Evening star., 1933-09-12
BETTER BUSINESS
MENHEAR DEFENSE
OF SECURITIES ACT
B. B. Balm Denies Law Stands
in Way of Financial
Recovery.
DECLARES CONFIDENCE
MUST BE BUILT AGAIN
Rumors of Capital Strike Are
False, Speaker Tells Shore
ham Session.

Answering charges that the Federal
securities act stands in the way OF
financial recovery, B. B. Balm. chief OF
the securities division of the Federal
Trade Commission, told delegates to
the affiliated Better Business Bureaus
convention at the Shoreham Hotel to-
day that recovery is impossible unless
confidence in financial methods and
institutions is restored to the great
number of large and small investors
whose savings make possible the ex-
iStence of those institutions
In one of the first public utterances
on the act made by commission Of
fetal since its passage, Balm outlined
the intent and aims OF the legislation
in an effort. as he described it, Ito
allay some of the general misunder-
standings arising out of the complexi-
ties of the situation with which 1t has
had to DEAL
The legislation, he declared, aims
definitely to shut the door" upon those
financial methods OF the past that have
brought disaster upon thousands OF in
vestors and destroyed the base of pub
lie confidence upon which our economic
structure and livelihood depends.
Sees Confidence Rebuilt.
LAS a program for the future, it opens
the way to rebuilding of public con-
fdence along new lines that promise
incaluable benefits, not only to the
great number of investors who have
their savings to invest, but also to
those business and industrial organiza-
tions which merit that confidence.
The outstanding purpose of the
securities act is that full disclosure
shall be made of all material facts
concerning an issue of securities that
is offered for sale to the public. 1t
stands squarely on the belief that an
investor whose savings are solicited is
entitled to be told just what he is be-
ing asked to do. 1t proceeds upon the
assumption that those who accept the
trust Of using other peoples money In
the conduct of business must let those
people know how and the purposes for
which their money is to be employed.
This is the simplest requirement of
common honesty"
Summarizing the activities of the
commission in connection with the act,
Balm said to date 227 registration state
ments have been filed, lis of which are
not effective, 27 of which have been
withdrawn, S against which stop
orders have been issued and 80 of
which are now being examined.
Scouts Capital Strike.
The talk of a capital strike induced
by the securities act, Balm declared,
to falsify.
1T neglects wholly the fact the state
of the capital market is such that
financing is hesitant for reasons that go
far beyond the securities act In issues
exempted from the registration require
ments the lack Of financing is appar-
ent. The hesitancy of short-term
financing has become a matter of ma
tlonal concern"
Facts required to be disclosed about
securities are neither voluminous nor
burdensome, except as unsound past
corporate practices may have made
them so, Balm said "Top-heavy and
intricate corporate structures, with con-
fused and confusing layers of various
different types of securities, require
many words to tell the story Of the re-
lationship of a particular security to
the earnings of the company. This be-
ing the case, the unsophisticated in
vestor should not be required to gamble
his little thousands that the answer is
right"
Balm appealed to the Better Business
Bureaus for their cooperation in ad-
ministering the law throughout the
country.
Paul v. Keyser. counsel for the In
vestment Bankers Association of Amer
tca raised the question as to whether,
under certain sections Of the act, 1t
will be possible to find adequate pri-
vate capital to undertake carrying out
the necessary and essential financing OF
the larger enterprises of the country.
The obligations which this act un-
dertakes to impose upon underwriters
are very great. and it seems to be not
unreasonable to expect that private
bankers may hesitate to accept the
hazards Of those obligations" he said.
Others to Speak.
Other speakers at the morning ses-
sicn included W. A. Wood. chief of
postal classi1cations, Post Office De-
partment, and Hugh Smith of Phila-
delphia. The sessions this afternoon
were to be addressed by K. P. Aldrich,
chief post Office inspector; Willard M.
Kiplinger, William P. Coils and C. M.
Overley Secretary of Commerce Daniel
C. Roper will speak at the annual ban
quet tonight. The conference will con-
clude with an executive session to-
morrow
Yesterday Donald Richberg, chief
counsel of the National Recovery Ad-
ministration, addressed the convention,
taking to task those elements of labor
and capital which have been obstruct-
ing the progress of the movement.
Demanding the wholehearted support
of employers and employees alike, Rich
berg defended the N. R. A. policy with
respect to labor, declaring I'VE cannot
hope to promote prosperity without
taking labor into consideration. Just
as long as there is Reorganization in
labor, there will be no tranquility in
industry"
The emergency which brought about
the N. r. A., Richberg told the dele
gates, still exists. and the administra-
tons efforts to alleviate unemployment
and distress definitely needs and must
have the wholehearted confidence and
support of the people"