Evening star., 1934-03-21
MORGENTHAU AIDE
STOCK BILL
Smith Says Treasury Was
Limited in Study of Re.
vised Measure.
BY the Associated Press,

BY the Associated Press.
Testimony that President Roosevelt
restricted the Treasury Department
study of the Stock Exchange regula-
ton bill was given today before the
House Interstate Commerce Commit
tee by Tom K. Smith, assistant to
Secretary Morgenthau.
The witness, called to present the
Treasury Departments views on the
revised measure, also said the depart
ment did not wish to express approval
or disapproval of the legislation.
The only phase of the bill which
the President directed the Treasury
to study, Smith testified, were those
relating to banking. Government
financing and the financial structure
OF the country.
The Treasury had nothing to do
with the margin rate requirements in
serted into the measure, Smith said.
Denies Business viii Suffer.
Smith told the committee the bill
has been 80 revised as to minimize"
any danger of delaying business re-
cOvery.
Il was requested to study the bill
to ascertain whether certain of its
provisions might have a needlessly
adverse effect upon the Governments
financing operations or upon the
financial structure of the country"
Smith said
He said that as a result of this
STUDY and numerous suggestions and
changes, most Of which have been in
corporated in the bill / be-
heVe that for the most part the mat
ters about which We were principally
concerned have been corrected. "
Smith said the Treasury is in fun
accord" with major detectives of the
Dill, which, he said. appeared to be:
To establish Federal supervision
over securities exchanges, to prevent
manipulation of security prices and
70 protect the public against unfair
practices, TO prevent excessive f1uctua-
tlonS IN security prices due to specu-
IatlVe influences, TO discourage the
use OF credlt In the financing of ex-
cesslye speculation in securities"
Studied General Aspects.
In addition to examining the bills
possible effect on Government fnanc-
The enactment Of any regulatory
measure OF this scope affects so many
different people and activities that it
is difficult to fOresee all of its pos
sible consequences. Therefore I have
also seriously considered whether the
provisions of the bill which affects
Government financing and the finan-
cial structure of the country might
operate to delay or obstruct business
recovery.
Il believe that the language OF
these sections of the bill has been
so revised as to minimize this danger
Our study has necessarily been
somewhat hurried and We should, OF
course, hope to have the privilege Of
submitting to the committee any fur
ther suggestions that may occur to
us after We have had more time to
study the bill"
Criticism yesterday by Richard
Whitney. president OF the New York
Stock Exchange. of the revised stocks
bill was answered quickly last night
by Ferdinand Pecora. Senate Banking
Committee counsel. with the assertion
that he did not believe the objections
were sincere.
Sees Price Decline.
In statement contending the new
measure was just as Objectionable as
the old, Whitney said:
This new bill will have as serious
effects upon the security market as
the original Fletcher-R -Rayburn bill. In
my opinion. it will inevitably bring
about declining prices and will inter
fere with and delay the economic re-
covery of the Nation.
This bill is destructive and not
constructive"
Asserting that if all of Whitney's
objections were met there would be
no bill at all, Pecora observed.
This bill does not seek TO enact
the social philosophy of any special
group. 1t seeks rather to make GER
tain that the wildcat speculation
which was fostered and encouraged
by the New York Stock Exchange
prior to October 1929. and the results
of which we're so baneful as to dislo-
cate American industry and to throw
10000 900 breadwinners out of en-
ployment. will not again afflict our
people and imperil their prosperity.
The American business man who
reads this bill with an honest and
open mind will not shiver with fright
at the scarecrows and ghosts which
Mr.. Whitney pretends to see."