WALL STREET: Installment Plan

Most U.S. businessmen learned long ago that the best way to build business is through big volume on small margins of profit. But New York Stock Exchange members, whose lives revolve about the facts of business in general, missed the point when it came to their own offices. Troubled by higher costs in 1947, they raised their commissions. But in the last three years, volume has shrunk from a daily average of about 2,000,000 shares to less than 1,500,000.

Last week Exchange members, voting on a proposal to increase commissions another 15%, turned it down by a vote of 573-532. Instead, the Exchange will try to boost volume through a plan suggested by President Keith Funston, a Wall Street newcomer: a way of selling stock to small investors on the installment plan. Under Funston’s plan, a small investor who wants to buy one share of stock may do so by making a small monthly payment (minimum: about $40) to his broker. The money will be turned over to a bank, which will pool it with funds of other investors, buying the stock and crediting the investor with whatever fraction of a share his payment represents. Funston thinks the plan will appeal to small investors for two reasons: 1) it will enable them to buy stock without first accumulating the whole amount, and 2) it will involve lower commissions than the average 7.5% charges made by investment trusts.