Bullock in Washington

From the fight put up by the New York Stock Exchange against Federal regulation, from the war waged by U. S. power-men against the Public Utility Act, another group of U. S. businessmen who are about to receive Congressional attention were able to pick up many a pointer on how --or how not--to act when their turn came to go to Washington. That group was the nation's investment trust managers, whom the Securities & Exchange Commission is currently investigating as a preliminary to making legislative recommendations to Congress (TIME, Oct. 5, et ante). They have fallen over each other in protesting their earnest desire to cooperate with SEC. They have admitted the existence of abuses, in the past if not the present. They have conceded the need of regulation, for their fellow trusters if not themselves. They have freely volunteered advice on how to catch the goats while leaving the sheep to graze.

Last week the pleasant opportunity of being helpful fell to the banking house of Calvin Bullock. The aging founder, who got his start in Denver and then branched east to Manhattan, did not attend the SEC hearing, sending instead his husky, handsome son, Hugh Bullock. A few years out of Williams (Class of 1921), Son Hugh opened what has since grown into the head Bullock office in Manhattan. He married a cousin once removed of Pennsylvania's Gifford Pinchot, an attractive, honey-haired socialite who helped found the Academy of American Poets, which gives balls and raises money for fancy fellowships for U. S. poets. Explained Mrs. Bullock on one occasion: "Poetry has been on the decline in America principally, I believe, because poets must eat like the rest of us, and there has been no live or ready market for their wares."

Her husband has had no trouble finding a market for his wares. Between 1924 and the end of last year Calvin Bullock sold $135,000,000 worth of fixed investment trusts, $78,000,000 worth of management trusts. One Bullock trust is Canadian Investment Fund, founded with a high-powered board of Canadian bigwigs in the days when the future of Canada looked considerably brighter than that of the U. S. Others include two series of Nation-Wide Securities, Carriers & General Corp., Dividend Shares, Bullock Fund.

SEC maintained last week that in the past eight years the public had lost $42,000,000 in Bullock trusts, most of it in the fixed trusts. Hugh Bullock admitted that the figure was "technically" correct but stoutly denied that it was necessarily a reflection on his management. He could not, he argued, be taken to task because investors sold their shares in the depth of Depression.

"As to the record," said Truster Bullock, "the majority of our trusts show profit to original investors. One thousand dollars originally invested in every one of the eleven trusts we ever formed . . . an original total investment of $11,000, today would be worth over $11,750. Meanwhile investors have received over $3,000 in dividends, a gain, appreciation plus income, of about 35%." Since 1929, he declared, Bullock trusts have paid out a total of $22,000,000 in cash dividends.*

Another interpretation of the Bullock record was presented by SEC in the form, of comparisons of the various trusts with standard stock-market indices--a comparison which makes most investment trusters boil with rage and resentment. According to SEC, the record of all Bullock trusts except two was worse than the Dow Jones or the Standard Statistics market averages. According to Calvin Bullock, the periods selected for comparison were unfair, and by their computations a number of the trusts showed better performance than the averages.

During his three days in Washington Hugh Bullock contributed two historical notes to the SEC study. Having suggested that future legislation be confined to banning deals between trusts and trust officials, insuring voting rights to stockholders, guaranteeing "the bright sunlight" of publicity through detailed quarterly reports in standardized form, the well-dressed young banker declared:

"We urge you in formulating your recommendation for Congress to note a remark that the dean of investment-company managers, the man who stood at the top of his profession throughout the world, whose companies' assets are reputed to total the equivalent of $500,000,000, the late Robert Fleming of London, made many years ago to us. He said in substance: 'Don't tie yourself up with too many restrictions. Restrictions that you think today are for the best interests of investors will rise up some day to plague you--and will not protect them.'"

The other bit of Bullock history: "In the middle of the summer of 1930, I was talking to former President Coolidge in his little law office in Northampton, Mass. Mr. Coolidge said to me, and I remember his exact words, 'There will be an investigation of investment trusts.' I replied that I would welcome such an investigation."

* Dividend-of-the-week was announced by Boston's State Street Investment Corp. to qualify for the exemption granted by the new Federal tax law to mutual trusts which distribute capital gains as well as earnings to their stockholders. State Street plans a $20-per-share payment before the year end.

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