Wall Street: So Prosperous It Hurts

A sure way to turn stockbrokers into reticent men is to broach the sensitive subject of their profits. Securities dealers owe much of their livelihood to investor confidence built up by public disclosure of corporate earnings. Yet the overwhelming majority of them consider their own net incomes to be nobody else's business. This double standard is well entrenched, wholly legal and—at least from a broker's view point—eminently logical. After all, partly by resisting demands for more such data, Wall Street has so far fended off the Securities and Exchange Commission's four-year-old proposal for lower fees on big-lot stock trading, the most profitable kind.

While overall corporate profit margins have been squeezed this year between rising costs and idle industrial capacity, brokerage profits have soared along with stock trading volume. At the New York Stock Exchange, which accounts for 80% of U.S. activity on registered securities exchanges, this year's trading two weeks ago topped the old full-year record, which had been set in 1966. Last week the 1,964,637,-738th share changed hands on the Big Board, lifting its average daily volume for the year to 9,862,277 shares. If that fast pace continues, along with increasing activity on the American Stock Exchange and the nation's seven major regional exchanges, some 4.5 billion shares of stock will be traded this year in the U.S.

On the Rebound. As a result, the SEC predicts, stockbrokers' total revenues will rise from about $4 billion in 1966 to $4.5 billion this year. The SEC figures that income from commissions on security transactions should come to $2.7 billion, and profit to be divided on that income between partners, brokers and salesmen should reach $675 million, compared with $600 million in 1966. Moreover, with stock trading hitting a furious pace, SEC analysts expect a sharp rebound in the industry's aftertax profits on its main business of securities trading, which slipped from 5.8% in 1965 to 5.7% last year, according to an N.Y.S.E. survey. "Brokers tell us they're making a great deal of money," says one SEC official.

"So far, 1967 is the best year in the firm's history," agrees Managing Partner Charles Moran of the Manhattanbased brokerage house of Francis I. du Pont & Co., one of the four who have overcome the general passion for secrecy. Last year Du Pont's profits climbed 19½% to $4,340,152, while its revenues rose 12% to $70,637,738. That may sound like a bundle, but it actually amounted to a mere 6.1% profit ratio, well below the amount of revenue that most industrial companies keep after taxes. Still, it was a considerably better performance than that of the typical advertising agency, which retains only 4.9%.