A Man for Everyman's Capitalism

When he became president of the New York Stock Exchange in 1951, George Keith Funston said, "I'll try to be a salesman of shares in America."

Up to that time, his primary sales experience had been as a marketing man for the American Radiator & Standard Sanitary Corp. and as a fund raiser for Connecticut's Trinity College, of which he had been president. But he did splendidly as the No. 1 drummer of U.S. everyman's capitalism. Funston's zeal helped raise the number of American shareowners from 6.5 million to 21.5 million. Last week, declaring that "I think I deserve a rest," Keith Funston, 55, announced that he would step down when his term expires next September--or earlier if the exchange finds a successor before then.

Though long expected, word of his retirement caught Wall Streeters unprepared. Throughout almost all the long postwar bull market, Funston has been the symbol and champion of the New York Stock Exchange's Corinthian-columned citadel, a man who helped change its image from that of a clubby, tricky place to that of a respectable and generally profitable market for everyman. After his announcement last week, a score of names were bruited about as possible successors; they ranged from Richard M. Nixon to Walter N.

Frank, the exchange's chairman who will head a nominating committee to pick a new president.

The Second Worst Job. The field is wide open. One reason is that anyone who really qualifies for the job can probably earn more in corporate life than the flat $125,000 that the Big Board presidency pays. Franklin Roosevelt once described the post as "the worst job in the world next to mine." In financial circles, it is commonly said that "Funston has 1,366 bosses," a reference to the exchange's 1,366 often warring members. The exchange's constitution allots so much power to its board of governors that the president is often regarded as merely a figurehead.

But Funston has been much more than that. Besides plugging stock ownership and introducing the monthly investment plan for small shareholders, he raised the number of listed companies from 1,100 to 1,300. This increase, plus the great expansion in trading and a number of operational efficiencies introduced by Funston, put the exchange's activities into the profit column after years of losses. He invested heavily in automation to increase the speed and accuracy of transactions, helped persuade listed companies to release more informative reports to shareholders, and forced companies to make every common stock a voting stock. When Ira Haupt & Co. went bankrupt in a 1963 salad-oil scandal, Funston prevented a crisis of confidence by inducing other member firms to supply $9.5 million to pay off Haupt's customers.

Like the market itself, Funston has had his downs as well as ups. Insiders complain that he failed to strengthen his spotty staff and that he had a chip on his shoulder in dealing with the Securities and Exchange Commission. Relations were much smoother between the SEC and American Stock Exchange President Edwin D. Etherington who, before he accepted the presidency of Wesleyan University this summer, was the favored choice to follow Funston.

Exit from New York? Funston leaves the exchange with two major problems, though both are moving toward solutions. One is the exchange's rule 394, which generally forbids members to deal in listed stocks with nonmember firms. Last week the exchange bowed to the SEC's demand that the ban be lifted to permit some large transactions; by increasing competition for customers' patronage, this may well result in better prices for customers.

The other problem involves plans for an $80 million new building complex to accommodate the exchange's growing operations. The governors had figured on erecting the complex in Manhattan but rebelled when Mayor John Lindsay called for an increase in stock-transfer taxes. "Lindsay has since cut the tax increase in half, and the exchange will probably remain in its old building for the time being; but it still intends to switch some of its operations to New Jersey and Connecticut so as to be in a stronger bargaining position if anybody tries to raise taxes again.

In retirement, Funston plans to do plenty of moving himself. He hopes to travel considerably while pursuing his hobby of archeology, which has already sent him from Yucatan to Greece. He will also raise funds for Trinity College and a few charities, join some corporate boards, and enjoy the harvest of his own investments in the stock market.

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