Evening star., 1934-02-10
Delay in Enactment Seen
as Congress Seeks CIari-
fication by President.
PROHIBIT0RY CLAUSES
BELIEVED TOO SEVERE
Hearings Before House and Sen.
ate COMMITTEES Due to
Begin Next Week.
b. The assoclated Press.

By The Assoeiated Press.
The encompassing bills for strict
Federal regulation Of the Nations
stock exchanges today appeared
headed down route too bumpy to
permit quick action as Congress
looked TO President Roosevelt for
more direct guidance.
Although both House and Senate
committees reported hearings would
open next week on the Fletcher
Rayburn measure, leaders conceded
privately belief that Mr.. Roosevelt's
general recommendation for legisla-
ton did not make clear to them his
stand on some of the more far
reaching prohibitions projected.
Some members in both branches
stated directly they did not take the
Presidents broad recommendation
for Federal regulation as a blanket
approval of the measure.
Notifications Seen.
Many of them expected the bill to
be materially modified before getting
through Congress, despite the con-
tention of Chairman Fletcher of the
Senate Banking Committee, its au-
thor. that it represented a middle
of-the-road program"
Already Fletcher's original pro-
posal for minimum marginal require
ments had been somewhat modified
Further changes were dependent upon
the Chief Executives reactions.
While Mr. Roosevelt in his special
message called for elimination Of
abuses, it was pointed out that his
Interdepartmental Committee recon-
mended that the detailed prohibitions
be left to the Federal Trade Com
mission rather than written into the
law.
Hearings Next Week.
Chairman Rayburn said the House
Interstate Commerce Committee
would begin hearings Wednesday,
Fletcher's committee had not fixed a
definite Gate, but indicated it would
be about the middle Of next week also
Fletcher, in offering the bill in the
Senate, announced it was designed ito
make stock exchanges market piaceAi
for investors and not places Of resort
for those who would speculate or
gamble"
Conceding that the legislation
would hurt "the insider who has re-
lied upon his ability to take advan-
tage of the unprivileged outsider"
Fletcher contended the bill repre-
sented a middle Of -the-road pro-
gram" and said 1t was not as drastic
as he and some other members Of
Congress would like.
Public Interest Protected.
But the bill was drafted, Fletcher
said. 'on the theory that the interests
of the general public are paramount
and that an end must be put to any
mulcting of the general public for
the benefit Of few insiders
To accomplish this end, the vet
eran Senator said there had been
mo compromise" on the enforcement
of the bills provisions and warned
that there can be no escape for
those persons who should not be
permitted to escape"
The primary purpose Of the bill Is
to require the registration of all ex-
changes with the Federal Trade Com
mission, which would have broad
pONcL W pIOl1lulSdUS IuleS anu I6Su-
lations for their operation.
But in addition, the bill would write
into law number of strict prohibi-
tions and regulations of practices,
including;
A go per cent minimum marginal
regulation, by prohibiting brokers to
extend credit on a security OF more
than 40 per cent of its current mar
ket price.
Severe restriction on borrowing by
exchange members and their use of
customers securities, including q re-
quirement that loans on registered Sc
curities must be made from Federal
Reserve banks.
Prohibition against manipula tions
of security prices, by making any Of
the following a criminal offense:
1. Washed sales.
2. Matched orders.
3. Any combination Of purchases
and sales for the purpose of raising
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