Wall Street: Page Two

One of our customer’s brokers, a small producer, was making more errors than he brought us in commissions. English was not his native language. Finally I called Dan into my office, talked firmly to him, and told him he had to be more careful. He listened, and left. I was wondering if I’d done any good when the door opened a little. Dan’s face came in, beaming. He said, “Don’t worry, Jack, from now on I’ll be at my wits’ end.” Success.

The firm continued to grow. The time came when our nice offices at 50 Broadway were too small, and we had to move. A new building was being built at 2 Broadway and, before it was finished, we took the top two floors. While they were being built, my former wife, Joan, made the wonderful suggestion that the window levels be lowered so that we could have a beautiful view of the harbor. It cost us $40,000 but it was well worth it. When we moved into these offices with the wonderful view, I felt good about them and wanted the public to know about them. But my small ego wouldn’t allow me to say it in a straightforward fashion. Finally, after much thinking, we decided on a television ad. I’d seen some wonderful cartoons on TV. I forget who did them. In them there were a couple of ping-pong players—elderly gentlemen who spoke with a British accent. The table they played on was small. They hit the ball back and forth in the air—it never touched the table. Our agency designed an ad. A camera takes you through the entrance of a posh club and into a room where two old English gentlemen are playing ping-pong. After a few bats of the ball, one of them says, “Who’s your broker, old chap?” The other says, “Broker?” The first one says “Yes, stocks and bonds, that sort of thing.” The other says, “Oh, Dreyfus—Dreyfus & Company.” The first says, “Why old chap?” Here you expect “a great research department” or something like that. But the response is, “Magnificent view of the harbor, boats and all that.”

The ad was a lot of fun, and it got the idea across in the best way. It was popular and we ran it often. I remember when some Germans came over to look at Wall Street advertising they selected our lion (I’ll tell about him later) and the ping-pong players for reproduction in German. These old English gentlemen, talking in German, were a sight to hear.

One day John Nesbett, a fine gentleman, applied for a position as a customer’s broker. John was the president of a small mutual fund, the Nesbett Fund, which he had been trying to develop for three years. The fund had only reached $500,000. With half a percent management fee, John couldn’t make a living. When I had been a customer’s broker with E. A. Pierce & Co. I had suggested to Mr. Pierce that a mutual fund would be a good idea, but nothing had happened. I still liked the idea. Unsophisticated investors would have their money handled by professionals, who spend their time studying the market. Also, as a customer’s broker I’d noticed that if I had ten customers, seven might do well and three poorly. Not necessarily my fault, the three had an instinct for picking my worst recommendations. But I worried about those three. In a mutual fund, the investments would be the same for all.

An arrangement was made with John for the name of the Nesbett Fund to be changed to the Dreyfus Fund. He and I managed it jointly until he left, two or three years later. It took us nearly five years to get the size of the Dreyfus Fund up to a million dollars (mostly by stock appreciation). During this time, Dreyfus & Co. lost a lot of money on the Fund, and my partners started giving me strange looks. Fortunately the five-year performance of the Fund was so good that it became easier to sell.

Managers of a mutual fund have two chief responsibilities. First, and most important, is the management of the money in the fund. Second, for management to make money, advertising and promotion are necessary. Let me discuss the latter briefly, then the management of the Fund.

When the Fund was still very small, Frank Sweetser, who was with Value Line, suggested we needed a sales department, which we certainly did. Frank offered his services and they were accepted. After Frank had been with us a short while he suggested that our logo be changed from DF to a stylized lion, and we did this. A few years later Frank left us for greener fields, but I thank him for the lion.

One day Freddy Dossenbach and I were having lunch at Schwartz’s. Over the Swiss cheese and liverwurst, I broached the subject of a TV advertisement for the Fund, with a live lion. Fred liked the idea and his firm went to work on producing it. They did a splendid job. The commercial had a majestic lion coming up out of a Wall Street subway, walking casually past a news dealer, into our lobby at 2 Broadway, jumping up on a block of wood, and freezing into the Dreyfus Fund logo. This one-minute commercial was accompanied by the wonderful lion music of Saint-Saens’ “Carnival of the Animals.” During the lion’s walk, an announcer, in a quiet voice, said, “The Dreyfus Fund is a mutual fund in which management hopes to make your money grow, and takes what it considers sensible risks in that direction.” The advertisement was a great success. Nobody got tired of the lion, or the music. That was fortunate because we had to run the same ad thousands of times—shortly after it was approved the SEC put restrictions on TV commercials.

My inability to copy was valuable in the Dreyfus Fund prospectus. Other prospectuses were written by lawyers. Not knowing any better, I wrote the nontechnical part of our prospectus. I was surprised and delighted when Barron’s National Business and Financial Weekly made the nice comment: “Dreyfus Fund’s latest prospectus is like none we have ever seen. Instead of the usual forbidding makeup with its weighty and legalistic prose, Dreyfus has substituted color and supplied the facts in an attractive manner...Dreyfus is the first fund to acknowledge, in its prospectus, that the average small investor is not a financial lawyer. And this is quite a step forward.”

One day Freddy Dossenbach and I were lunching at Schwartz’s with a representative from the New York Times who made the suggestion that we put the balance sheet of our prospectus in a Sunday Times supplement. I enlarged on the idea, and we put the entire prospectus in the Sunday Times, as a supplement. It was excellent advertising, and we used the supplement as our official prospectus—a bargain, the Times sold us copies for three cents apiece.

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See also: Life Magazine