The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1934-06-06
Liberal Viewpoint
by DIR. HARRY ELMER BARNES

PERHAPS the most colorful and dramatic
4 victory likely to be won by the Roosevelt
administration against the common enemies OF
mankind will be the passage of the Fletcher
Rayburn BILL designed to provide some reason
able regulation of gambling on the New York
| Stock Exchange.
Having failed in their terrific campaign of
propaganda against the Stock Exchange bill the
predatory financiers are now concentrating their
attention upon efforts to relax the federal Sc
curites act of last year. 1t is reported that the
administration is inclined favorably toward some
considerable easing up of this important legisla-
ton. We hope that this report is baseleSs.
1t is highly important that every inch Of
ground gained in the struggle against the specu-
lative moguls should be held fast. The securities
act of 1888 is the indispensable twin tower in the
ramparts which Mr. Roosevelt is trying to raise
against the money changers
The most satisfactory analysis of the federal
securities act which have read is an article on
this subject by Mr.. George j. Feldman, pub
lished in the Boston University Law Review.
Mr.. FeldInan points out that the federal trade
commission, in its annual report for 1888, char
acterizes the securities act as perhaps the most
outstanding of the permanent reform legislation
passed at the last session of congress" I am
inclined to think that the commission did not
err in ranking this act by implication above the
national industrial recovery act
A CCORDING to the trade commission. the
n securities act is quite satisfactory in per-
forming its basic function of procuring adequate
and true information for investors. At the same
time, the commission maintains that neither
the act nor it's administration will offer any
serious obstacle to the legitimate financing of
legitimate business"
Nevertheless, the speculative bankers and in
vestment agencies who looted the public for
decades before 1929 have violently attacked the
act. They have asserted that it obstructs the
recovery machinery; checks the free flow of
capital to industry; fatally hampers the f1otaton
of new securities; and restricts the legitimate
operations of the intelligent investor.
Mr.. Feldman examines these allegations with
care. The central feature of the securities act
is the registration statement. This requires
complete statement of the financial condition of
the issuer of securities as well as all relevant
facts concerning the particular ISSUE
Such statement is no obstacle whatever to
investment operations. But it does put real
crimp in the use of corporate securities as
form of gambling pasteboards. If the registra
ton requirement does not eliminate all gambling
possibilities it at least unoads the dice and gives
the customer half chance.
TINE past history of the fotation of securities
l. proves we'll enough the necessity of such
protection for investors.
1t has been stated by opponents of the act
that the reputation of the banking house is
SuftClent prOCectOn Tor the investor. Inc IlIldH-
ciaI history of the last ten years offers the
crushing refutation of this contention. Some of
the lemons have been handed out by some OF
the most reputable investment banks
Others maintain that the whole matter
should be left to the self regulation on the pet
of investment bankers. The best answer to
this is that the Pujo committee in 1913 uncov-
cred much the same abuses as did the commit
tee on stock exchange practices in 1888. Twenty
years of opportunity for self-regulation bore no
fruit
Indeed, there is little evidence of any sincere
inclination toward self-regulation today. Clar-
ence Dillon told Mr.. Pecora that he would
repeat his practices if ever given the opportunity
to do so. Only the late Otto Kahn gave any
real indication of penitence and of firm reso-
luton to reform.
MIR. FELDMAN doubts whether the securi-
1V1 ties act has restricted the f1otation of new
securities. He makes it clear that there is GER
tainIy no evidence which can conclusively
demonstrate this charge.
Even if it could be shown that the act has
reduced the gross volume of new securities, the
burden of proof is upon its enemies to show that
such securities as have been restricted would
have conferred any benefit upon the American
public through their sale.
Mr. Feldman sensbly concludes that latter
so much of private enterprise, it is well to give
federal regulation fair trial"