The border vidette., 1934-03-10
ECONOMIC HiGHLlGsHT
3 s "a

mall en OrORllO, Wnlcn mas 0e
generated into name-calling
contest between the principals
on both sides, has obscured the
stock exchange investigation and
the proposed National Securities
Exchange Act. That Act, h3w
ever, is considerably the more
important Of the two events so
far as business. large and small.
is concerned. 1t came out of the
Senate's Banking and Currency
Committee, and is about as stiff
piece of legislation rs the New
Deal has produced. II it passes.
expert opinion predicts the stock
exchanges of the country are
going to gather moss. and the
brokers, banks and investment
houses, as we'll as individual
spectators, will have to find
outlets for t b ei r energies.
Among the things the bill prohi
bits are: Wash selling, through
which spectators create an illu.
sion of market activity by plac
ing buying and selling orders at
the same time; pool operations.
designed to force stocks up and
down by manipulation; starting
of rumors and the retailing of
market tips; the use Of firm
capital for private trading by
brokers; short selling, pegging
and stop-loss orders. The min
imrm margin requirement is go
per cent - and this provision
ca used the most bitterness of all
among financiers, inasmuch as
it would force the liquidation of
thousands of existing accounts,
including millions ia bank loans.
All corporations with listed
stocks must furnish to the ex.
change and the Federal Trade
Commission voiuminous data con
ceruiug salaries, bonuses, op.
tions, income, etc. To enforce
the bill drastic penalties are pro
vided-in the case of violations
on the part of exchanges a $500
600 fine may be levied. Indivi
duals can be hooked to the tune
Of $25, 900 plus tsn years in Jail.
Mainstay Of opposition to the
bill is urban, cool- headed. aris
trocratic Richard Whitney, great
power of the New York Stock
Exchange. He summoned the
heads of all the big brokerage
nouses-and wires went out to
all their branch managers, ia
structing them to point out the
dangers OF the bill to friends and
clients. Next Whitney step was q
letter to the head of each of the
800 corporations whose issues
are listed on the New York ex
change. Those corporations in
clude the bulk of the great busi
nesses of the country. which
furnish most of the jobs and in
vestment opportunities, When
Mr.. Whitney went to them, be
was aiming not only at Big Busi-
ness. but at the small stock own
er and the worker.
Biggest Whitney gun. how
ever, is of different character
than most would anticipate. II
lies in appealing to the small
corporation man, owner nd
firms with small stock issues
which never appear on a major
exchange. According to Mr..
Whitney the bill would make
this stock Ineligible for collater
al for loans either at bank or
exchanges. would thus pinch the
little fellow as hard as it would
pinch his big brother. the super.
capitalist.
Supporters of the bill, so far,
seem limited to the Senate and
minor. left wing New Dealers.
Mr.. Roosevelt, who will have the
final word in this as in so many
matters, has said little. and the
belief is that the Act is not a
White House measure. that much
Of the sting will be taken out Of
it. He wants to put bit on
speculation-but doesn't want to
hobble it entirely. Aud Lawyer
Samuel Untermeyer, crusader
extraordinary for many years
for financial legislation of this
nature, on reading t b g bill.
murmured sadly that it went to
the opposite extreme from un
controlled speculation. waa im
practical and i'm possible.
Notes Of business, taken prin
cjpallv from government reports,
follow:
Transportation: Constant i'm