Evening star., 1933-11-04

clarlf1Cat1On OF the liability sections OF
the Federal securities act He added:
''All over the United States corpora
tions are ready to undertake the neces-
sary financing. but no corporation di-
rector in his senses is going to risk
existing resources by putting his name
on financing under law that makes
him personally liable for the next 10
years and adopts the un-American
principle that he is to be judged guilty
unless he can be proven innocent.
1T is time for some plain speaking.
The law is hindrance to national
recovery Personally l do not believe
that any one ever intended to pass
law which makes a security dealer who
handles $4,000 worth of a $4,000. 600
issue liable for the entire s1O,0OO,000."
Demands That Law Be Changed.
Amendment of the securities act to
enable investment bankers to do their
part in the interest of national re-
coyery was urged by Mr.. Gordon in
his annual address He asserted that
President Roosevelt last Spring stated
emphatically that the securities 1egis-
iatlon would pc grated SO as not 70
hamper honest business, but that in its
actual operation the law brought COM
plete stoppage of new general market
corporate underwritings for capital i'm
and a of oid
issues.
Mr.. Gordon stated that the securities
act should be modified so that the IL
ability sections would be reasonable
and the complex procedure involved
IN iat restTation smped He al se5ted fsssa
with respect to any issue in pros
pectuS is impossible and that an ap-
parently trivial point omitted therefrom
may in the light of latest events turn
out to be of material Importance and
subject each banker and corporation
official to civil and criminal liability.
He added that the association is and
always has been for an effective law
to protect investors from fraudulent
issues. but that the present act is in
effective because it is entirely unwork-
able
Mr.. Gordon referred to the storm
of abuse and SANDER" heaped upon
the investment banking business during
the past year. said it had been met
with dignity and explanations made
if held essential. He estimated that
from a billion to a billion and half
in retunding operations must be under
taken in the next Is months
Education of Investors Urged.
Other speakers were also emphatic
in their opposition to the securities
act. 1t was suggested that closer con-
tact should be observed with the press
as clear statement of facts might
often put investment bankers in bet
ter light.
That more education among investors
Is needed was another angle brought
cut The British methods of distrib-
uting securities was said to be un-
workable here, at least so far as small
investors are concerned. Since the
poor man of today in the United States
may become the investor of tomorrow.
the investment banker must carry on
a certain amount of educational work
among prospective buyers Of securities"
Cne speaker asserted.
On the score that metropolitan
bankers were frequently charged with
leading up country banks with un-
sound investments several speakers at
the forum revealed from their own ex-
periences that when high-grade bonds,
with relatively small yields. were Of
fered small banks they were declined
in favor of more speculative issues al
fording higher returns.
Rails Will Need r. F. C. Help.
The convention was told that the
r. F. c. must be ready to continue
lending to the railroads in 1884 A
committee report said that the posi-
ton of the railroads has been vastly
improved by increased traffic this year
and by economies which have made it
possible for large share of increased
gross revenue to be transferred directly
to net railway operating income
1t should be borne in mind. how
ever" the committee said, that while
the situation is much improved. de-
cline IN traffic would precipitate a
Crisis quite as serious as that which
the carriers faced year ago. and
there are still important systems which
do not possess full resources for their
needs. especially in meeting maturi-
ties"
There has been a tendency to exag-
gerate the amount of deferred railroad
maintenance, according to the report.
The present railroad machine is in
condition to furnish adequate service
at the present level Of traffic
Real Estate Relief Advocated.
Real estate must be relieved to a
large extent of carrying the burden of
increased cost of Government, the Real
Estate Securities Committee declared
in its report.
A plea for more complete information
on the operation Of investment trusts
was made in the report of the invest
ment companies committee to the con-
vention of the I. B. A.
The committee declared that the
Federal Trade Commission does not
propose to control the policies or princi-
piles on which investment companies
are conducted ror will it supervise
their activities after registration Of
their securities
The belief was expressed that mar
agements of investment trusts should
carry through with the principle of dis
closing full information to stockholders
in periodical statements.
The railroads should be treated on
a comparable basis with other forms of
transportation. Land. air and water
transportation systems should be forced
to bear their share OF the cost of facili-
ties provided at public expense, and
should be subject to comparable regu-
lation, it was asserted.
Election Concludes Convention.
After many policies were discussed
and outlined, the convention wound up
with the annual election Of officers.
Robert E. Christie. jr., of Dillon Read
g. Co., New York. was chosen president.
Telegraph dispatches stated that some
opposition to the Nominating Commit
tees selection made some weeks ago
was evident because Of Dillon Reads
recent connection with Senates investi-
cation of financial matters.
He will naturally appear before Con-
gress later when the association asks
for changes in the securities act. How
ever, the committees recommendations
were adopted and he was elected.
Chosen on his record as an investment
banker, his friends say.
The complete slate includes the elec-
ton of Alden H. Little, Chicago. es
executive vice president. The 500 dele
gates then returned home.
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