Professor Abrahams edits a record of a 1913 conversation between reformer Louis Brandeis and Thomas W. Lamont of J. P. Morgan & Co. In the wake of the Pujo investigation of the “money trust,” the two discussed the nature and extent of economic power wielded by investment bankers as well as some specific issues such as interlocking directorates, competitive bidding for security issues, and greater publicity about securities transactions. This document reflects the long-run, fundamental conflict between social critics fearful of the concentration of economic power in America and businessmen who disclaim power because they believe their behavior is controlled by objective business considerations which operate for the good of society as a whole.

This study examines the complex process of the transfer of technology in the early stages of industrialization. The manner and timing of the selective acquisition of portions of Britain's new textile technology by entrepreneurs in the Philadelphia region were determined by the subtle interplay of market forces, technological constraints, and active efforts to encourage or discourage the transfer.

Professors Alberts and Archer provide a valuable addition to our understanding of capital markets and how resources are allocated to firms of different asset sizes. Their hypothesis is that the cost of equity capital to smaller firms is higher than it is to larger industrial firms. They test their hypothesis by analyzing the variability of returns of 658 industrial firms and attempt to determine whether variability of return is inversely related to asset size. The authors assume that for all firms Ke must equal the sum of the risk-free rate of interest and a risk premium, when risk is defined by four different measures. Two measures of risk use ex post rates of return on book value and two measures of risk employ ex post rates of return on market value. In the first two cases, risk is defined as variability of the firm alone and, in the second two cases, risk is defined as the firm's variability incorporated with the variability of a market portfolio of securities.

Professor Stevens has attempted to determine whether or not a consistent financial basis for merger exists as measured by premerger financial characteristics of the acquired firms. He suggests that results of his study are useful in identifying merger motives and in relating such motives to a general framework for analysis of merger movements.

Professor Huntsman's paper is a welcome addition to the growing literature on portfolio theory. Traditional mean-variance analysis, in spite of its obvious simplicity and its ability to explain portfolio diversification, has come under increasing attack, both for the theoretical weaknesses underlying the technique and for its failure to recognize that investors manifestly prefer returns that are positively skewed to those that are not.

Major points covered by Paul H. Cootner in his discussion of “The Prediction of Systematic and Specific Risk in Common Stocks” by Barr Rosenberg and Walter McKibben have been incorporated by the authors in the revised version of their paper.