American Type Founders - Depression and Bankruptcy

Depression and Bankruptcy

Unfortunately for ATF, unlike printing consumables (like paper and ink), which must be purchased anew for each job, type wears slowly and its purchase can be postponed in hard times, while capital investment in new presses simply dries up, and so ATF was especially hard hit by the Depression. Also, the company had been over-extended in the boom years, too much credit had been extended to the trade, inventories were bloated, and the corps of executives (many left over from pre-consolidation days) were older and without vision. With the financial downturn after 1929 ATF began to see serious distress. In 1931 hours were cut at the factories. The following year, sales were down another 25% and salaries were cut. When major accounting errors showed that company to be even less profitable than was thought, Gillick was forced to resign.

Thomas Roy Jones, a businessman with no experience in type founding, replaced Gillick. By 1933 the situation was desperate. Sales of type were less than 30% of 1926 levels while purchases of Kelly presses had plummeted to a mere 6.8% of what they had been. In October 1933 Jones filed a voluntary petition for bankruptcy. ATF was placed under the control of its creditors (chiefly consisting of several banks) and drastic measures were taken. Operations were consolidated, the Jersey City plant was closed and the typecasting operations moved to the Kelly plant in Elizabeth. Salesmen were put on a commission basis. Inventories were cut, faces discontinued, and production of several models of Kelly press as well as the Klymax Feeder was shut down. ATF was released from court supervision in 1936 and in 1938 a sales study was made making the following observations: the Kelly press was obsolete, body type was now the exclusive province of line-casters and display type would have to be the mainstay of type production, almost half of what ATF was selling was other manufacturers products that could easily be made in their own facilities, the acquisition of or merger with another firm in the letterpress industry would be desirable, as offset was a rising technology ATF needed to invest in that business.