Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-04-28
BY I. A. FLEMING.

last two years mas DSel very ldpiu oAAu
the result of the long sustained upward
movement in the New York Stock Mar
ket that has made for the most sem
sational success for the we'll managed,
reliable so-called trusts or pools.
Two $1OO.0O0,000 corporations have
been organized, one $50 900 COM
panv. one SIS, 900, 900 and one $780,
600 900 and others are on the stocks
With predictions Of the movement
further enlarging as this method Of
stock trading becomes more ana more
fashionable, as 1t Will In all pronanlllty,
with the spread of the story of gains
made circulated by word OF mouth
among people generally.
One must have a large modlcum OF
faith to efface himself or herself en-
tireIy in the purchase and sale OF in
yestments. Old-time brokers will give
a customer all possible information at
hand regarding corporation on request,
but they N;sitate to recommend this
or that stock, being fearful OF the az
termath II the net result Is not salts
factory.
II is generally understood that the
investment trust of today is patterned
after the English idea, which favored
the purchase Of securities by group OF
men and then by agreement carrying
the intangibles for a stated period, with
the regular dividends, as declared, be-
ing distributed pro rata among the
syndicate.
It may be that the growth of the in
vestment trust on this side OF the At
lantic will not reach the proportions
| that are expected during the next few
wears. especially If there should be a
natural two-sided market, in which
such stable profits as have been made
in the last two years on Wall Street will
be impossible, even to important traders.
Large Banking Houses Lead.
In this movement a few large in
vestment banking houses have taken
the lead and in the field that has fol-
lowed there have been many entries
in which faith and honest intent have
been lacking.
Leading concerns in the business
today are the Goldman-Sachs Trad
ing Corporation, $l00,000,000; the
Petroleum Corporation of America,
little over 100000, 600; Selected Indus
tries, Inc, $50 1000, 900; Tri-Continental
Corporation, $50, 900 600; Prudential In
vestors, capital $4,000, 900; the Van
Swearingn Bros. great Allegheny Cor
poration. operating in rails generally,
with probably 200 other concerns, good.
tair, bad and Indifferent.
The Commissioner Code.
A code for the conduct of investment
corporations has been drawn up by the
security commissioners of 81 States,
seeking to regulate the formation,
capitalization, rules for government,
etc. including the proviso that the
Officers, directors and management
should make an investment OF their
own funds SUFFICIENT to secure per-
sonal interest"
It is advised that periodical state
ments be made, reserves established, a
report of any privileges accorded the
managers, the cost Of securing capital
and other information calculated TO
keep the business Of these corporations
in some check.
The committee further expressed the
belief that all States equipped with
blue sky laws can correctly annalyze
such corporations operating in their
States and bring offenders under court
restraint.
The code aso indicates that COM
panies doing an investment trust should
specify In their charter or trust agree
ment an accurate statement of the
plan and policy to be followed; should
give the amount OF the agreement with
investors and the personnel should be
of good business repute
It should also be provided that the
| capital assets cannot be distributed
during the life Of the agreement. State
commissioners may also ask for further
information and likewise may get it.
| But the recommendations are not laws.
Not Certainty.
It is not likely that history will re-
peat the 1929 success of the invest
ment trusts. the big well managed cor
porations operating on the level.
No man or group of men may hope to
find such a bull market in the near
future. Perhaps they may find a good
bear market. but the public does not
fancy bear movement or will 1t par
ticipate in its operation.
Pools have been formed time and
again in stocks. little and big, and
have been successfully operated and con-
Quoted with loss ever since trading in
stocks reached stable proportions.
The ticker tells its daily story, and
the attendance In brokers' Offices in
dicate whether the tale Is one of adj
vance or decline. The public does not
rise to q weak market.
Old-time traders prefer to have some
thing to say In connection with their
market operations They have found,
| through long association, that their
brokers are honest, faithful servants and
are possessed Of as much, IL not more,
information than any one else as to the
i vital facts OF securities or that they
| may obtain it.
Bankers. as a rule, do not favor the
| investment trust idea. It has taken too
| much money out Of the banks, coupled
with the general speculative movement
all over the country, although most OF
our financial institutions are amply able
to attend to the demands OF their
customers In trade and the Reserve
Boards threat seems to still have its
effect on Wall Street They admit that
| it is possible for a well manager cor
poration with big financial backing 10
conduct an investment business with
| PROFIT. also that it has been demon
strated that losses are also possible.
| Nothing New In Pools.
There is nothing new In pools. Their
! operations have been on more lin
/ tied scale than the investment trust
save where two or more large inter-
ests were brought into contest with
each other. when there have been some
very large pool movements.
The greatest secrecy Is always at
tempted in operating pool, leaks being
dangerous in the extreme.
Practically all times there are OPP
portunities for safe investment, never
for safe speculation--there Is no such
thing.
In the recent prolonged activity in
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