Business: Change and Turmoil on Wall Street

MOST outsiders would assume that Wall Street, the citadel of American capitalism, is a model of efficiency and sound management. It is nothing of the sort. In fact, Wall Street is an avenue filled with managerial cracks and potholes. Nothing has so plainly revealed its weaknesses as the recent steep decline in stocks, which has cut almost $200 billion from the value of shares listed on the New York Stock Exchange alone. Simultaneously with this decline, and largely as a result of it, the U.S. securities system is undergoing a series of fundamental changes that are bound to affect all investors.

The changes are being championed by a new generation of leaders in the industry who are highly critical of the way in which its basic power groups work and serve the public. On Wall Street, as elsewhere in American life, self-criticism is in style these days, and no institution is any longer considered sacred. The stock market's critics are speaking up against mismanagement in brokerage houses, politicking in stock exchanges and the practices that led to the speculative spree of the mid-1960s —and the hard fall that followed. This new group differs considerably from the men who rose to power in the market in earlier times. Today's leaders are fairly young—many are in their 30s and 40s —as well as politically iconoclastic and socially concerned. Skeptical of the conventional wisdom, they are questioning not only the mechanism of the market but the uses to which capital is put.

The securities business is so widespread and diverse that no man can speak for all of it. But few in the industry wield as much influence as 43-year-old Howard Stein, who is both a leader among the younger critics and a top executive in a branch of the business that is becoming increasingly powerful in the market. As president and chief executive of the Dreyfus Corp., Stein heads a complex of investment funds that manages more than $2 billion of "O.P.M."—other people's money. Among the five investment companies for which he serves as prime strategist is The Dreyfus Fund, the second largest of the nation's 800 mutual funds (after Investors Mutual). It is probably the best known of the funds, partly because of its famous symbol, the Dreyfus lion, which stalks out of a subway and leaps languidly onto a pedestal in television commercials."*

Stein is a slender, relaxed man whose interests range far beyond matters of money. He was an outspoken critic of the Viet Nam War long before dovishness became fashionable in the Wall Street community. Largely because of his antiwar stand, he took a six months' leave of absence in 1968 to become chief fund raiser for Senator Eugene McCarthy's political campaign. Now he is helping to plan John Gardner's drive to form a nonpartisan national citizens' lobby that would act to reshape national policies and priorities. Last week Stein made a quick trip to Northern Ireland to see for himself one of the world's trouble spots; while there he moved through barbed-wire barricades to talk with Catholic priests, Protestant militants and heavily armed British soldiers. Like almost every knowledgeable investor, Stein realizes that trouble anywhere in the world has an impact on U.S. securities markets. He argues that the effect is larger than it used to be because television makes distant disputes seem closer