New-York tribune., 1922-05-25
Cromwell arms Banton
Licensing of Brokers
Will Shield Bucketeers
by Political Favor
Predicts Disaster
TO Economic Life
Curbing of n. Y. Boards
Power Leaves Honest
Dealers Unprotected

'lf stock brokers are licensed by the
state and tho New York Stock Exchange
is compelled to incorporate, the results
would be disastrous to the economic
lifc of all America, The people gen
orally do not understand this. but in
dustrial expansion depends upon ready
capital. and ready capital depends upon
AL adequate. untrammeled and strictly
ethical marketing OF stocks,
If you want a bucketshop estab-
llshed az a permanent institution, If
YOU want to destroy all morale in bust
ness, If you want TO have Inexperienced
people tampering with the very nerve
center Of the nations economic life, de-
stroy the system of voluntary disci-
piiue which exists in the New York
Stock Exchange today and substitute
some system OF political control. But,
remember if you do this you will leave
honest investors almost utterly unpro-
tected."
This IS the reply Of Seymour L.
Cromwell, president Of the New York
.
tacks upon the exchange By District
Attorney Joab II. Ranton and the lat.
tors demand for It's Legislative con
trol. The District Attorney predicted
in an address on Tuesday that the
exchange would be under some sort
Of statutory supervision before the end
of the year, because he wanted the
right to examine the books of brokers
to ''sec il they are honest
Favor Laws Against Bucketing
NJ. Cromwell pointed 10 some Of his
previous uttcrances on the subject. dc
nyjne that the exchange was opposed
TO all blue-sky legislation. and assert
ng that any legislation which could
actually raise the ethical standards Of
me brokerage business would be vel
coined by all members of the Stock
Exchange.
But it is hard to think up q law that
would make people honest" he said
I'VE do not oppose laws against buck
citing
Mr., Cromwell charged that for weeks
iberate attempts have been made to
deceive the public concerning the Stock
Exchange attitude in the matter OF
legi isation.
There are laws against tucketing
Oh the statute books, and VIC wish they
we're cnforced' he declared, "but the
real enemy of the bucket shop-the or
which can and does put bucket shops
/ out Of existence is the New York
Stock Exchange The big problem be-
fore the exchange always has been one
! of protecting the market from un-
scrupulous schemers and from worth
less and fraudulent securities,
There have been outcries from time
10 time against the Stock Exchange.
! but whenever it has come up for I'M
partial investigation the Investigators
f have been amazed at the efficiency Of
this machinery. When Charles L.
Hughes was Governor OF New York he
appointed commission to carry on Il
searching investigation, and the chair
! man Of the commission, Horace White.
after making one or two slight suggcs-
tions, reported: 4 wish to state that
! after making most palnstaklng IN
spection would not be willing to
place an impediment the size of the
smallest pebble in the cogwhcel of so
magnificent a machine as this which
has been established BY the New YORK
! Stock Exchange.'
at is said that the Stock Exchange
is arbitrary and tyrannical. In a
sense it u.s. It's sense of obligation to
the public has made ii so. Its mem
5,
this discipline, which is self-imposed.
AN INSCRIPTIONS spccuator might
take his chances with the law, but he
will take few chances with an organi-
zation which can put him out Of bust
ness the moment he is caught IN a
crooked act"
Political Control Hazardous
In objectins to any system Of politl-
! cal control MIR. CROMWELL said:
Cant you see the chance that such
situation would give the politicians? :?
Crooked firms could be carried along in
return for campaign contributlons
while reputable firms could be black
mailed under threat of proceedings to
Get their licenses revoked. Not only is
| the game a bigger one than has ever
previously been thrown into the poht-
/ cal arena, but the field is one in which
{ they would almost surely work meal
culable disaster TO the country. So
/ long as the broker could retain his
/ license under the proposed system, so
( long as he could find judge to EN- DIN
q commission from taking 1t away until
/ endless arguments had been carried
from appeal to appeal, the innocent IN
vestrrs would be taken in.
eve owe the man with S10O much
4 more pIOleCliOH lHdil NS WV VIZ CiS
and experienced investor who is more
( able to look out for himself. The New
York Stock Exchange is determined to
give him THAT protection. We don't
/ intend to let up until the last bucket
! shop is exterminated. Each succeed
/ ing decade finds US near to this goal.
It finds the gamblers more and more
isolated and the general practice ele-
waited to higher ethical level. Unless
our organization is tampered with by
greedy politicians or by bungling
! Statesmen, we expect to achieve even
greater results.
Mr.. Cromwell regrets that the Dis
trict Attorney "appears to have devei-
oped the conviction that the evils OF
! the brokerage business can be cured
only by licensing brokers and lncor-
porating the exchange
'If the exchange were incorporated. y
he added, "ts powers effectively TO
discipline its members would be gone.
member detected in improper con-
duct could delay execution of sentence
while he appealed from court to court.
The power of the Exchange TO deal
with a corner, such as the Stutz cor
ner, would be taken away. Its power
to keep it's quotations out Of the hands
I of those who would use them for
bucketshop purposes would be at all
nd. And its power 10 meet an emer-
,yo-c.. 1:k., That IT TIE outbreak Of the