Evening star., 1932-11-27
CHAIN INVESTMENT
SYSTEM IS FADING
Growing Number of Small
Local Dealers Show
Change.
Ry FRANK H. MCCONNELL.

(Copyright, 1892 by the Associated Press1
: NEW YORK, November 26.-The
1929 investment banking superman,
popularly credited in the hey-day OF
the bull market with the ability to SIT
in his Wall Street o21ce, press few
buttons and sell bonds by the basket
full in distant cities, appears to be go
ing under partial eclipse.
Fading with him, though by no means
completely disappearing, is the machine
age practice Of applying chaln-store
methods to the distribution Of bonds
through far flung investment banking
organizations with branch Offices in
many cities.
Replacing them to an increasing ex-
tent ere the local security dealer, who
again is playing more important part
in the Nations investment business,
and the smaller, put more snugly knit
organizations for the retailing Of in
veStment securities.
Complete figures are not available to
show how far this process has gone
since the zenith Of the branch or chain
method of doing an investment busi-
ness was reached. Investigation shows,
however, that the nine largest Wall
Street investment banking houses had
in 1929 about 800 branches scattered
throughout the country. The nine
largest today have somewhat less than
half that number.
Transition Under Way.
In the same period, however, more
than 100 important new local security
dealing houses have been formed in
cities throughout the country. This is
interpreted in Wall Street to show that
a transition is under way, in which the
vast mechanisms of the 1929 invest
ment' banking system are giving way in
an appreciable degree to a growing
number of small local security deal
ing firms, which are closed to their cli-
ents and are intimately acquainted with
their particular investment problems
and needs.
Among the large Wall Street under
writing houses which have reduced their
number of branches, and especially in
the smaller cities have turned over
some of their former Offices to local
security dealers, are the National City
Co., Chase Harris Forbes Corporation,
Guaranty Co., Bankers Trust Co., Dill
Ion, Read & Co., Bonbright & Co., Inc,
and Brown Bros, Hartman & Co. With
the exception of Bonbright g. Co., all
of these organizations are still retain
ing their large out-of-town" Offices.
Bonbr1ght & Co., however, has grad
ually completed a program over the
last two years Of placing all of its for
mer branches on strictly independent
footing.
Whether this change of the large
Wall Street institutions from cen
tralized organizations of vast magni-
tude to smaller but more compact units
will work out for better or worse, is a
moot question in Wall Street. A con-
cidAra hln ~ fvaYJ h.,
ing leaders hold that the firmer re-
establishment of local dealers on their
own resources will prove more efficient
than the chain store" system. For one
thing, it is argued that the man who
heads his own business and spends his
own money is more likely to trim ex-
penses and to build up efficiency than
he would as branch manager. For
another, the same man is expected to
show a keener enthusiasm when in
business for himself and to assume
greater responsibility in handling the
needs of his clients.
Defend Old Network.
Opponents of this view, including
some men who have played prominent
part in the creation Of the 1928 and
1929 network of investment banking or
CARNATIONS, contend that strong CEN
tralization is more efficient; that it
brings customers in the smaller cities
in closer touch with the sources of
supply, and that the 1928 and 1929
underwriting systems, despite the de-
bacle of the sucurity markets in recent
years, performed very genuine service
to the investment public These stand
patters hold that the severe losses suf-
fered by many bondholders might have
been even more severe had 1t not been