Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-04-18
.TRUSTSPERMANENT
WITHIN TEN YEARS
Corporation Official Says Or
derby Progress win Follow
Indifference.
Special Dispatch to The star.


PHILADELPHIA, April 1S-The es-
Enlistment Of investment trust funds
and companies in the United States on
permanent and useful basis viii prob
ably have been accomplished within 10
years of the time when public interest
was first widely attracted to them, ac-
cording to Leland r. Robinson, presi-
dent OF Second International Securi-
ties Corporation, who spoke at a din
ner given to Philadelphia bankers by
William H. Davis.
I'VE may distinguish three phases
in the development of investment
trusts Of different varieties in our
country" said Mr.. Robinson, who is
lecturer on this subject at Columbia
University. These may be called re-
spectively: ID the formative period OF
eager and often too rapid growth. 90
the period of trial and public indiffer-
ence and CD the final period Of quiet.
orderly progress. Just now we are
passing through the second period on
the way to the third, but 1t Is obviously
impossible to give any exactness to
such periods or their terminating dates.
Formative Stage Passed.
1.-THE initial formative stage In the
development of American investment
trusts should be placed roughly In the
decade 192O-1929, although many In
stances may be cited of earlier, or even
pre-war, applications of the principle.
Particularly in its later part this dec
aGe may be compared to the years 1907
1890 in Great Britain. when a mush-,
room growth occurred and all sense Of
distinction among holding, finance,
trading and investment trust companies
seemed lacking for time.
The period of public indifference,
while these companies we're fighting
their way to sounder positions through
processes of trial and error, was ushered
in by the Barring crash and its after
math and continued until after 1895.
This has some points of similarity with
our experience of the last two years.
Tor In America now, as in England dur
ing the 9Os, a struggle for survival of
the Mt in public confidence Is resulting
In a better understanding of the es-
sentials in this business and In the
adoption Of more conservative practices
as regards reserves, investment super
vision, realistic income statements and
sensible dividend policies.
"AS in Great Britain over 80 years
ago, so in the United States will this
second period give place to quiet, sus-
tanned and orderly growth of various
forms of cooperative investment In
which the interests of shareholders and
participants are paramount" Mr.. Rob-
1nson stated 1t as his belief that an up-
ward turn in the market If continued
over few months would forcibly d.
rect public attention to the so-called
Leverage" factor In many investment
company stocks, which the speaker de-
scribed as "the capacity for liquidation
values to rise, often at q much faster
6n
portfolios, because of fixed-cost CAN'T ri
enjoying a senior position"
Investment Revival Seen.
Other reasons of broader import given
by Mr.. Robinson for expecting an early
revival of public interest in investment
companies are the increasing selective
character Of sound investments, the re.
Gently illustrated necessity for properly
tInln the buying and selling of both
STOCK and bonds, the wisdom of con-
tinuot s supervision, the need for wise
direction. from the social viewpoint. in
the employment of capital funds and
the many opportunities for productivity
using abundant American capital in
prom citing our exports by intelligent
pure ,iase of foreign bonds and equities.
"fhe British investment trusts" Mr..
Ro' sinson concluded, have been Of Inn
pV lance IN eSIapilShlng L0ndOn'S pre-
wsr financial supremacy and in indi-
Jsctly financing her commerce and in
1lstry throughout the world. They
have done this. in the main, by buying
for long term investment the bonds and
preferred stocks of governments and of
enterprises located in many different
countries. and particularly in the
United States and South America.
The fact that survey just completed
shows IS per cent of all holding in SO
British companies publishing their In
vestments to be in the form of bonds
and preferred stocks draws a line Of
sharp contrast with the American COM
panies, which have more insistently
chung to entities -