Evening star., 1933-05-07
Securities and Bank Reform.

President Roosevelt, in his inaugural
| address and in subsequent messages tc
Congress, called the attention of the
country to the need Of drastic reforms
in the banking system and in the
handling of securities which are sold to
the American people. The House. prac-
tically by unanimous vote, has just
passed the securities bill" and that
measure Is expected soon to be ap-
proved by the Senate The bill is in
tended to prevent the sale of unsound
securities. In the light of the expert
ence of the American investing public
i in recent years, it is high time for
such a measure to be enacted into
law. 1t is proposed under this bill that
full publicity be given relating to all
corporations issuing new securities, and
severe penalties are imposed for false
information. The British for years
have had drastic law to safeguard
the investing public, law which has
been peculiarly effective.
One feature of the bill which passed
the House places responsibility upon
all the members of the boards of direc-
tors of corporations for the statements
filed with the Federal Trade Commits
sion regarding the corporations. While
this provision in the bill was assailed
in some quarters, beyond doubt, If
enacted into law, it will have salutary
effect. At least it will discourage the
election of dummy directors who merely
lend their names to corporations. A
man who becomes director of cor
poration, knowing full well that unless
he keeps himself informed and is well
acquainted with the status of the cor
poration and its financial standing he
| may be subject to penalties under the
! law, will insist upon knowing what hi:
| corporation is doing. Furthermore, the
great overlapping of directorates in cor
porations, found to exist today, is likely
to be eliminated in considerable part
While the securities bill seems well
on its way to final enactment into law
the bank reform bill still lags. This
seems to be due, if reports are correct
to conflict in opinion between Secretary
Woodin of the Treasury and member:
of the Senate Committee on Banking
and Currency, headed by Senator Car
ter Glass of Virginia, who are in charge
of this legislation. President Roosevelt
may be called upon to adjust the diff
ferences. Among the Senators-anc
this is true generally so far as the Con-
gress is concerned-there is demand fol
some form of insurance Of bank de-
positS. Secretary Woodin and President
Roosevelt have both been reported as
in opposition to any such guaranty by
the Government. On the other hand
the administration has obtained from
Congress a measure virtually to compel
the people to place in the banks gold
coin and gold certificates as an anti
boarding measure. Further, the Gov
ernment guarantees the deposits OF the
people made in the postal savings
banks.
No measure enacted by Congress Of
to be enacted is more important or more
CT an emergency measure than the banl
reform bill. 1t is true that an emergency
banking act has been passed, giving
the President great powers over the
banks. Thousands of banks are toda!
| closed. The very fact that they ART
closed has shaken confidence of thu
public in banks. Many of them, if re-
opened, would perhaps go to the wal
because of that lack of confidence. Wha
i is needed is a great and full measure
of confidence in banks And nothing
| could give that confidence in create,
measure than a bank reform bill. Ye
! there is talk today of allowing the banl
reform bill to go over without fina
action until next Winter. Why shoult
this be? This legislation has been un
der consideration for almost two year
in the Senate committee and the Hous,
committee and in the Senate itself
There is far more need of such salutar.
! legislation even should it require length.
! debate, than an adjournment of tn
Congress the first week or the secont
week in June, which seems to be tn
goal OF the Democratic leaders in Con
gress and of the administration,