Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-05-10
Former Head of American
Bankers Declares Reforms
Are Needed.
Would Eliminate Floor Trad
ing and Dealing in Small
Margin Accounts.

before the International Chamber of
Commerce the elimination of floor
trading. the elimination of brokers
margin trading in accounts under $l0,-
900 and the changing of the settle
ment date from daily operation to BIZ
monthly. am convinced each of these
reforms must be brought about"
Mr. Traylor is president of the First
National Bank. Chicago, and member
of the Organizing Committee for the
Bank of international Settlements.
"One of my critics." he said, "sug-
gested in an editorial that I, too, was
part of the crowd that had believed
the golden era had arrived and that
the business cycle was a thing of the
past 1 was quoted as having said this
when 1 was president of the American
Bankers Association, in 1927.
Will Answer Critics.
"At the proper time I will reply in
full to this criticism, but it is suffi-
cient to say now that the critic quoted
only half of my statement. What I did
say was that new forces had come into
being and that if business and banking
leadership were able to control them
wisely the world would see fewer hard
times and less depression than ever be-
fore.
But I said further that if these
forces were not wisely handled, we
would be faced with greater business
troubles and disaster than ever"
DO you believe it would have been
better TO have allowed the depression
of 1921 to run its course, rather than
to have arrested 1t when We did," Mr..
| Traylor was asked.
"Cerainly. We should have allowed
the war imitation to be squeezed out
10 years ago. Had we done so, we
would not be going through a severe
and disastrous doflation now. But the
movement downward was arrested by
banking and business policy, so for
another 10 years we continued to live
on borrowed money. OF course TINS
conditions had to end and when it did,
in 1929, the initiation was much more
pronounced and had gone much fur
Their than in 1921. So the resultant
depression has been much more severe
than it would have been otherwise"
do you believe We are pretty well
through now with the depression Pc
riod?"
Must Maintain Standard.
"There are still some elements that
must be cleared up. No one can say
exactly when the revival will come.
What we can say however, is that a
revival cannot be brought about until
all Of the economic elements are
brought into balance"
Are you referring to wages? Do
you believe they must come down, with
commodity and security prices?
II think one must be very clear and
definite about this matter. I am strong
ly in favor of maintaining the American
standard of living. BY that mean the
daily wage must buy the same amount
a wear from now as today.
eff prices come down 20 per cent and
wages remain stationary, the worker is
receiving 20 per cent more real wages
than he did before the price drop. II
wages are reduced Is per cent, the recip-
lent would still be better off. 1 think
we ought to keep very clearly in mind
that what every one wants in the wage
situation is maintaining real wages in
terms of what those wages will buy"
IF floor trading on the Stock Ex-
change were eliminated, would that re-
duce very considerably the volume OF
business on the market?" Mr.. Traylor
was asked.
ut probably would. However, from
the viewpoint of the investor rather
than of the broker, I believe prices on
the exchange would be much higher in
such times as these if floor trading were
entirely eliminated"
Short Selling Legitimate.
do you believe in the principle OF
short selling?"
Eyes, I think there is legitimate
place for short selling if the mechanics
of trading are set up right. But today
what have you in Wall Street? The
cards are stacked in favor of the floor
trader and against the stock purchaser.
when a customer buys 5000 shares
of United States Steel he signs a slip
agreeing to allow that broker to lend,
at any time, the owners stock for short
selling without obtaining permission
from the owner. Now suppose this stock
is lent for short selling This very
transaction may cause a drop in the
price Of the stock Of from one to ten
points.
Think of the owner assisting in this
kind of deal! Does any one outside of
Wall Street believe such an arrange
ment is legitimate and for the best in
terests of the man who owns the stock?
Not if he is in his right mind!"
What you have in mind, then, is a
market where every order is a bona fide
buy or sell, under specific instructions
from the people who own stock You
want a market of quotations such as
! exists tday in the case of listed bonds?"
Eyes, that is correct I think we
ought to have more legitimate trading,
fewer wash sales, more stability and
less gambling"
Would Suspend Payments.
The discussion shifted to world trade.
What is your suggestion for meeting
the world Depression" Mr.. Traylor was
asked
II believe the situation is sufficiently
serious to demand that the world grant
delay in the payment of all interest
and principal on political debts, includ-
ing separations and war debts, for a
period of, say, five years. This would
be gesture of good will and at the
same time it would be of immense bene-
fit to all nations.
I'm addition. so far IS the United
States goes I believe payments on the
principal debt of the Federal Govern
ment should be postponed five years, as
we are already seven years ahead OF
schedule. Also, would insist that all
new Expenditures by future Congresses
be met by increased taxation and not
by new Treasury loans That would
eliminate borrowing, which must be
made good eventually by somebody.
Such policies, it seems to me, would
have the backing of all thoughtful
Americans"
(Copyright, 1881, by North American News
paper Allianceo
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