Evening star., 1934-02-27

broker. but also as dealers. both in
listed and unlisted securities"
He Contended the legislation would
hit particularly the smaller holders
of securities i'll comparatively small
cities and communities in New Eng
land.
BY forcing segregation. we believe
the act would force New England
security houses to withdraw from
these small cities and communities
both their services as brokers and
their services as dealers. The effect
on listed holdings of these investors
in these small places would be to
make their listed holdings less readily
marketable
The small holder. II the security
houses in the small communities are
forced to withdraw. would not be
likely TO have established connections
with security houses in big cities This
being the case. he woud find il diff
cult, in case of necessity TO dispose
of his listed holdings. promptly to
make instant arrangements for quick
execution of an order to sell.
The corresponding difficulty would
obtain in case he desired immediate
execution of an order TO purchase
listed securities. The general effect
on the small holder in smaller towns
would be as stated. TO make his listed
securities less readily marketable.
Likewise individuals in small places
holding unlisted securities would be
deprived entirely of service and
financial advice of dealers if the segra-
cation section forced, as We believe it
would, the withdrawal of security
houses from the small cities and COM
munities.'
OBrien said he would make it
obligatory that the securities ex-
changes govern themselves. and do so
within the principles of the New
Deal Let the Government assist us
by legislation to prohibit unethical
practices and control unethical indi-
viduals whom We cannot reach he
added.
Here to Cooperate"
Disavowing opposition to 'legisla-
ton which may be needed in the pub
lie interest" O'Brien contended we
are here to cooperate"
"Unscrupulous persons use the eX-
changes" he said. lust as they use
every other human agency to attain
their ends. We welcome whatever as
SiStance Congress can give us to elm
mate unfair practices. All that We
ask is that in helping us to correct
abuses, you do not go to such ex-
tremes that you put us out of busi-
ness"
Chairman Fletcher of the Senate
committee granted Redmond the
right to take part in the proceedings
after a brief procession conference
with Richard Whitney, president of
the exchange, who was waiting to
testify.
Before Whitney was called Thomas
Corcoran, attorney with the Recon-
struction Finance Corporation, who
helped draft the bill, appeared to ex-
plain the measure.
While saying the bill was not per-
feet, CorCoran defended it against
charges Of being too drastic
He said to charge the Trade Com
mission with control of the exchange
without full powers would be like put
ting "a baby in cage with tiger
to regulate the tiger
Lowering of the high marginal
trading walls in the bill was to be
considered today by the Senate COM
mitteemen. Definite proposals to
modify the marginal requirements.
making them more flexible for the
protection of small investors, were to
be scrutiniZed.
Whitney, president of the Stock Ex-
change, was to have opened the hear
ings yesterday, but the committee de-
cided to hear first an explanation of
the bill from its proponents.
Small Investors Seen Hit.
A restudy of the controversial mar
ginal provisions was inspired by con-
tentionS that the measure as now
drawn would work hardship on small
investors.
The bill stipulates that a minimum
margin of 60 per cent be maintained,
except for stable securities. In that
case brokers could lend 80 per cent
of the lowest price quoted for the
stock during the preceding three
years.
Chairman Fletcher said many sug-
gestions had been made that the min
imum be cut to 40 per cent. 1t has
also been suggested that brokers re-
tain the discretion of carrying a Gus
toner when his stock dipped suddenly
downward if he had placed the re-
quired margin when he purchased it.
Otherwise, it was argued. market
manipulators could drive out small
holders by depressing a stock only q
few points and requiring them either
to put I'D more money or he sold out