In a third-floor boardroom of Boston's State Street Bank Building, directors of the Lee Higginson Corp. grimly debated for eight hours the future of their firm—oldest and one of the most famous of U.S. investment houses. When they finally arrived at a decision, Lee Higginson was dead. For an "undisclosed amount," Manhattan's relatively youthful (age 74), fast-growing (60 branches) Hayden, Stone Inc. bought Lee Higginson's name (which it will not use), offices and assets in Boston, New York, Chicago and four other cities.
In its heyday, "Lee Hig" was one of the kingpins of finance both in the U.S. and abroad. Set up in 1848 in a tiny State Street office by Lawyer John Clarke Lee and his cousin, Boston Merchant George Higginson, Lee Higginson over the years financed the development of the Atchison, Topeka & Santa Fe and other Western railroads, built several Boston fortunes by developing the fabulous Calumet & Hecla Copper Mine in Michigan. The firm helped put together General Electric in 1892, led the financing of the struggling General Motors Co. in 1910.
Lee Higginson overextended itself. Between 1928 and 1932, it underwrote many millions of dollars worth of Swedish Swindler Ivar Kreuger's efforts to corner the international matchmaking market. After Kreuger's depredations were disclosed, Lee Higginson, among others, was stuck with the tab.
The firm never really recovered. While some of the old partners spent 20 years or more honorably paying off their debts from the Kreuger fiasco, the reorganized firm could never rustle up enough cash for the computers and research staffs to compete with such giants as Merrill Lynch, Pierce, Fenner & Smith—or, on a somewhat smaller scale, Hayden, Stone. Says Hayden, Stone Chairman Alfred J. Coyle, they "couldn't make the costly effort we make in research—the only way a firm can supply the services customers want."
There was even less after the May 1962 market plunge. Lee Higginson lost heavily, then was all but ignored by investors in the trading resurgence that followed. In even more recent years, the firm had been barely scraping by. Boston-based Chairman Charles Cotting, 77, closed the books sadly—but just in time. Unless new funds could have been raised in a very short time, Lee Higginson was headed for an ignoble fate: suspension from the New York Stock Exchange for lack of adequate capital.