Evening star., 1941-02-04
Competitive Bidding
On Utility Issues
Holly Debated
S. {. c. and |. B. A. Clash
Over Question
At Hearing
Ry the Associated Press.

BY the Associated Press.
NEW YORK, Feb. 4.-Should util-
ity companies be compelled to ask
for competitive bids on new secur-
tiles offerings?
This question is being hotly de-
bated in Washington. The Securities
g. Exchange Commission has pro-
posed that certain types of utility
companies seek competitive bids
from underwriters when the COM
panies market new issues, On the
other hand, the Investment Bankers
Association of America thinks COM
petitve bidding can lead to over
pricing of new offerings.
The view of the I. B. A. is that
competition between investment
bankers for an underwriting job
could lead, and has in some instances.
led to sale of new securities at prices
above what the actual market price
should be. Then, after the offering
has been placed, the securities when
traded in the free market decline a
point or two, and It is the investor
who takes the licking.
Hearings before the S. E. c. on
competitive bidding already have
gone through the initial taking Of
testimony. The hearings are to be
resumed tomorrow.
Folger Opposes Idea.
A honey illustration of the 7. B.
AS attitude in the controversy was
presented to the commission last
week by Investment Banker J. C.
Folger of Folger. Nolan & Co. He
told the commission that buying
utility securities under forced COM
petition would be like buying $40
horse for $40 at country auction
and getting home to find 1t had a
SPAWN.
MY father and grandfather were
pioneer livestock men, first in Iowa
and later in Washington State" Mr..
Folger said. "In the communities
where we lived it was customary for
the farmers to have livestock sales
in the fall. Everybody attended
these sales. partly to see their neigh
bors. partly to get a free lunch and
possibly to bid on livestock.
My father and grandfather never
bought any livestock at these auc-
tions, and one of my first lessons
was that such purchases were un-
sound, since a man would become so
interested in beating out his neigh
Dor and showing everybody that he
had as much money and could bid
as well as the next one, that he
would find himself paying $50 or
$40 for a horse that was probably
worth $40. When he got the horse
home he might find it had a SPAWN. "
This feeling about competitive
bidding is deep-seated," Mr.. Folger
continued. Il have seen out-of-
town auctioneers come into our
little town and sell jewelry at prices
greatly in excess of the prices asked
by the home dealer.
The point concerning which I
feel so strongly is that people bid
ding at auction usually think more
of beating out their neighbor or
competitor than they do Of the
merchandise.
There may be some exceptions,
but I don't think the securities busi-
ness is one of them, especially If we
consider country distribution.
I'm afraid some one will go over
back of the barn, take a nip and
60 on a competitive bidding spree "
Exchange Seat Hits New Low.
A membership in the New York
Stock Exchange sold last week for
$4,000, the lowest price since 1898.
The low price of memberships,
brokers say, reflects the widespread
feeling among brokers that there is
no indication at the moment that
the dull, routine stock trading of
the last couple of years is going to
get any better soon.
The stock brokerage outlook may
not be so bright, but Wall Street,
from the standpoint Of building oc-
cupancy, is far from slow, new
survey by Schlang Brothers & Co.,
real estate managers, indicates.
The survey says there are more
than $4,000 executives and Office
workers occupying 100000 square
feet of Office space in the financial
district of New York City today,
compared with 175o00 in 100000
square feet in 1929, the supposed
peak for the district.
The survey reports that businesses
other than securities and stock
brokerage firms have absorbed the
equivalent of all space relinquished
by these firms since 1929, plus
100000 square feet of new space.
At the close of 1910, the study
adds, the financial district was "a