Wall Street: Learn to Listen

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At Bache & Co. Inc., which stands second in size ($90 million gross) to Merrill Lynch, Pierce, Fenner & Smith ($227 million) among U.S.'s brokerage firms, desks are decorated with a motto of the house: "Learn to listen." The man that Bache's 5,000 employees are expected to listen to most intently is Chairman Harold L. Bache, 71, whose granduncle founded the firm 87 years ago. Last week, after Bache President Adrian C. ("Ace") Israel, 50, suddenly resigned because of "a basic disagreement over corporate policy," Wall Streeters were saying that the real reason was that Israel had found himself forced to listen without ever being able to get a word in edgeways.

Good Job. Along with heading up a family-owned commodities brokerage trading in cocoa, coffee and rubber, Israel joined Bache in 1945. Last year when Bache, following the example of 138 other New York Stock Exchange members, switched from a partnership to a corporation, Israel was picked by Harold Bache to become president. Bache himself became chief executive, but Wall Street predicted that Israel would eventually move into that job.

The job is a good one to hold; Bache's growth rate is even faster than Merrill Lynch's, and the company recently distinguished itself by raising $270 million to underwrite the Manhattan Fund started by China-born Financier Gerald Tsai Jr. Bache gained new strength by becoming a corporation; most of its 70 partners immediately became vice presidents with correspondingly high salaries plus better tax breaks and such employee benefits as pensions. The corporation no longer has to worry about a principal problem of partnership: substantial sums of money being pulled out suddenly after a partner's death. Bache had to weather such a crisis in 1944, when Jules S. Bache, Harold's uncle and at that time managing partner, died. Bache partners coughed up nearly $4,500,000 as heirs were paid off. The firm nearly went broke.

The Successor. Unlike partnerships, incorporated firms can also build up reserves of capital that are taxed at a lower rate and can be used to train new employees and set up the complicated electronics system—in Bache's case, to 76 U.S. and 13 overseas cities—that brokerage houses need to flash quotations and service customers. Incorporation also makes it possible to bring along younger executives without tedious diplomatic negotiations among aging partners.

At Bache & Co., however, the new blood will have to sit back and listen.

Hardly had Israel's resignation been announced than his successor stepped up. Harold Bache, who has been in the firm for 52 years and maintains that he is "having too much fun to retire," announced that he would henceforth act as president as well as chairman and chief executive.