Diaries and Directors

Poking behind some furniture in a shed near the McKesson & Robbins plant in Bridgeport, Conn, one day last week, Post Office Inspector Samuel MacLennan found two old ledgers. They contained the record, written in his own hand, of 16 of the 18 years that Philip Musica lived and swindled as F. Donald Coster. Confronted with the diaries, the three surviving Musicas promptly pleaded guilty to violation of the Securities & Exchange Act. SEC Examiner Adrian S. Humphrey thought them so important that he adjourned his inquiry until the ledgers had been studied.

Those who examined the diaries said only that they "named new names." Newspapers recalled that in his suicide note Coster-Musica accused unnamed directors of knowing he had kited McKesson & Robbins' assets.

Last week, with his usual tartness, SEC Chairman William O. Douglas took a fling at directors in general and McKesson & Robbins directors in particular. Plumping for responsible paid directors who would give real attention to their jobs, he urged U. S. corporations to go out and find men who would represent stockholders rather than management or banks. Although there might be plenty of practical problems in staffing directorates with paid "outsiders" (not part of the management) who had the time to know intimately the business they directed, Mr. Douglas said pertinently:

"A very large numerical majority of stockholders in American corporations has a dangerously inadequate representation on their corporate boards. . . . The average modern director does not direct the course of the corporation to a much greater extent than a conductor directs the course of his trolley car. Both of them go along with the vehicle ; and one of them is often present only for the sake of the ride. . . .

"Corporations can and should take steps to place upon their boards working directors who are adequately compensated, and the responsibilities of those directors should be made commensurate with their trust. . . . The paid director, familiar with the affairs of his company, could not live in peaceful and happy ignorance, oblivious to the fact that warehouses and inventories which his company owns are figments of a criminal imagination."

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