Charles I. and E. Merrill Pierce. Declaration of Policy

Charles I. and E. Merrill Pierce. Declaration of Policy

Lasting legacy of Charles Merrill is that he has brought Wall Street to Main Street for making the stock market that has made Henry Ford for the automotive industry to adapt it to some extent for the common man. However, it was a long way from Florida, his birthplace. Although his father was a prosperous country doctor, Merrill helped pay for his training in "Emharst college" in Massachusetts, serving waiter, tables and selling mail-orderclothing. After college, he returned to Florida and played semiprofessional baseball. Eventually he joined the New York investment brokerage firm and became head of its Department of bonds. Merry started his own company in 1914 and soon organized a partnership with Edmund C. Lynch.

Ero advice to individual investors was simple: "Invest a little, and not only in the action - in housing and furniture, too. This manner your investment will grow in the same way as the U.S. economy was growing and". Dream to make Wall Street the average person available was still ahead. Meanwhile, in 1929 after the collapse of Merrill half retired, but in 1938 began working in full force in the new partnership, "Merrill Lynch Pierce Fenner End Bean" (Merrill Lynch Pierce Fenner & Beane) (EA Pierce in 1930 took over the brokerage company Merrill). Eventually, in 1941, Merrill took the exercise of their dreams.

To win the confidence of the public, he began to pay their brokers salaries instead of commissions, has introduced a training program to make his people financial advisors, as opposed to promise mountains of gold sellers, and his firm has always publicly disclose holdings and performance partner. Advertising, too, was the key: he wanted to educate the public, and his advertisements often read like articles from the textbook. Partner Merrill, EA Pierce, shared his views and was a progressive thinker when it came to reform Wall Street and the promotion of better self-regulation. He even encouraged the resumption of friendly relations with the government that got him enemies in the stock market. In the "Declaration of Policy ', a critical letter sent to partners and managers in 1940, two of these people outline their strategy for the transfer of Wall Street to Main Street and respond to the concern shown by Otto Kanom almost 30 years earlier.



Partners and managers:

We are glad that we can finally write to you in detail about our new company.

We think you'll want to know more about what led to the unification of the three companies - "Pierce & Company," "Kessett & Company, inkorporeytid" and "Merrill Lynch & Company, Inc.." - And you want to know that we going to do next.

The first part of the story is simple. It deals with the problems that we all unfortunately familiar with - the problems of depression in the economy, from which our industry has not even began to recover in the securities industry, as in other industries, the crisis has shaken our company to the ground.


The securities industry provide the necessary services
Over the past few years we have tried to readjust. Some of us are a bit behind in understanding that such restructuring should be permanent, but some doubt the possibility of successful adaptation. Nevertheless, we are convinced that buying and selling stocks, bonds and other evidence of liens and property rights - a fundamental industry, performing the required services.

The fact that for us there is no shortage of opportunities, says the fact that even in the past gsdu amount bought and sold stocks and bonds amounted to more than thirteen billion dollars. In essence, the work ahead of us, includes the coordination of our operations so that costs were proportional to the current minimum standard of gross income there, and then increase in their gross income at the expense of adapting our policy to meet the standards and requirements of our customers and the public opinion The sooner we realize that the living can never match s with those that have been twelve or fifteen years ago, the more likely we are committed to success in current and future conditions.


ALL MUST JOIN TO RESTORE FAITH
We need to do the work - to us, working in the securities industry - work to restore faith in the stock market as a place of intelligent investing. This should make all who are in the industry, and those who, as we believe there will eventually be, but we're not going to wait until someone else starts it. We are not clever way or no better than our competitors and we did not think to displace any of the business, but we do recognize certain basic facts to be reckoned with in our business - from his relationship with the public, and we're going to put this principle.

We would be glad to cooperate with any and everyone who sees himself in front of the road, so we think we see it. In our plans and activities will not be secrets. That meets our needs, we feel equally suitable for other, directly or indirectly funding the industry - our competitors, banks, insurance companies, etc. So, our goal is interaction with anyone who wants to put their energy and focus their thinking on a lot of work to save the securities industry itself and in the process of saving ourselves.


