"Investors Union"

Frank Arthur Vanderlip was once (1909-19) president of Manhattan's National City Bank and like the two presidents who succeeded him (James Alexander Stillman and Charles Edwin Mitchell), he is no stranger to headline writers.

In January 1931 he made headlines with the assertion that the 1,100 bank failures of 1930 were caused by a lack of "adult education for bankers." that the Depression was a "strange and stupid spectacle."

In February 1931, he had his picture taken with a rare species of crane in his private aviary in the Palos Verdes hills near Los Angeles.

In February 1931 (on the day that Auburn stock touched 205 after a rise of over 100 points in six weeks) he said, "The last Auburn stock I bought was at 105. I am a large owner and have been for a long time. . . . My position has been and is only that of a darn longtime investor." (Last week Auburn sold around 34.)

In December 1931 he predicted: "We will see a greater prosperity than anything we have ever yet seen."

In 1932 he became an ardent backer of Howard Scott and Technocracy, which made a thousand headlines. His name also helped Architect Buckminster Fuller publicize the visionary "dymaxion" house.

In June 1932, he told the graduating class at Scarborough School (at Scar-borough-on-Hudson near his home) that history was not properly taught. He had a right to do so: a year later he presented the school with a deed of gift to the school building and property.

In November 1932 he rushed in as master of Errett Lobban Cord's proxy fight to gain control of Aviation Corp.

In November 1932 he demanded the re-election of Herbert Hoover, declared that if President Hoover had not stood "as courageously as stood Foch at Verdun"-the Democrats "would have put us off the gold basis and the bony arm of the skeleton of Inflation would today be filching value from every savings bank account, every insurance policy and every wage envelope. . . ."

In January 1933 he, aged 68, accepted the chairmanship of the national advisory board of the Crusaders (Wets) saying: "The nation vitally needs the political weight of the serious-purposed, educated, patriotic youth of the country."

In March 1933 he issued the first pronunciamento of the "Committee for the Nation" (see p. 45), probably the most far-reaching demand for inflation yet formulated by responsible businessmen: devaluation of the dollar and "enforced increase of commodity prices."

Last week Mr. Vanderlip made headlines by announcing preparations for two new investment trusts which he said might some day "have assets of $1,000,000,000."

Nimbly versatile though Mr. Vanderlip is, this announcement was no surprise, for last January in the Saturday Evening Post he criticized existing investment trusts for the losses they have caused to investors, declared that the investing public needed the protection of trusts run like mutual savings banks.

His proposal last week: two trusts ("investors unions"), one to invest in stocks, the other in bonds, each to have a limited number of directors' shares which will be sold to provide initial capital. The directors are to be "public spirited men" without interest in security flotations. The public stockholders will have no vote but at any time 25% of the stockholders can call a meeting and by majority vote demand changes in the board of directors or trustees. The minimum unit for sale to the public will be priced at $200 to avoid the greater cost of dealing in smaller units. The trusts will make a small service charge in selling their stock and when buying it back (on the basis of the composite market value of their portfolio on the previous day), but no profit would be realized from the sale on repurchase of their own securities. Except for requiring diversification of holdings, there will be no restrictions on the trusts' portfolios.

Many investment trusts retailed their stock to the public at unconscionably high prices during the Gay Twenties, but the best of them are now run thoroughly in the interest of public stockholders. The chief advantage of Mr. Vanderlip's proposed "investors unions" will be that, if launched just before an inflation, they should make the records of existing trusts (with huge losses during deflation) look sick by comparison.

In 1929 Goldman Sachs Trading Corp. was all that Wall Street asked of an investment trust: in nine months it multiplied the paper value of its assets five times; one morning at the age of seven months it gave birth to a new $100,000,000 trust, Shenandoah Corp. (issued at 17, sold at 38| by i p. m.); three weeks later it produced a $127,000,000 trust, Blue Ridge. But the wits of 1929 remarked that the mountain beyond the Shenandoah and the Blue Ridge was "Look Out." And last week Goldman Sachs Trading Corp. like many another darling of 1929 was selling at $2, when Walter Edward Sachs, its president, wrote a letter to his stockholders, told them that Atlas Corp. had acquired 40% of its stock. They were asked to approve Atlas Corp. taking over the company's management--the name of Goldman Sachs Trading Corp. would be changed to "Pacific Eastern Corp."

Thus did a famous Wall Street name prepare to pass out of history. Thus did sandy-haired Floyd Bostwick Odium, head of Atlas, who has been picking up investment trusts as a junk dealer picks up suits of clothes too fancy for their owners, hang another trust in his wardrobe.

-An error. Not Foch but Petain was in command over Verdun when the Germans made their great drive against it in 1916.

This file is automatically generated by a robot program, so reader's discretion is required.