Evening star., 1934-05-08

as reported from the Senate Banking
and Currency Committee and now
before the Senate for consideration
threatens Government control of in
dustry, according to an outline Of
critical opposition and suggestion pre-
pared today as representing the views
of commercial and industrial groups
who have been studying the measure
Among these is the Dur9 BILE Goo6s
Industries Committee. formed recently
at a conference of code authorities,
of which George H. Houston, presi-
dent of the Baldwin Locomotive Co.,
is chairman
The outline prepared today submits
a series OF amendments to the Senate
bill which are deemed essential If
industry is not to come under bureau
cratic control. exercised through the
proposed commission to deal with
Stock Exchange regulations. All of
these proposed amendments are de-
signed to relieve industries from pro-
visions which. it is asserted. would be
burdensome, unfair and in some cases
ruinous
Changes Suggested.
While 1t is suggested that the estab-
hShment of a Federal Securities Ex-
change Commission. provided for in
section of the Senate bill is de
Slrable, several suggestions for
changes in the set-up are proposed
In this connection it is suggested that
the commission should consist prefer
ably of three appointive members and
two ex-offlclo members, the Secretary
OF the Treasury and the Secretary of
Commerce. The Treasury operations
Will be Vitally affected by the course
of the public markets. the credit ex-
tended upon non-governmental securi-
ties. and by other influences arising
from administration of the act. The
operations of the Department of Com
merce IN relation to the production
and distribution of goods will be af-
fected by the act
Business men feel that practical
Judgments upon financial and business
activities and conditions, through rep
reservations of the two departments.
will prove valuable. and that the acts
enormous possibilities for benefit or
injury to the country will be under
the scrutiny of men who must have
breadth of view about government
and business. Some suggest the gov
ernor of the Federal Reserve Board as
an alternate to the Secretary of the
Treasury.
The commission is given power to
assess exchanges for all expenses of
the commission incurred in admins
tration of the act. This. combined
with its powers to engage as many
employees as it likes, at salaries of its
own choosing, presents possibilities of
unnecessarily heavy costs, which the
exchanges cannot avoid nor influence,
as well as OF other abuses. These
costs will be passed on to the corpora
tons whose securities are listed and
to the investors. The House bill estab-
fishes definite fee of one five-hun-
dredth of l per cent of the dollar
amount of sales transacted on the ex-
changes in the preceding calendar
year"
Taking up the question of registra-
ton of national securities exchanges.
provided for in section of the bill,
1t is pointed out that: There is a
requirement for an agreement by an
exchange to comply and to enforce, so
far as within its powers, compliance
by its members and by iSsuers whose
securities are registered thereon with
the provisions of the act. any amend
ments thereto. and any rule or regula-
ton made or to be made Hereunder
This whole paragraph is undesirable.
From the point of view of industry it
is very Objectionable as providing for
additional indirect control over indus
try by the commission which has the
power to supplement and alter the
rules of the exchanges. The whole
paragraph should be omitted or at
least amended"
Exclusive Power Is Urged.
/ Discussing the provision of the bill
relating to margin requirements, the
memorandum outline recommends
that the Federal Reserve Board be
given exclusive powers as to margin
requirements, instead of having the
proposed Federal Securities Exchange
Commission share in this matter.
Section Is of the bill, which deals
with "over-the-counter markets." it
is contended, "is obviously intended
to enable the commission to obtain
control over industry" Of this it is
further said:
1T is highly Objectionable to all
corporations. particularly the small
enterprises. This section not only
covers over-the-counter transactions
in outstanding securities, but is SO