Evening star., 1934-01-30
Stock Exchange Regulation
Report Held Constructive
Committee Emphasizes
importance Of Haring
Trained Administrator.
Necessity for SecurityMar.
ket to Liquidate Hold
ings Is Recognized.
BY DAVID LAWRENCE.


The most constructive document that
has come out Of the Roosevelt admin
istration on an economic question of o
highly controversial nature Is the char
acterization that can be given the re-
port just filed with the President by
the ter-departmental Committee ap-
pointed to study the regulation OF stock
exchanges.
The fact that it is signed by con-
ServativeS and radicals alike makes 1t
unique in the first place, but 1t is also
unusual in that it emphasizes the i'm
portance of having men OF experience
and technical qualifications in admin
istering regulations imposed by Govern
ment on business.
The chairman of the Inter-depart-
mental Committee is John Dickinson,
Assistant Secretary Of Commerce and
right t-hand man of Secretary Roper. He
was formerly professor of law in the
University of Pennsylvania. Along with
him on the committee were James M.
Lands, chairman of the Federal Trade
Commission, who helped considerably
in writing the new securities law. and
Arthur Dean, q New York lawyer, VINO
has been most penetrating in his crlti-
cisms of the same securities law.
Other members were Prof. Berle, one
of the brain trust" whose Speclalty
is railroad finance. and Henry Richard
son, a New York lawyer.
Market Need Recognised.
But the report was unanimously
adopted after days and nights OF PAINS
taking study and discussion-whlch IS
proof that even persons OF opposite
points of view can get together on
statement of principles and remeoy
if they have the will to be practical
and effective.
The report recognizes that there must
be a market for the sale OF securltles
if for no other purpose than TO hqul-
date holdings from time to time ano
of course, to obtain money for needed
projects in business and industry. IL
recognizes, also, that many OF the prac-
tices which are complained OF are abuses
of a principle which may in itself be
sound or q purpose that may be worthy.
How to limit snort selling and curp
practices that are harmful to the COM
munitv Is outlined in the report. when
is sufficiently drastic not to be wei
coined any too enthusiastically by the
stock market gambler type:
One of the most interesting passages
in the report Is the confession that
human nature is essentially speculative.
1t says:
"In America the man of average in
come has perhaps turned to the STOCK
Exchange because Of the prohibition OF
various forms OF gambling. II tne
speculative tendencies OF our people
could be turned into other channels,
this instinct might be satisfied without
the far-reaching economic consequences
which come from widespread public
speculation in the stock market
Would Curb Margin Trading.
The committee believes margin trad
ing should be restricted and that the
Federal Reserve Banking System should
be co-ordinated in some way with the
lending processes SO that expansion OF
credit can be held in check when specu-
lation becomes too extensive.
The basic suggestion is that there be
created Federal Stock Exchange
authority which would administer the
rules set forth in the report if en-
bodied into law The question is raised
whether the Federal Trade Commis-
sion should take over this work by
creating a subdivision to take care Of
Stock Exchange practices or whether
the new agency should take over the
work now done by the Trade Commis-
sion with respect to the issuance Of
securities.
The Importance of having technically
trained individuals in the admins
trative board is recognized as one way
to make the regulation effective and
yet not injurious to the financial struc-
ture. There are many reasons why the
two functions can be merged into a
single agency. The principal opposi-
ton to the securities law has been that
strike lawyers have increased oppor-