Young Counselors

Charles Willard ("Bill'') Young Jr. was five years out of Yale's Sheffield Scientific School before he decided to strike out for himself. He wanted to be an investment counselor. He persuaded his friend James Henry ("Jimmy") Ottley, who was one year behind him in college, to go into partnership. Bill Young had Wall Street experience. Jimmy Ottley had the management of a $7,000,000 estate which his father had accumulated as publisher of McCall's Magazine. Young & Ottley became "managers of investment funds'' in 1929. First thing they did was to call the stockmarket crash.*

With this prime selling point they went after more business. And they got it. The only thing they sold was advice. But, said Messrs. Young & Ottley, "advice given for nothing is generally worth it." Like most investment counsel firms, they charged a fee based on the amount of capital under their care. Accounts of less than $100,000 were turned down. For clients whose chief concern was income the fee was a flat 1% annually on the principal. Messrs. Young & Ottley's big chance to capitalize their sagacity was the 10% fee on net appreciation in the more speculative accounts. But throughout the Depression they were content to sit on the sidelines, merely preserving their client's capital in cash and bonds. This they recorded in advertisements titled "Patience," and two years later "Patience & Courage." For Young & Ottley's recommendations were for long-term investment, not intermediate market fluctuations. Last week after the market had crumbled (see p. 45) they were recommending additional purchases of common stocks.

Last December when they reversed their policy and began buying stocks, the market temporarily went against them. Wall Street waggishly reported that the firm had to lock its blond young socialite Chairman Ottley in the safe to save him from wrathful customers. But the New Deal market found Young & Ottley with ten times as much money under its management as in 1929 and with offices spreading over nearly two floors of Manhattan's Chanin Building. Pride of the firm was the "Industries Room" where clients were taken to view the chart-covered walls. Like a general staff's war maps, the charts were studded with varicolored pins, indicating danger points, quiet sectors or advancing salients in the industrial front.

Last week these two young men, whose careers were models for all young college graduates, suddenly split. Bill Young resigned as president and, taking part of the staff with him, set up his own firm diagonally across 42nd Street in the Chrysler Building. About 15 clients voluntarily followed this man who, it was generally believed, wrote the policies that made Young & Ottley a great Depression name. As is usually the case when partnerships go on the rocks, both Bill Young and Jimmy Ottley were mad clear through but neither would tell what caused the break. Their friends thought it was not over investment but office policies that they disagreed. Bill Young, as smart a salesman as he is a statistician, liked to spread himself with a fancy-salaried staff and luxurious offices. Jimmy Ottley, who knew by heart his father's early struggles with McCatt's, liked to keep expenses down.

C. W. Young & Co., Inc. is backed by a group of its directors including James Cox Brady, heir to the Brady utility and motor fortune, William V. Griffin, president of Brady Security & Realty Corp., President William H. English Jr. of the New York Coffee & Sugar Exchange and several of Bill Young's friends who were reported to have put up $50,000 each. Jimmy Ottley became president of the old firm, will continue as Young & Ottley, Inc.

Bill Young's flair for analysis came from his father who was for years American Telephone & Telegraph's chief traveling auditor. While still an undergraduate Bill Young published financial articles, invented a new type of slide rule. His method of calculating security values involves the use of 30 separate ratios. Now 32, married but childless, he lives on swank Sutton Place, uses his yacht Arab as a summer home.

* Their reasoning: "Regardless of the outlook for any individual company, if a ridiculous price is offered for any common stock . . ."

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