Global Governance in the Twenty First Century. Appendix B by Michael L. Chadwick

Author:Michael L. Chadwick [Chadwick, Michael L.]
Language: eng
Format: epub
Publisher: Global Affairs Publishing Company
Published: 2007-05-31T21:00:00+00:00

Appendix 47 – International Banking

Investment Bankers: The Men :...

By

Newsweek

To men in need of money, the name plates above have a ring like the solid clank of gold coins. This is where the money can be found to expand a business, and sometimes to keep it alive.

General Editor Sandford Brown turns the SPOTLIGHT on investment bankers--and on the new surge of business in Wall Street.

Standing in the visitors' gallery above the teeming floor of the New York Stock Exchange this week, or watching a clacking ticker in Cedar Rapids, even the dullest observer might imagine the stock market as the throbbing heart of the whole U.S. economy. Yet, in fact, it is more like the pulse than the heart-measuring a flow of billions from investor to investor, which does little in itself to strengthen business. The give and take of trading is not an economic heart for the simple reason that it pumps no blood.

The real pumping is done in another part of Wall Street, in the offices of some 100 investment bankers whose job is to underwrite and sell new securities. They know where the real money can be found in the endless swirl of paper values that runs through the markets from bank vault to bank vault; they know how to put it work setting bricks in place and creating jobs for millions. The investment banker diverts billions of dollars--some $20 billion last year in corporate securities, another $7.1 billion in municipal bonds--from the paper chain into plants, machinery, inventory, working capital, and other solid assets for business and the U.S. economy. It is through the investment banker that Wall Street exerts its real impact on the economy. He stands at the head of the Street, and everything else on the Street is in a real sense an adjunct and a support for his essential job.

On the job in recent days, the First Boston Corp. raised $20 million for Commonwealth Oil and Refining by selling its securities to the New York Life Insurance Co. (which agreed to take up the whole issue for its portfolio). Kuhn, Loeb & Co. sold a public offering of $25 million in equipment trust certificates for General American Transportation Co. at a "coupon" of 4.55 per cent (the interest rate GATC will pay), with most of the certificates going to banks and other institutional investors. Lehman Bros. sold out 135,000 shares of common stock for Playskool (toys and playground equipment) at $12 a share, and the price soared to $28 on the open market within two days. Adams and Peck managed to sell a 140,000-share offering of Transvision Electronics at $8; though the price skidded to around $5 before the week was out, Transvision had the dollars it needed for expansion. Deere & Co. (farm equipment) announced it was coming to the market for $35 million to clear up its short-term bank debt; a syndicate of underwriters headed by Harriman, Ripley & Co. will supply the cash by underwriting Deere's 25-year debentures.

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