Evening star., 1934-03-02

to normal recovery"
John S. Newbold Of Philadelphia
joined him in opposing the proposal
to regulate "over-the-counter mar
kets."
Market Demonstration Given.
The Senate Banking Committee
was given q lesson in stock market
mechanics today by specialist broker
presented by the New York Stock Ex-
change to argue that the Fletcher
Rayburn bill would destroy the spe-
cialist dealer"
Raymond Sprague, one OF the $50
specialists on the big board who
handle particular stocks, said the bill
would hurt his business, but would
harm the public more by destroying
the liquidity Of the market
The youthful broker urged the COM
mittee not to put any curbs on spe-
cialists, asserting that I'VE may not
be perfect, but We are doing the best
We can"
I'VE are not afraid Of regulation,
he added. But he urged the COM
mittee not to set up rigid regulations
without a complete study.
Earlier representatives of dealers in
Baltimore and West Coast cities op-
posed the bills provision to divorce
brokerage business from trading in
securities.
Two Deny knowledge.
As for the possible leak" both
VnFk ".
change president. and Senator Kean,
Republican, Of New Jersey, told the
committee yesterday they had no
knowledge Of any short-selling orders
originating in Washington.
whitney said, however, that the
short interest in aviation stocks
jumped in January from 1900 to A.
900 shares. He said q list Of short
sellers already had been compiled ito
find out whether any one was making
use Of inside information improperly"
Subpoena for the documents In
volved was served upon Whitney be-
fore he left the stand.
This, however, was a matter Of rou-
tine, for Whitney and his associates
assured their complete willingness to
give the committee the information
and, in fact, revealed they already
had it in washington.
Whether the list includes any Gov
ernment officials, none would say, and
Kean himself asserted he had no
knowledge or suspicion tn that re-
gard.
II knew that the Exchange sent
out a QUESTIONABLE asking for the ir-
formation and I thought it the duty
of the committee to find out who was
involved" he said. There was big
break in those stocks before the con-
tracts were Cancelled and they have
the names"
Whitney said the short interest in
aviation stocks increased from 4,600
shares to $4,000 shares during Janu-
ary. He thought scattered groups
had done most of the selling, but
could not recall whether any indi-
vidual accounts involved huge blocks
Of stock.
Whitney said he did not know
whether any of the selling orders
originated in Washington. The rec
ords that will be given the committee,
he disclosed, will contain the name
of the person for whom the account
was carried, the broker through whom
he dealt and the amount of his short
interest.
Contention Challenged.
Shortly before this development
Wall Streets contention that the
pending bill would place the Gov
ernment in absolute control Of pri-
vate corporations was CHALLENGED by
Ferdinand Pecora, the committee
counsel.
II think that is the most fantastic
kind of a ghost" Pecora said. after
Whitney had expressed this view in
presenting his objections to the
Fletcher -Rayburn bill.
Provisions of the measure giving the
Federal Trade Commission power to
prescribe the form and content of
financial reports by corporations we're
80 onerous and all embracing" Whit
ney testified, "as to give the commits
sion complete control over all corpor-
ations."
"You think the power to impose
forms of accounting is equivalent to
giving control?" Pecora asked.
I'm combination with other sections
Of the bill, yes"
II seriously and emphatically chal-
lenge that statement" the committee
counsel said.
Whitney called on Roland Red
mond, counsel for the Exchange, to
elaborate this view and the latter ex-
planned that this was done because
Whitneys' statement was based on the
attorneys Interpretation Of the view.
by regulating the form and con-
tent" he said, "the Federal Trade
Commission could require the inclu-
sion of anything that it wanted to.
That effects q club over the head of
management. The commission could
demand daily reports with its officers
liable both criminally and civilly. It
is q weapon that would allow the con-
troll Of corporations"
Question Of Power.
"Your argument" Pecora countered.
would imply that the commission is
denriyad ~ q eorSa ~ fajrneSs and