In the white marble vastness of the U. S. Senate office building caucus room, one day last week, sat lean, grey Harold Stanley. Head of Morgan Stanley & Co. Inc., No. 1 U. S. investment house, he had gone to Washington to be questioned by the Temporary National Economic Committee in its inquiry into investment banking. Earlier the committee had heard hard-boiled Charles E. Mitchell, onetime head of Manhattan's National City Bank, later tried and acquitted of charges of income tax evasion (but forced to settle a Government lien for $1,384,222, taxes and penalties), who is now board chairman of Blyth & Co., Inc. It had also heard Morgan Partner George Whitney, Detroiter Emmett Francis ("Spike") Connely, president of Investment Bankers Association. Young (31), brash SEC Counsel Pete Nehemkis pitched them questions to which they gave defensive answers.
But aloof, publicity-unwise Harold Stanley cracked out the home run of the week for his side, the old-line investment bankers. The pitch that onetime Catcher Stanley (Yale '08) leaned on went sizzling over the head of onetime Third Baseman Leon Henderson (Swarthmore '20), SECommissioner and most articulate anti-banker member of TNEC.
Well did Harold Stanley know when he sat down in the witness chair that soon he would be back in the same chair when the committee shifted its topic from "Investment banking" to allied "competitive bidding." Well did Pete Nehemkis know that Mr. Stanley was the leader of the conservative Wall Street group (including such firms as Kuhn, Loeb, Lee Higginson, First Boston) which has frigidly rejected competition. When such competition-minded houses as Chicago's Halsey, Stuart, such individuals as Cleveland's Cyrus ("The Great") Eaton, walk in the front door with bids for securities issues, Morgan Stanley & friends stalk out the side exit.
Last week, as Pete Nehemkis tried (unsuccessfully) to get Mr. Stanley to admit that his firm, managing underwriter for A. T. & T., had parceled out its financing ($580,000,000 since 1935) to a select and fixed group, SEC's quizzer carefully avoided reference to competitive bidding. A question by TNEC Chairman O'Mahoney gave Harold Stanley the opening he was waiting for. With the air of a man starting a lecture, Mr. Stanley sounded off: ". . . The question of competitive bidding is a subject which I would like to go into and talk about at length. . . . But—
Up went the big, capable hand of Leon Henderson. Competitive bidding, said he, would be discussed later. Harold Stanley persisted, for well he knew that when TNEC gets into competitive bidding, such insurgents as Cyrus Eaton and Alleghany Corp.'s unruly Bob Young may get the first say, put Morgan Stanley & Co. on the defensive with tail-end statements in news stories.