Mutual fund pioneer's comments still relevant today

Can you believe it? Comments made by a mutual fund pioneer in 1928 are still relevant today. The speaker was Paul Cabot, founder of what became State Street Research.


I received permission from Michael Yogg, the author of a recently published biography of Cabot, to post an excerpt below the dotted line. The indented blocks include some spicy quotes from Cabot.
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Paul was sensitive to the potential abuses of the investment trusts because of his research on their British counterparts of the late nineteenth century. In 1928 he addressed the American Savings Bank Association and, without mentioning any institution by name, outlined some actual abuses that concerned him.

In my opinion there is to-day in this country a large and well-known
investment trust whose shares are selling for far more than their
intrinsic or liquidating value, which has continually managed its
portfolio so that it can show the greatest possible profits and
thereby obtain the greatest market value for its shares, regardless
of their real worth. Generally speaking, in this trust during the
past year the good securities that have appreciated in value have
been sold and the poorer ones retained or increased, simply to show
profits.

The Economist tells us that this is exactly the game they were
playing in England almost forty years ago.

American Founders Corporation, the dominant investment company organization of the 1920s, concluded correctly that Paul was talking about them and went to National Shawmut Bank, of which Paul was a director, and threatened to withdraw their account if Shawmut did not force Paul to stop talking about them. Paul reacted to this strongly.

They told me this; well I flamed up. I got so goddamn mad I said,
why the sons of bitches, in the first place I didn't mention their
name in this thing at all, and obviously it shows the shoe binds them
since they are excited about it. I said I'll show them how I'm going
to be shut up. I trotted up to the Atlantic Monthly, the editor of
which happened to be my uncle, and gave him this speech and he
published it?.It went all over the country and I got a hell of a lot
of letters from it.