Evening star., 1934-02-09
MEASURE TO CURB
STOCK MARKET ON
WAY TO CONGRESS
Strinrent Control Bill Will
Be introduced Today as
Message Is Speeded.
HASTE SHOWS DESIRE
TO KEEP PRICES FIRM
Commodity Exchange Regulation
to Be Dealt With in Sep
arate Bill Later.
By the Associated Press.

"A PiOlIOoi44S Oh AL
gent Federal regulation Of Stock Ex-
change operations was ready for in
PRODUCTION today as President Roose-
welt polished a special message to
Congress upon the subject.
Authors of the projected legislation,
describing it as roundup of various
proposals cleaned from two years OF
study. reported identical measures
would be introduced in both the Sem
ate and House as soon as the Chief
Executives message arrives. Bills for
regulation of commodity exchanges
will follow.
The Presidents sudden decision to
ask for immediate legislation was un-
derStood on Capitol Hill to arise from
a desire to Danish past evils and pro-
tect commodity price gains from spec
ulative dents. How far he would sug-
gest going. however, awaited disclosure
in his message.
Pools Nav Be Barred.
The most stringent Of the proposals
now ready for introduction was an
absolute prohibition On pool opera
tions with provision for making them
criminal offense subject TO neaVy
fine and imprisonment,
Also. the bill was understood TO deal
with other market operations Whlch
have led to abuses in the past, ncldd-
ing marginal trading, short selling,
excess credit for speculative purposes,
trading by brokers for themselves ana
others at the same time, operations OF
specialists, and various devices .or
manipulating the market.
Control of these and other practices
would be largely vested in the Federai
Trade Commission. 1t would nave
broad discretionary power to set up
rules and regulations for trading
The legislation being drafted for
control of the commodity exchanges
was understood TO provide also Tor
regulations by the Trade Commission,
but details of the legislation had not
been outlined.
Hearings Next Week.
The Senate Banking Committee,
whose tWo-yeaI inquiry into market
operations vas largely responsible for
the sentiment to regulate the eX-
changes. was poised to open hearings
next week on the legislation.
Chairman Fletcher of that commit
tee and Ferdinand Pecora. its counsel,
worked until the early morning hours
today in completing their draft of the
legislation.
A switch in plans late in the day
led to abandonment of the idea of in
Guiding commodity markets, as we'll as
stock exchanges in the measure. Al
though President Roosevelt preferred
that this be done, it was found i'm
practical and the grain and cotton
exchanges will be covered IN a second
bill
Officials close to the Chief Execu-
tive said yesterday he was anxious
to avoid repetition of the events of
last Summer when a commodity
price, after a long sustained rise, fell
away. as the result, he considered, Of
an over-extended speculative boom in
stocks ard grains.
Inquiry Launched Then.
1t was considered significant that
soon afterward the White House
began to speak seriously and deter
minedly of giving the Government wide
powers of supervision of the stock
and commodity futures markets, and
that, at the Presidents request. a
committee headed by Secretary Roper
began an inquiry into what could be
done.
Now commodity prices are on the
rise again and have recovered much
of the ground lost in the collapse of
last Summer Stocks have been boom
ing. too. The devaluation of the
dollar has. in the opinion of admins
tration advisors, provided an added
stimulus, but at the same time has
furnished the basis for broad eX-
pansion of bank credits which might
encourage too great an upswing in
stocks.
For this reason, the feature Of the
administration bill, providing for con-
troll of credit flowing into the stock
market for marginal buying may
cause considerable argument at the
Capitol. Heretofore this control has
rested largely with the Federal Re-
serve System. and those who pro-
tested vigorously against the trans
fer of some of the systems powers to
the Secretary of the Treasury by the
recently enacted monetary bill already
are preparing for a fight.