Evening star., 1933-03-29
Roosevelt Says Legislation
Is Proposed to Guard Pub.
lie Without Interference
to Business.
!STEP IS FIRST IN PROGRAM
PLANNED BY PRESIDENT
Chief Executive Takes Attitude Of
LET the Seller Beware" and
to End "Unethical and Unsafe
Practices" on Stock and Conn
modify Exchanges.
BY G. GOULD LINCOLN.


President Roosevelt recon-
mended to Congress today the
enactment of law for the Fed
eral supervision of traffic in in
vestment securities in interstate
commerce."
In a special message, brief and
10 the point as have been his
other communications to Con-
gress, the President declared "the
purpose OF the legislation sug-
gest is to protect the public with
the least possible interference to
honest business"
He added that this is only one
! step in his program of protecting
investors and depositors. The
President promised that it would
be followed by recommendations
for legislation looking to the bet
ter supervision of the purchase
and sale of all properties on ex-
changes, stock and commodity,
He added that he would also rec
ommend legislation to correct
"unethlcal and unsafe practices"
on the part of officers and di-
rectors Of banks and other corpo-
rations.
Serve rs Trustees.
What We seek" said the President
In conclusion, 'is return to a clearer
| understanding Of the ancient truth
| that those who manage banks, corpo-
rations and other agencies handling or
using the peoples money are trustees
acting for others"
Accompanying the Presidents mes
sage was a bill dealing with the pro-
| posed Government supervision of the
| issuance of securities The measure,
which was Immediately introduced in
both House and Senate, is IS pages
! long.
1t follows the lines of laws that have
been in effect for number of years
In Great Britain and some of the other
foreign countries. Under its operation
the public would be protected through
! information which must be filed with
the Federal Trade Commission regard
Ing the corporations before the securi-
| ties can be offered for sale in interstate
commerce. Otherwise. the isSuer of the
securities would subject himself to pen
alties under the law.
The bill requires that all advertise
| ments of sale of such securities in in
terstate commerce carry definite in
| formative facts which would put the
purchaser on notice.
Burden Put on Seller.
1t also changes the ancient doctrine
OF caveat emptor to 'let the seller be-
ware" and puts the burden on the seller
rather than on the buyer.
The belief was expressed that enact
ment of such legislation would give
great impetus to honest dealing in Sc
curities and bring back public conf
| dence in the securities and the sale
| thereof.
The legislation which the President
will propose to regulate and supervise
stock and grain exchanges will be sent
| to Congress within the next two weeks,
| it Is understood. Samuel Untermyer Of
trust" investigation conducted by the
House in 1921, has been requested by
the President to aid in drafting this
stock exchange legislation. Mr.. Inter
| myer was in Washington last Saturday
and had a conference with President
Roosevelt at that time. He is expected
| to return, however, for further confer
| enceS.
AS soon as the Presidents message
had been read in the Senate today Sen
ator Robinson of Arkansas, the Demo-
cratic leader. introduced the securities
bill and had it referred to the Commit
tee on Judiciary.
Would Separate Banks.
l T1,o procila,t in, III L.
reference to legislation which he would
| recommend to improve, strengthen and
reform the banking system. 1t is ex-
pected that such legislation would COM
| pei banks of deposit to conduct bank
| ing business and banking business
! alone. It will make impossible the pres
ent system of security affiliates which
a number of the large banks now have.
| Commercial banking also would be
| separated from trust banking and it is
expected that the proposed legislation
would bring private banking firms
within the scope Of regulations that
apply to public institutions.
The Congress and the country have
been aroused by the revelations before
| the Senate Banking Committee, which
is conducting an investigation into
| the operation Of the stock exchange.
Investigations also into the manner in
which foreign securities have been sold
to the American public, through big
banking houses in this country have
been a shock to the investing public
The Roosevelt program is to make
impossible the unloading Of such secur-
tiles on the investing public without
the fullest and the correctest informa-
tion being supplied. It is expected that
Congress will give this legislation early
consideration and that the Presidents
securities bill will be passed with as
little delay as possible.
The securities bill was introduced In
| the House by Representative Rayburn,
chairman Of the Interstate Commerce
Committee. and was referred to that
committee. Rayburn has called a meet
| ing of his committee for Friday morn
| ing. when hearings will be held.