Evening star., 1934-02-24
MEMBERS OPPOSE
. EXCHANGE RULE
Section 10 of Proposed Bill
Held Harmful to D. c.
Market.
BY EDWARD c. STONE.


Congress pass this section as it now
reads, 1t might seriously handicap
'free and open" trading on the local
board. Section 10 reads:
Sec. 10 forbids any member OF
a national securities exchange or any
person who engages in the business OF
effecting transactions in securities for
the account of others through a men,
Der of a national securities exchange
to act as a dealer in or underwater
of securities whether or not registered
on any national securities exchange"
While capital investment houses are
doing no underwriting of new issues
at present, this condition is not ex-
pected to continue forever. IN the
past, investment firms here have ham
died a good many new securities and
they expect to do the same again.
Should the measure be passed by
Congress in such drastic form that
dealers could not belong to the ex-
change here and handle any new
issues, 1t is the opinion of some men,
bers that they would dispose of their
seats. Not only would such action
reduce the active membership, but also
cut down the total volume of business.
Both results would be damaging.
The membership is none too large;
more business is needed rather than
less. Any members who might with
draw would have to sell their Secur-
tiles off the board, thereby hurting
the standing of the exchange.
Aimed at Big Exchanges.
The wording of section 10 is intend
ed to protect the public. All well and
good. Everybody favors that. The
more of the public's money that is
saved, the more there will be for
sound investments. The section Is
really aimed at investment and under
writing houses which put out huge
issues and then have their own men,
bers of the New York Stock Exchange,
or other large exchanges push public
distribution through pools or other
wise.
The situation does not prevail in
Washington. The market here is not
large enough for pool operations, even
exchange is strictly an investment
organization. All stocks and bonds,
no matter how good, have some ele-
ment of speculation in them, but in
vestment rather than speculation, is
stressed by the members in their
transactions with the public.
Holders of seats on the Washington
Exchange believe that section 10 in
the proposed control law should be so
changed that it will not hurt small
exchanges. They look for a different
wording when the final draft comes
from the Congressional Committee.
Six new members recently have
bought seats and business has shown
marked improvement. Without any
legislative setbacks, 1894 Is sure to
be an excellent year, judging by the
first seven weeks.
Lyddane Leaves Bank Post.
Charles B. Lyddane, who has been
assisting Cary A. Hardee, former Gov
ernor of Florida, in liquidating the
affairs of the Federal-American Ma
tional Bank & Trust Co., has re-
signed his position. to take effect
March l.
Mr.. Lyddane entered the banking
field in Washington as a runner with
the Home Savings Bank in 1905 and
has been active in banking ever since
that time. Two years later he went
to the Commercial National, where
he was note teller. Then he Joined
the staff of the old Federal National
in 1918, where, as assistant cashier,
he took in the first deposit the bank
ever had.
He soon became cashier, and at the
time of the consolidation with the
old American National, forming the
Federal-American National, in 1922,
he was elected a vice president. He
helped perfect the merger with the
Merchants Bank g. Trust Co., con-
tinuing as a vice president in the
new organization.
When the Federal American failed
to open 100 per cent, after the bank
moratorium last March, Mr.. Lyddane
remained with the institution while
John Poole was conservator and then
became assistant to Hardee. He said
today that he plans to take a vaca-
ton in Florida before making a new
business connection.
Insurance Funds Waiting"
When the problems of currency sta
bility, obstacles to new capital issues,
and a means Of making the rise in
production costs of industry follow
actual profits rather than precede
hoped-for ones are solved, the long
term investment market will come
into being again and will powerfully
stimulate sound recovery, M. A. Lin
ton, president of Provident Mutual
Life Insurance Co. Of Philadelphia, de-
clared before the Midwinter trust
conference in New York.
The life insurance companies will
be back in the field investing their
funds conservatively in mortgages and
corporate bonds in accordance with
the new needs" he added. Life in
surance reserves are great reservoirs
of credit which will do their share
in bringing back prosperity just as
soon as they are given a chance"
Mr.. Linton denied "one of the il
lusions during depression" that the
country is already overbuilt and over
equipped so that long-term invest
ment on a large scale Is not needed.
Capital Traction Stock Climbs.
During the first Saturday session Of
the Washington Stock Exchange in
some two years, Capital Traction stock
made another new high mark on the
present move.
The stock opened with small-lot
sale at 2512, gain of % over yester-
days close. Later in the session 10
shares sold at 26 and shares more
at 26h. The market closed with Is u
bid and % asked. Very little of the
stock is being offered for sale at pres
ent prices on account of the much
higher earnings reported during the
first two months of street-car merger
operations.
A single share of Potomac Electric
Power 51a per cent preferred stock
sold today at 1075s.
The only sale in bonds was 81 1000
Washington Railway & Electric As,
which changed hands at 8812, up half