The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1935-09-10
Trends
Morgan Again Is
Affiliated With
Securities.
Securities.
by VINCENT LYONS.
Times Financial Editor

--BY VINCENT LYONS
Times Financial Editor
ITO those persons whose memo
IL ries best retain the bizarre.
the name Morgan recaptures that
carnival episode Of 1884 when a
truant midget Tas plunked down
on the knee Of John Pierpont Nor
gan while the austere financier was
testifying before a committee Of
the United States Senate. To
others it has meant name that
since the Civil War has been linked
with the financing of American
business enterprise.
Since June. 1884. J. P. Morgan
& Co. has denied itself the right
TO continue in the field which has
long been its forte. Under the
Banking Act Of 1888 the House Of
Morgan. as we'll as other similar
institutions, were prohibited from
doing both a banking and a securi-
tv business. Morgan elected to re-
tain its banking business. Thus,
in the interim the name has not
been connected with any Of the
financing Of corporations which has
taken place.
Last week the House Of Morgan
tersely announced that several of
the partners were Withdrawing
from the firm to launch a new in
vestment banking house of Nor
gan. Stanley e. Co. Five members
OF J. P. Morgan & Co. and Drexel
& Co. the Morgan unit in Phila-
delphia. relinquished their posts to
have a hand in the new enterprise.
NHORGANS name will be repre-
WI sented in the new venture by
Henry Sturgis Morgan. 35-year-old
son Of J. p Heading the organiza-
ton as president will be Harold
Stanley. Mr.. Stanley. it will be re-
membered. was made a partner of
J. p. Morgan e. Co. after his work
with the Guaranty Trust Co. of
New York is thought TO have at
traCted the attention and admira-
ion of the elder Morgan.
The return of the Morgan orgi-
cation to the investment security
business at this time is a natural
development. Undoubtedly the
original announcement of the firm
to retain its banking business was
prompted more by expediency than
desire. When the decision was
made the investment market was
in the dOldrums and New Deal
legislation pertaining to new issues
was viewed generally as a black
eye to the business.
In the Banking Act of 1885.
which was passed by Congress at
the last session, an attempt was
made to allow banking institutions
to return to the underwriting field.
This provision was added to the
hill but was deleted in conference.
formation of the new enterprise
following so closely on the heels of
this would seem to indicate that
the House of Morgan has intended
TO return to the fold of investment
banking for some time.
ENFORCEMENT OF j. P. Morgan
- & Co. from Morgan. Stanley
& Co. will be complete. according
to an analysis of the incorporation
papers of the new firm. Common
stock of the new company. all Of
which will be held by the officers
and staff. is vested with sole voting
power. Thus. none of the men,
berS Of J. P. Morgan & Co. will
have a voice in the management
of the securities concern.
A further move in this aim toward
individuality is seen in the provi-
Sions of the preferred stock. part
of which is to be held by present
members of J. P. Morgan 81 Co.
Holders of the senior stock are en-
titled to 6 per cent annually on
their shares. but cumulative divi-
dendS are payable at the rate of
only 4 per cent.
ley 81 Co, will occupy the same
Importance in the investment Sc
curity field as the name of j. P.
Morgan &, Co. did goes without say
ing The embryonic firm will be
looked upon as a child born of
necessity and, despite the effective
enforcement arranged through
capital stock provisions. the older
organization undoubtedly will have
some sort Of paternahStic relation
ship to the new unit.
INJECTION of the Morgan enter
Il prise into the investment bank
ing business Will not come as a
welcome development to those
houses which have been gather
ing the lions share of the trade
since the enforced absence of the
recognized leader in the field. Ac-
COrding to word from Wall Street
the first reaction will be an intenSi-
fication of competition for rev
issues.
Those corporations which pre-
viOuSly have handled their finan-
cial transactions through the House
of Morgan undoubtedly will resume
this relationship. American Tele-
phone & Telegraph and CONSOLE
dated Gas Co. of New York are
reported to be on the verge of re-
funding some Of their high coupon
Indebtedness. When plans are
completed it IS expected that the
new firm Of MORGAN Stanley & Co