Ripley's Reprimand

Last week the prices of some stock exchange securities, which had perhaps been inflated, receded.

Coincidently, the September issue of the Atlantic Monthly appeared with an article by Professor William Zebina Ripley of Harvard. The professor, skilled analyzer of business conditions, scolded U. S. corporations for doing business in the twilight, for concealing their affairs from the ordinary stockholders. He would have corporations make public a full and adequate report of their incomes, the con- ditions of their properties, and the state of their inventories. Many corporations will be reluctant to do this. So he recommended that the Federal Trade Commission demand such reports from firms doing interstate business.

Editors of daily papers recalled that six months ago Professor Ripley damned the current method of unloading non-voting stock on the public. Immediately the board of governors of the Manhattan Stock Exchange had established rules against the promiscuous listing of such non-voting stock. Therefore these editors decided that this new article caused the coincident fall of stock prices. They scare-headed their articles to this effect. Wall Street men glanced at the big type and dashed to newsstands for copies of the Atlantic Monthly. One dollar became the current price for this forty-cent magazine when quick-witted newsdealers found their scant stocks growing low.

Learned Editor Ellery Sedgwick of the Atlantic Monthly knew that this issue would cause a sensation.

The Wall Street Journal dryly phrased the current financier's opinion regarding the daily journalists who, in a dull week, had made such a todo: "So incorrigible are financial reporters for the daily press in their habit of ascribing every sudden fall in stock prices to some single, specific outside influence that Wall Street itself pays little or no attention to front page market stories. It knows from experience that in nine cases out of ten a price reaction brought about by purely internal conditions, such as an overextended speculative position in a few issues, will be explained on grounds having only the remotest logical relation to the day's prices and none to investment values."

Yet Professor Ripley's reprimands will have the effect that he wishes, for he sums up and brings to wide attention a corporate fault. "His goal is identical with the one the Stock Exchange, Barron's Weekly, the Wall Street Journal, the Boston News Bureau and many leading financiers have been working towards for years--protection of the public. To be sure, corporate publicity alone will not give the stockholder his full rights. . . . However, the bulk of the evidence is in favor of Professor Ripley's demand."--(Barron's Weekly.)

Already President Coolidge, at White Pine Camp, has promised to read the full article. His spokesman has praised what excerpts he has seen. And members of the Federal Trade Commission, become somewhat moribund, have roused to think that they may have some rights to the data indicated by Professor Ripley.