Packaged America

Members of the New York Stock Exchange who chanced to walk past the corner of Madison Avenue and 43rd Street in the last month have been taken aback by what they saw. In the long narrow office where once was a dressy branch of defunct Pynchon & Co., the firm of Pirnie, Simons & Co., Inc., members of no exchange and backed by celebrated Promoter Archie Moulton Andrews, has what its salesmen call "our store."

In the Pirnie, Simons store are tables stacked with crackers, condensed milk, razor blades, patent medicines, adding machines and other products of U. S. industry. But these articles are not the store's stock in trade. Aided by garish window displays (including large gilded dollars), the store's bright salesmen sell securities listed on the Stock Exchange. Though the store was organized by an old stock salesman, it is now in charge of a seasoned merchandiser who gave it what Pirnie, Simons calls "the Fifth Avenue touch."

The sales method is ingenious and profitable. Pirnie, Simons offers "portfolios"' or packages consisting of one share in a number of companies. Last week there were five such units being offered, four containing 25 securities, one 50. On purchase the securities are registered in the buyer's name and delivered. Pirnie, Simons says that at first the store was thronged with curious shoppers, but that now long-pull investors are flocking in. On a typical day last week Package No. 1 at the store was offered at $258. The market value of the securities in Package No. 1 on the same day was $210. Pirnie, Simons generously offers to buy back securities within one year without charging commissions. Since Exchange members charge a minimum commission (usually $3) no matter how small the transaction, an investor would have to pay a larger total commission than Pirnie, Simons if he bought one share of each of the stocks in Portfolio No. 1 in the open market. Few investors, however, would buy a large batch of stocks in one-share lots. But conversely if a buyer of Portfolio No. 1 waits more than a year to sell he would have to pay a commission of $3 on each share sold (unless Pirnie, Simons extends its repurchase offer), so that a rise of 58% in the securities would just clear his cost before taxes.

Pirnie, Simons says that sales are soaring, that new stores will soon be opened. Promoter Andrews expects packaged securities to become "the Ford of the American investment business." To persons who guess nearest the price of the five packages on Sept. 30, Pirnie, Simons is now offering prizes.

Last June the New York Stock Exchange, realizing that few investors in packaged securities were aware of the penalty they were paying in commissions, drew up rules to control the type of package which Exchange members might sell. Approved packages must be worth at least $500, have no units of less than five shares, must not cost more than 10% above the market value of the securities. Pirnie, Simons & Co. promptly sued the Stock Exchange, sought an injunction against enforcing such rules. Last week the court granted the injunction. The damage suit is pending. The Stock Exchange will probably appeal. Meanwhile business at the store seemed to be flourishing and throughout the land Pirnie, Simons' roadmen were urging people to "BUY AMERICA."

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