Evening star., 1926-08-25
Big Business and Publicity.

> The stock exchange is an extremely
sensitive barometer. 1t rises and falls
In response to slight variations of
pressure 1t is subject to 'puffs" Of
passing force. When the market is
stagnant these influences have slight
er effect than when it is active in
either bull advances or bear depres-
sions. Just at present Wall street
Is bulIish. The market is unusually
active, prices are high, optimism pre-
walls. the public is participating IN
share buying and selling, there is
much speculation and there Is
heavy volume Of investment. In this
condition the stock barometer is un-
usually sensitive.
short time ago a quick upward
movement in a certain stock, which
has been feature of the market TOT
some weeks past, was caused by the
publication of an interview with one
of the banking leaders of New YORK,
which expressed the most favorable
Judgment of the earning and dividend
paving powers of the corporation.
Later the interview was modified, but
the bulls had had their opportunity
TO use it to cause q sharp advance
A bad crop report affects the mar
ket. A disaster may do so. A sud
don foreign political crisis is apt to
knock points off the stocks. In just
the same way turn for the better
in anv of these situations will cause
the list to react upward.
Yesterday the market was anected
in a peculiar manner by the publ
cation of advance sheets Of an article
in a leading magazine by a Harvard
professor. a. noted economist, dealing
with the matter of publicity in the
financial affairs of corporations ana
suggesting that the Federal Trade
Commission exercise the powers al
ready vested in it to compel the sub
mission of more complete and COM
prehensible reports. Quickly the word
spread that the economist had men
toned certain large companies. ana
before the full text of the article was
known the bears were able to make
a raid on a long list Of stocks, in
Guiding those of companies that were
uot thus mentioned: in fact, some
that were particularly pointed out as
pursuing a policy of commendable
publicity.
Unquestionahly, greater publicity,
especially for the Information of the
stockholders, is desirable in the case
of corporations the securities of
which are widely distributed and
which do large volumes of business.
The Withholding of information from
shareholders is highly reprehensible
Reports that conceal essential facts
or cloud conditions are mischievous.
They affect not only the immediate
interests of investors, but furnish the
factors of false price movements in
both the stock and the commodity
markets. In this case it is pointed
out that the Federal Trade Commits
sion now has the power to compel
full and explicit statements and to
prevent what TINS economist CrltlC
calls "enigmatic accounting" and mis-
leading balance sheets.
The Federal Trade Commission can
perform no more valuable service to
the public than to require corpora
lions to render their reports In terms
that will inform stockholders and the
public at large of the exact condi-
iions, whether favorable or unfavora-
lsle. The day of secrecy In business
management, especially the manage
ment Of businesses that serve the
whole community and include hun
dreds of thousands. almost millions
of persons as owners in greater or
hess degree, has passed.
------ k--11e~~---------