Perot the Evangelist

Every good and excellent thing stands moment by moment on the razor's edge of danger, and must be fought for. --Words engraved on a plaque outside H. Ross Perot's Dallas office

Perot, the son of an East Texas cotton and cattle trader, apparently genuinely believes that philosophy. In 1962 he quit a safe job as an IBM computer salesman to work for Blue Cross-Blue Shield and to start his own computer software company, Electronic Data Systems. By 1969 it had grown enough to make Perot a billionaire at the age of 39. That left little danger; so Perot, who might be described as a mixture of Billy Graham and Don Quixote, has sallied forth to rescue Wall Street from the dragons plaguing it. In 1970 he heeded pleas from John Connally and John Mitchell and pumped capital into duPont Glore Forgan, the country's third largest brokerage house, to save it from going under. Since then, he has infused almost $80 million and his evangelizing zeal into duPont, in which he owns almost 100% of the stock, and another big brokerage house, Walston & Co., in which he will soon control a one-third voting interest.

"He enjoys a nightmare situation," says a Dallas associate--and that is exactly what Perot has found on Wall Street. Though the stock market last week rebounded from a four-month tail spin, prices as measured by the Dow Jones industrial average have still fallen 15% from their mid-January peak.

Brokerage failures are still common, and some big houses are cutting salaries and laying off employees because trading volume is down. First-quarter volume on the American Stock Exchange fell a disastrous 42% below a year earlier. Perot himself compares operating in that climate to "trying to farm without rain," but he is confident that he can turn rain maker.

Like almost everyone else on Wall Street, Perot believes the fundamental problem is the flight of the small investor from the market. Raising commissions, as one New York Stock Exchange faction is trying to do, he thinks is precisely the wrong strategy. Perot advocates instead a radical change in Wall Street's whole commission structure --basing fees not on how many trades a broker arranges but on how well his customers make out on their investments. "The typical broker," he says, "does not see himself as making money for his customer; he is after the commission he makes on his trades."

The idea has obvious problems--for one, even the most talented brokers cannot make much money for clients during a deep market slide--and Perot admits he has yet to come up with a formula for putting the policy into effect. Meanwhile, he is moving ahead on other fronts. In order to create a new breed of brokers for his firms, he has established a $14 million-a-year training center in Los Angeles. So far, it has graduated 72 students; a new class of 600 will start the six-month, eight-hour-a-day course this fall. Perot says he prefers clean-cut ex-Navymen like himself. "I want people to identify with me, to create a closely knit team, rather than the lone wolves that characterize Wall Street," he says. Every duPont graduate has to sign a definitive employment contract that constrains him from leaving the firm for at least a year. But Perot can freely fire those employees who stray from the code of the pack.

Perot also has mounted a million-dollar-plus ad campaign that trades frankly on the appeal of his Horatio Alger career and apple-pie patriotism. "For 38 years of my life I was a 'little guy,' " reads one ad. "There are so many of us. We are America. We make this big engine go. That's why duPont is interested in the individual investor." To make duPont more accessible to small investors, Perot has opened its offices six days a week. He has even suggested that U.S. stock exchanges stay open 24 hours a day so that investors anywhere in the world can trade at any time.

Some sophisticated Wall Streeters consider Perot not only unrealistic but see his simplistic advertising appeals as potentially dangerous. If he really can sell the little guy on the stock market, they fear, he might unintentionally create a speculative mentality like that of the 1920s. But as the head of two of the biggest brokerages, Perot can hardly be ignored, and his evangelizing has converted at least some veteran financial men. As one old-line duPont Glore Forgan executive has confessed, "I haven't been so excited since I went on my first date."

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