Let's remove unnecessary frills
It seems to us, our company has to do two important things.

One of them - cost control throughout the room. Let's get rid of any and all excesses are not a direct contribution to meeting the basic needs of our customers. For example, 86% of our customers do business with us by phone. They do not need and do not need elaborate decorated offices. They are willing to ease, competent workforce and a good fair treatment.

Which brings us to the second goal. We have developed what we think is a reasonable political program. It will be put into effect when at the end of this week, our union will become a reality.


Our success depends on the public Service
This policy rests on the belief - not always in our prevailing, trust us - that we are to achieve success, businesses must put the interests of the public in the first place. The client may not always be right, but it does have the right, at our recognition of Mr.'s rights, and our desire to respond to them based our chance to succeed.

It would not be trivial nonsense to say today, we need to succeed at the expense of service we can provide the investing public. And to say that legitimate, honest service - the only guarantee of success, therefore, face the truth.

We believe the public is still ready and willing to invest in securities through brokers and exchanges. We conducted some research, which, together with studies of the New York Stock Exchange have raised some troubling - and encouraging facts.

Alarming - a large percentage of potential investors and speculators in securities related to the distrust of the motives and actions of the securities industry and the people engaged in it. Both you and we know the reasons for this lack of confidence, and we know that it will not be removed until we can convince the public that now our house in order.


CONFIDENCE IS BASED MAINLY ON THE RISE
Encouraging fact is - even with a higher percentage of people in general are expressing confidence in our business, but have definite ideas about how we should continue to work to maintain this trust.

Our plan is based on our determination that our company must do to meet the situation. If we try as best as possible and if we properly recognize what he wants to investing public, our plan will succeed.

Here are ideas we have developed are included in the policy statement, beginning with the words:

Policies and services provided by "Merrill Lynch, Pierce And Kessetg" formulated in the spirit of enlightened self-interest. Although they are based on the belief that an important step forward both in terms of comfort and protection of investors and speculators, they are basically kind of brokerage services. It is, we believe, will have the greatest chance of long-term success. In addition, in our opinion, the customer deserves this advanced form of brokerage services.


FINANCIAL STABILITY AS A CORNERSTONE
The first specific issue contained in this statement relates to financial stability, the cornerstone of all our work. We believe that because the firm is free credit balances clients, acts as a facilitator of their securities, acts as a pawnbroker and finance margin transactions in those financial ties it imposes a responsibility towards its clients, including not only maintain at all times high degree of financial stability, but also more responsibility for ensuring accurate picture of public trading status of the firm.

To meet demand, the firm will maintain at all times working capital position, well above the requirements of the New York Stock Exchange,

The second objective will be achieved through the issuance of a full financial report, as intelligible and understandable form.

Now with regard to departmental policy: we manage the brokerage company, engaged in securities and commodities, as well as guarantee and place the securities.

But they are two different spheres of activity, with an entirely separate functions. It will not be allowed the emergence of conditions that might cause conflicts of interests of our various types of customers.


HELP OUR CUSTOMERS IN ASSESSING THE POSSIBILITY OF REJECTION
Virtually all operations carried out by customers, the firm will act only as a commission broker.

However, in the case of securities transactions, in which the firm acts as principal, the customer will be notified in advance.

For delivery information published analytical reports for securities with which the company does not operate as a principal, the firm intends to indicate in such records the total amount of direct and indirect ownership of such securities and the date of the report of the company and its key partners. Such information will be given as follows: if the aggregate value of these securities is less than 50,000 dollars, it will be called "little interest" (small interest); if it is within the range of 50.000 to $ 100.000 dollars, it will be called "medium interest "(ztsYap6a1 interest); if the cost will exceed $ 100,000, it will be called" great interest "(large interest). Purpose of the message help to the client in assessing the likelihood and size of the deviation from the firm's representation of the facts relating to individual securities. Over recent years, it was the main objective of brokers, but we intend to test this specific practical application as part of our plans for 1940.


