RUSSELL HART’S CAREER IS AN INDUSTRY HISTORY
Byline: Sidney Rutberg
NEW YORK — Russell J. Hart retires on March 31 as corporate credit manager of Republic Factors. The 65-year-old executive has been working in the amazing shrinking factoring industry for 45 years.
A review of his career points up the dramatic consolidation in the industry. All the factoring firms he worked for over the years before joining Republic no longer exist. Republic, a startup in 1977, is one of barely a dozen major factors still in the business. When Hart started, there were about 45 factors.
His first job was as a file clerk with William Iselin & Co. in 1950. At the time, Iselin was the oldest factoring firm, tracing its origins to 1810. Hart was soon promoted to credit investigator, another activity that has disappeared.
“My job was to visit the banks every morning to get trade references,” he said. “I had to buy a hat, because in those days you just didn’t go out in the market without a hat. Since the textile and apparel business was concentrated in New York, the New York banks had the information we needed to extend credit. “We had to be out on the street at 9 a.m. and never could go back to the office until 3 p.m. So I learned from some of my competitors that the place to go was to the movies. In those days we had the Paramount, Radio City, the Roxy, and I’d get there before the prices changed at 10:30 a.m.” The practice of investigators making the rounds of the banks was phased out over the Fifties and Sixties as the industry dispersed beyond New York, bank stories became a smaller part of the credit checking process and computers began taking on more of the grunt work, said Hart.
In 1950, Iselin was one of three factoring companies operated by CIT. There were a series of consolidations of the CIT factors, and in 1984 Manufacturers Hanover Bank took over CIT. Earlier, Manny-Hanny had acquired Iselin Jefferson Financial.
The whole package was merged into what is today’s largest factor, CIT Group/Commercial Services, which in 1994 swallowed Barclays Commercial. Manufacturers Hanover was absorbed by Chemical Bank, which is in the process of merging with Chase Manhattan.
Hart’s next job was with United Factors.
“The word had gotten around that I had played minor-league baseball and I went 4-for-4 in a softball game against United’s team. United’s president was the pitcher, and he made me an offer to go to work for them. At United, I had a long apprenticeship and wasn’t allowed to check credits in the two years I worked there.”
United Factors was the factoring arm of United Merchants & Manufacturers, which went into bankruptcy in 1977. UM&M ran into financial trouble when it tried to bolster the credit of its foundering Robert Hall Stores chain of men’s apparel stores. United Factors was the largest old-line factoring company in the business and appeared financially sound. It was taken over in 1977 by the large, California-based Crocker National Bank. In 1981, United Factors, which had been renamed Crocker United, went out of business. Subsequently, Crocker National itself was taken over by Wells Fargo.
“In 1956 I got an opportunity to join Mill Factors,” Hart continued. “It was there that I learned to check credits. I worked at Mill Factors for 14 1/2 years before it went broke. The factoring segment was all right, but the commercial finance business dragged it into Chapter 11.” Mill’s factoring business was acquired by James Talcott Inc., and Hart worked for Talcott for about a year.
After leaving Talcott in 1971, Hart joined Shapiro Bros. Factors, a family business that was taken over by Chase Manhattan Bank shortly after he joined. Chase also took over Interstate Factors, which had been a captive factoring firm for Reeves Bros., a large textile manufacturer.
“I was made a vice president of the bank and credit manager of Chase Factors. But the money wasn’t nearly as grand as the titles and I left after three years and went to Crompton-Richmond, which in 1972 became United Virginia Factors.”
Textile Banking acquired the Chase factoring portfolio in 1983 and formed Commercial Credit Financial Services. About three years later, the company was taken over by Irving Commercial, which after the merger of Bank of New York and Irving Trust, became BNY Financial, now the second largest factoring firm.
Before all this happened, Hart says he was fired in 1974 by United Virginia “because someone had screwed up and they needed a fall guy — me.”
“It was a tough year for layoffs,” he continued, “and after three months I managed to land a job at Texfi Industries, a firm in the then hot doubleknit industry, as assistant credit manager.”
After about three years with Texfi, Hart came back to factoring in 1977 as credit manager of Republic Factors, a startup.
“I was credit manager of nothing. We had one client that did about $1 million, no paper, no pencils, no credit files. I went out to the store and bought two boxes of file folders, signed contracts with credit agencies and we were in business.
“In the spring of 1978, Republic was negotiating to buy James Talcott, a major firm with a big office on the West Coast. That deal fell through, but in November 1978 Republic hired Maurice (Bud) Schoenholz, who had been with United Factors, to set up a West Coast operation.
“Schoenholz was the Pied Piper of Wilshire Boulevard,” Hart recalled. “He’d just walk down the street and attract business — with the California market booming, and with 60 to 65 percent of our volume coming from there.”
The firm that started in 1977 without pencils does an annual volume of more than $5 billion, about 40 percent of it from the West Coast.