The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1934-04-06

q
by law They re- -
spond to deep
seated impulses In Lippmahh
men, impulses so strong that no
government ever has been strong
enough to suppress them. At the
utmost they can be moderate when
there are wise laws backed by
convinced public opinion. To at
tempt more than that-to make
laws that are too strict for human
nature-or too noble to be sustained
by public opinion, is simply to in
vite evasion, corruption and hypoc-
risy.
It is in our long experience with
the liquor problems, rather than
in the maze Of technical conjectures
about DEATHS of these various bills
to control the exchanges that we
can, 1 think, most surely find the
wisdom to guide us in dealing with
this problem. We may begin, 1
think, by asking ourselves what it
is in the liquor traffic that we can
control and have to make an effort
to control. 1t is not the habits of
individual drinkers. The law can
do little or nothing about them.
NOR can it do very much about
IN walters and barkeepers and
statesmen and all those who serve
the customers at retail. The effec-
tive control of the liquor traffic has
IN foIy Of al ,frrI, IN,
the realm of the brewers and distil-
lers, and its object must be in sub
stance to restrain them from put
ting on the pressure of high-pow-
cred craftsmanship. That is the spe-
cific evil in the liquor traffic which
the law can do something about,
and if it succeeds it will have done
a lot and it may we'll leave the rest
to education and moral discipline.
So it is with the stock market
No law could abolish speculation,
even if that were desirable. But
what law can do is to discourage,
high-powered craftsmanship in the
organized markets. That was the
specific evil of 1928-1929. The
natural appetite of the public for
gambling was stimulated into a
frenzy by pool operations, by secur-
ity statesmen, by brokers. 1t is this
artificial stimulation that has some
how to be repressed. Yet it is not
easy to represS it, for dealers and
brokers profit when trading is ac-
tive and their incentives are to keep
il active. What with their own in
f1ated overhead large offices and
large Staffs, they must have great
activity in the markets.
It is impossible, of course, for the
government to put a policeman in
every brokerage Office to see that
business is conducted temporarily.
It does not matter how specifically
laws are drafted, in this sort of
thing the possibilities of evasion
bound to break down. In the ma
ture of things, therefore, the pri-
mary control over the business must
rest in the exchanges themselves.
TTNTIL recently the prospect of
~ inducing the Stock Exchange
governors to govern has not been
very bright. Two years ago, for eX-
ample, congress started its investi-
CATION of the stock market. When
Mr.. Whitney testified he took the
position that there was nothing
much that needed to be done which
was not being done. Like the
brewers before the eighteenth
amendment. his policy was to stand
pat.
Then came the little bull market
of last June and July. In that mar
ket all the old evils of the big bull
market manifested themselves again.
When the bubble burst the Stock.
Exchange authorities made a move
that amounted to recognition that
they had to do something. But the
move was feeble and utterly unim-
presSive. When, for the second time,
they had shown that of their own
motion they would not seriously at
tempt to put speculation under con-
troll, the die was cast, and it became
certain that congress would legislate.
The first measure which congress
produced was very close to being
financial Volstead act. But bad as
it was, it served a great purpose. 1t
radically changed the attitude of
the Stock Exchange authorities and
forced the enlightened members of
the financial community to realize
that the Stand-pat policy was going
to ruin them, and that they had to
produce constructive remedies for
the recognized evils.
The result has been a series of
proposals from Mr.. Whitney and
from members of exchanges outside
New York which for the first time
clearly recognized that the exchange
is not merely a building. but a pub
lie institution, which has to be gov
erned in the public interest.
ITO be sure. this change of policy
Il within the exchanges has come
at the eleventh hour, and only as a
result of the fright caused by the
first congressional bill. For that
reason 1t has aroused no great en-
thuSiasm, though I venture to say
that if Mr.. Whitney and the others
had made their present proposals
six months ago they would find
themselves today sitting up with Mr.
Myron Taylor and Mr.. Gerard
Swope in the front seats of the new
deal.
Be that as it may, the exchanges
now have the beginning of a con-
structive policy. 1t is not only fair,
but statesmanlike to recognize this
fact. For in the last analysis it is
only by a change of policy within