Help mandatory for extra security
You might like to know how your senior partners are of the Securities and Exchange Commission. We'll tell you. We fully agree with the main purpose of the laws of the Securities and Exchange Commission, aimed at providing investors with relevant information and the prohibition of manipulation and fraud, and we assure our clients the full cooperation of all subsequent efforts designed to further strengthen these core objectives.

However, no regulations and the installation can not claim not to guarantee profits, nor for insurance against losses. But we believe our customers can safely use exchanges to investment and speculation with certainty that there is no marked cards.


OUR RESEARCH DEPARTMENT WILL stick to the facts - a clear idea
Now, on the advice the client on his investment, we do not think we can manage the brokerage firm and be a good investment advisor at the same time. All we have to sell - services and facts. So we are going to carry out our research department of a small research activities. We do not think that something has happened to our research, we ion want to see it as completely as possible using all available data, presents them in a more understandable form, and then lets the facts speak for themselves. In other words, we're going to deliver the facts, embellished by the Council. Councils will no longer be, if only they did not specifically ask for it and only with the approval of one of our partners or managers.


RUMORS AND "HOT TIPS" The ban
Let's take a look at our registered representatives, or customer service specialists. They represent an important step in our new work, mainly because we think we can give them the opportunity to act on a more sound basis than it did in the past. One of the challenges in our business - a potential conflict of interest between client and professional customer service that resulted from the compensation rules, which we believe are wrong. We're going to reduce, perhaps even to remove a potential conflict of interest.

Speaking among us, and we believe is the best name for such people the "official representatives" (service representatives). It is best expresses what we would like to have them in our organization. We believe that by serving only 'client interests, without any other considerations, service representatives will be in fact the best way to serve their own interests and the interests of the company. To achieve this, they will contribute to our clients in obtaining the desired evidence, they will not offer advice on buying or selling securities or commodities, other than advice for those restrictions, which were mentioned a few paragraphs earlier, they will not spread rumors "confidential hints" or "hot tips" designed to influence the purchase or sale.


CUSTOMERS WILL SAY WHAT THEY WANT SERVICE
Our customers will independently determine the scope of services that they want to receive. They will be asked to fill out a form, just specify the desired type of service. Further representatives limit their activities strictly specified limits.

That this policy was really working, we plan to correlate the wages of our representatives in the main to the quality of care provided to our clients. Their value will be determined in general by the degree of success with which they satisfy customers, and thus attract more customers. In our opinion, this is the only reasonable way to increase the income of our representatives.

All this policy means that we believe that the best chance of growth of our company are rather effective construction of the business than the conditions allow, indirectly creating obstacles to increased trade of existing customers.

In order to partners and managers to as much as possible to facilitate the implementation of this new fair service, we are planning to largely exempt them from normal duties so that their services were available to any trader, whether large or small, which may require their expertise or skilled care.


PANIC IN THE DAYS THE INTERESTS OF OUR CLIENTS IN THE FIRST PERMANENT PLACE
When the number of transactions taking off from an average daily rate up to several million shares a day, then your broker's services should be tested in an emergency. And just in those days, the client requires the best possible service to protect or to open his position.

While "Merrill Lynch, Pierce Eid Kessett" created one of the fastest and most accurate transmission systems for order execution, we recognize that errors or delays may still occur. Where errors occur directly because of the company's personnel or for any other reason, located in nasheyu control, we can certainly make an appropriate adjustment. In all other cases, efforts will be made to expedite the settlement through the standard procedures established by the New York Stock Exchange. We hope the reasons for such adjustments are rare. The problem here is said just because there where people and equipment involved, there is always the possibility of error.

We believe that we have a reasonable program, but not enough to develop and implement a reasonable program. People need to know about it. That's why we're going to give some publicity.


SECURITIES INDUSTRY IS IMPORTANT FOR ALL OF OUR CITY
In conclusion, we express our unwavering confidence in the future of our country's fundamental economic strength of our kind - capitalism - and inherent in the place occupied by the securities industry in this economy.