Competitors for A. T. & T.

In an American Telephone & Telegraph anteroom on lower Broadway, the competitive bidding fight drew to a close early this week. Anti-competitors won all the arguments, but lost the prize.

Three weeks ago (TIME, Sept. 15) A.T. & T. got in step with the trend SEC had set for utility holding companies, announced it would ask for competitive bids on $90,000,000 of new 2 3/4% debentures. The three bidders that grabbed for this gold-plated bait: 1) No. 1 proponent of competition, Halsey, Stuart (in association with Mellon Securities); 2) No. 1 opponent (and A.T. & T.'s longtime banker) Morgan Stanley; 3) archenemy of all underwriters, the "private placement" boys, in the person of three big life insurance companies (represented by Mutual Life of New York). The winner: private placement, with a bid of 101.842--v. 101.017 for Morgan Stanley, 100.26317 for Halsey, Stuart.

The outcome of the bidding settled three bitter arguments: 1) competitive bidding is not, as its proponents had claimed, in itself the way to give the little investor a share in prime new security issues; 2) Halsey, Stuart answered its own contention that competition means higher prices to the issuing company by offering the lowest bid of the lot; 3) private placement won the competitive bidding argument without even engaging in it.

The point underscored by A.T. & T.'s bidfest; since insurance companies and banks are the only big outlets for gilt-edged issues anyway, the real field for underwriters is to sell securities that require distributing talent. Said one outspoken syndicate member after the bidding: "I'm glad we lost it--there isn't any money in those deals for us, and there's no reason why there should be."

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