THE STOCK MARKET'S ODD MAN OUT

Nothing on the New York Stock Exchange has sold quite so briskly as its slogan, "Own Your Share of American Business." The number of in vestors who do has risen from 6,000,000 to 24 million since 1953. One in eight Americans--more than half of them in the under $10,000 income bracket--participate in "people's capitalism."

Having sold the people on capitalism, the Big Board may now have to sell the capitalists on people. The surge in trading volume has swelled brokerage-house commissions, which many brokers have been more eager to pocket than to plow into necessary automation. Now, faced with a deluge of paperwork, they are taking the easy way out by turning down business from the small investor. So widespread is the move to eliminate the little man that President Robert Haack of the New York Stock Ex change, speaking to a group of civic leaders last week in Los Angeles, declared that the Exchange "vigorously deplores" the trend and might "be forced" to take action.

Nothing Doing. Small-time operators are particularly unwelcome at firms whose operations are badly snarled. Hayden, Stone & Co., which last month decided to close ten offices and fire 200 of its 1,100 customers' men, has told survivors that they will not be paid for taking orders that earn less than $12 in commissions. Paine, Webber, Jackson & Curtis says no to anyone who wants to open a new account with an order of less than $1,000 for a listed stock, or $5,000 for an over-the-counter stock. E.F. Hutton & Co. turns down would-be clients with orders of less than $1,500 for listed stocks, $2,500 for over-the-counter shares, and $3,000 for "odd-lot" transactions of fewer than 100 shares.

At many firms that have not been restricted by the exchange, brokers are also quick to show the door to the speculator whose hankering for cheap stocks usually means a foray into the untidy over-the-counter market, where most of today's stock-delivery foul-ups occur. Says a broker at Chicago's G.H. Walker & Co.: "Frankly, we're going to refuse the guy who wants to buy 1,000 shares of a $1 stock. On the other hand, if he's got $800 for a blue-chip stock, I'd take that business." Since brokers often act as if they are doing him a favor by accepting his money, the odd-lotter frequently feels like odd man out. "I've only got $2,500 to play with," says Hollywood Electrician Richard Johnson. "I know that's not much. But I've had to change brokers three times in the past year, and each time I've had to invest more than I wanted just to make a purchase. That's not right."

Many brokers contend that it is right because the small investor does not pay his way. James W. Davant, managing partner of Paine, Webber, argues that the cost of handling stock transactions is rising so rapidly that brokerage houses lose money not only on the odd-lot business but also on the average "round-lot" trade of 100 shares or more. "It is unprofitable to serve the investment needs of the small investor," he says bluntly. Brokers make money on the really big trades--and those profits too have been hit.

A few weeks ago, under pressure from the Securities and Exchange Commission, the New York Stock Exchange reduced the fees on trades of more than 1,000 shares, dropping them from an average .89% to .84% on the value of each transaction. This will cost the brokers about $150 million in commissions next year, or roughly 7% of what they might have expected to earn on the big trades. Oddly, to make up the difference, brokers are clamoring for an increase in commissions on trans actions of fewer than 100 shares. Such commissions range upward from a minimum of $6.

Yet no one need weep for the brokers or their firms. Though profits on commission transactions will be off from last year, the average 16% that the firms earn on invested capital compares well with any other line of U.S. business. Then, of course, there are those celebrated Wall Street Christmas bonuses --even though many brokers are cutting back a bit. At Merrill Lynch, biggest of all, employees with more than 20 years' service, who collected an ex tra 23 weeks' salary last Christmas, will get only 22 weeks extra this year. Five-to ten-year men will get 17 weeks' extra pay, down from 18 weeks last year. But Merrill Lynch, which has led the industry in automation, continues to handle its 1,004,000 customers profitably, and opposes higher commissions. Says President Donald Regan: "The small guy shouldn't bear the burden."

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