Evening star., 1933-09-13
SECURITIES LAW
SUPPORT PLEADED
Ferguson, Forum Speaker,
Explains Act and Asks
Public to Back 1t.

curitieS act successful was stressed laSt
night by Garland S. Ferguson, jr., a
member of the Federal Trade Commis-
sion, during the National Radio Forum,
arranged by The Washington Star and
broadcast over coast-to-coast network
of National Broadcasting Co. stations.
Mr.. Ferguson explained in detail the
purpose of the act, and declared its
success will depend not only on the
ability and fidelity of the Federal Trade
Commission. which is administering IL.
but in a large measure on the support
of the public.
The act aims definitely, Mr.. Ferguson
pointed out, Ito shut the door Tor all
time upon those financial methoos Oh
the past that brought disaster to thou
sands of investors and to a great ex-
tent destroyed the broad base OF public
confidence upon Whlch our ecoiioliiAe
structure depends"
Mr.. Ferguson said there had peen
some criticism of the act on the ground
il is dangerous and destructive ana
will unduly hamper legitimate enter
prise. but he voiced the belief the al
tacks came only from those whose
hold upon the standards OF the past
gives Way reluctantly before the more
candid and more fortnight STANDARDS
of the present"
Law Carefully Planned.
The text of Mr.. Ferguson's speech
follows:
some part of the general public may
he under the impression that the Sc
curities act of 1893" Is a sudden and
fasty creature of Congress. passed only
to meet an emergency and intended
as temporary legislation. If so, this
is an erroneous impression. Wh1le u
was the collapse Of unsound hnanclal
structures under the stress OF the de-
preston of the last few years that
brought home to the people the neces-
sity for such legislation, that necessity
had existed for long time.
Since the days Of John Law ana the
mississippi Bubble" since the days OF
the South Sea island speculation" the
people of France, England. the United
States and other countries have had
their savings swept away by invest
ment In worthless and fraudulent Sc
curities. Those who are most frugal
and conservative are often the most
easilv induced to buy wildcat" stocks
and bonds-are most easily misled by
rose-colored prospectus, and deceived py
an inaccurate financial statement. Long
ago the principal foreign countries
passed laws regulating the issuance and
marketing of securities, and have from
time to time made them more strln-
gent.
For many years the States, through
their "blue-sky" laws, have been en-
deavoring to protect their citizens from
those who would prey upon their saw
rT1l,o 10 lor q
purpose and have afforded protection
from those who would sell within the
State. Those from without, however,
have been little impeded. During the
boom period preceding 1880 the inter-
state sales of unsound securities grew
to such proportions that billions OF dol
lars were lost to the people OF this
country
Law Urged by President.
Realizing the necessity of national
legislation, President Roosevelt, in a
message to Congress. recommended the
passage of law that would put q
stop to this evil After many days OF
public hearings, in which the commit
tee heard the testimony Of able,
thoughtful and experienced men, and
weeks of consideration, Congress passed
the act. Its administration and en-
forcement were intrusted to the Feder-
al Trade Commission.
The success of the. act will depend,
not only on the ability and fidelity OF
the commission, but in large, II not
a greater measure, on the support OF
the public.
If there is any one thing that has
grown out of the times Of adversely in
which we have been recently living
It is the desire to make common cause
against the problems that confront us.
There is now singleness Of purpose in
our united efforts such as we could not
have hoped for in the days OF easy
prosperity. And beyond the accom-
plishment of our immediate purposes
there is, I sincerely believe, hope and
determination that we learn how to
build more soundly in the future; that
we shall profit by our experience. OF
major importance in this concerted
drive is the securities act, approved by
the President on the 9th of last May.
This legislation aims definitely to
shut the door for all time upon those
financial methods Of the past that
vestorS and, to a great extent, de-
stroyed the broad base Of public con-
f1dence upon which our economic struc-
ture depends. As a program for the
future it opens the way to rebuild
ing of public confidence along new
lines, along lines that promise untold
benefit, not only to the great number
of people who have their savings to
invest in industry and in business, but
also to those business and industrial
organizations which merit that conf
dence, and stand ready to deal with
their investors as co-partnerS in a
common enterprise. To those who hold
that the requirements of this act stand
in the way of financial recovery, I re-
ply that recovery is impossible unless
confidence in financial institutions IS
first restored to the great number OF
large and small investors whose saw
ings make possible the very existence
of those institutions. And once that
confidence has been restored 1t Is un-
thinkable that the irresponsible f1nan-
cial practices of the earlier era shall
again be allowed to lead us blindly to
the same tragic outcome.
Disclosures Chief Purpose.
The outstanding purpose, might say
the principal purpose, OF the securities
act, is that full disclosure shall be made
of all material facts concerning an is
sue of securities that is offered for sale
10 the puUliC. 4I Std1loo oqodlCAy uPoAi
the principle that an investor whose
savings are solicited for the uses and
purposes of a corporation is entitled to
be told the truth, the whole truth, and
nothing but the truth. 1t proceeds
upon the assumption that those who
accept the trust Of employing the
money of other people in the conduct
of business must let those people know
the purposes for which their money is
to be employed, and facts upon which
they can exercise their own judgment
as to the wisdom Of their venture.
Surely there is no element Of startling
radicalism in this requirement. It Is
the simplest requirement Of common
sists Of telling all the truth and not
merely the savory part of it, is the legal
standard to which those who offer Sc
c,Irities for public investment must con.