20, col. 2) demonstrates.

The name of the company is omitted, and its product is described only as "a patented specialty retailing through stationers". Yet in all details the description coincides perfectly -- product price, location, company history, capitalization and share par value, claimed wartime production constraints -- leaving no doubt about the company's identity. The shadiness is all the greater in that the ad appeared at the end of 1919, whereas the company was not actually renamed and reincorporated as B. B. Stylo until some months later. Further, the incorporation notice that appears in the New York Times of April 28, 1920 (n.p., col. 1) runs as follows: "B.B. Stylo Co., Brooklyn, make Stylo and fountain pens, $100,000; A. J. O. Hoschek, D. Orlando, F. Italiano, 1,314 Avenue H., Brooklyn."

Achille Joseph Oishei Hoschek was a lawyer and a rather colorful character, whose offices were at 309 Broadway, the original Held/Bird Bill company address. Yet I have not been able to find any other records connecting Hoschek et al with B. B. Stylo or Smallwood, nor can I find any connection to the Brooklyn address given in the Times (a modest storefront in Flatbush with rental apartment(s) above). The Zimmermans are still listed as president and vice-president in the 1921 Directory of Directors in the City of New York (p. 940) and they are also the only names listed in a notice in the Brooklyn Daily Eagle of September 1, 1921 (p. 16, col. 7) announcing a special meeting at the company's regular annual meeting to vote on a proposal to increase the capital stock yet again, from $100,000 to $500,000 (another eyebrow-raiser). The only other name that shows up is one I. Feder, and only at the very end: he is listed as Secretary in an announcement of a stockholder meeting on October 10, 1924 -- just weeks before declaration of bankruptcy -- "for the election of officers and for the further purpose of deciding upon the future activities of the corporation" (Daily Eagle, Oct 8, 1924, p. 19, col. 8). It is tempting to dismiss the information in the Times notice as mistaken, but given the circumstances, the existence of a broader network of backroom players is all too possible.

Some idea of what sort of scammery might have been afoot may be gleaned from an article published in the United States Investor of January 27, 1923 (vol. 24, no. 4, pp. 18-21 [162-65] -- thanks to Darren McQueen for getting me scans of these pages from the University of Michigan library), bluntly warning investors away from Smallwood and his aptly-named Pyramid Pictures corporation ("The plan, of course, is to keep people reinvesting in new syndicates so that none of the money subscribed to or earned by Pyramid ever comes to rest in the pockets of the investor"). The article does not mention B. B. Stylo, but on its last page, under the heading, "Promoter's Record Not Good", it recounts Smallwood's recent involvement with the promotion of the National Hog Raising Co., closed down by the postal authorities, and his brother E. L. Smallwood's promotion of the U. S. High Speed Tool Co., "which has never been able to do much of anything for its principals, and nothing for its stockholders, although prospects for substantial profits were being held out while the stock was being disposed of."
Rome, New York Daily Sentinel, Jul 25, 1923, p. 6, col. 2
The authorities eventually took action. As the notice above reports, the New York Attorney General finally stepped in and obtained an injunction barring Smallwood from further stock sales. It is noteworthy that the injunction was directed not just at Smallwood's companies, but at Smallwood himself by name. What happened thereafter is clear in the big picture, if not in the details: the pyramid collapsed, taking B. B. Stylo down with it. Smallwood moved on to other ventures, always funded with other people's money. The Zimmermans do not appear to have come out so well -- my earlier post noted that Albert S. Zimmerman was working for an electrical company in 1930, and the subsequent travails of his widow -- so it is probable that they were dupes rather than active conspirators. How they ended up in Smallwood's clutches remains to be discovered, but there may be a clue in the Trow's New York Copartnership and Corporation Directory for 1921 (p. 1670), which places the Zimmermans' son Albert I. alongside Arthur N. Smallwood in the H. A. Smallwood Co., as treasurer and president, respectively. Though Albert I. appears to have moved from New York City to Los Angeles at some date between 1935 and 1940, I have found no indication of any continuing involvement with Smallwood, stock promotion, or the motion picture industry. Census records list him as a salesman, first of toilet articles, and later, in California, of chemicals.

Despite all the messy backstory, the pens made by B. B. Stylo were good products. How the company might have fared under more prudent management is an open question. Even though much of the proceeds of stock sales was siphoned off, the portion that went to the company gave it a sharp boost for a few years, allowing it to buy ads, open a sales office in Manhattan, and even publish an in-house magazine, "The Winged Stylo" (Office Appliances, vol. 35, Mar 1922, p. 230). The bankruptcy notice (Brooklyn Daily Eagle, November 3, 1924, p. 22, col. 8) lists "Alleged claims, $1,113" -- a seemingly small amount, but quite enough to sink a company that had run through all its cash and was unable to raise a penny more from those who held its now-worthless stock. The biggest losers by far were surely not the company's creditors, but its stockholders.

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