Evening star., 1935-07-13
ASKS SAFEGUARDS
ON UNDERWRITING
A. B. A. Committee Opposes
Plan to Lift Ban in
Present Form.
BY EDWARD C. STONE.

Rudolf S. Hecht, president of the
American Bankers Association, says
that the associations Special Com
mittee on Banking Legislation does
not favor the congressional proposal
to allow banks to underwrite securi-
ties or to act as distributors of such
issues unless granted certain safe
guards.
The A. B. A. committee is favor
able only to what is known as true"
underwriting, in other words, the pur-
chase of unsold investment securities
from investment bankers, thereby
being freed from all liabilities of sec
tionS II and IL of the securities act
of 1888.
The special committee has given
much careful study during the last
week to the proposed banking act of
1885 as it now stands in Congress.
The exemption from liability is not
in the Senate banking bill, but it
would permit in a limited way the
underwriting of securities when ap-
proved by the controller of the cur
rency With the liability clause not
in force the bankers would be favor
able to the underwriting proposal.
The associations committee as far
back as last February decided that
the banks should be allowed to en-
gage in the So-called true" or Eng
lish type of underwriting. This re-
port was adopted by the A. B. A.
Executive Council. If banks took up
from the investment houses unissued
portions of flotationS, or extended
temporary loans to underwriters dur
ing distribution, they would neither
be issuing nor distributing securities in
manner that would carry any
liability.
Committee Is Conservative.
In short, it appears that President
Hecht and his associates are both
conservative and cautious. They are
bound to keep these institutions out
of any possible pitfalls after all the
banks have passed through since the
Wall Street tumble and its after
math.
Other members of the A. B. A. Leg
the recent discussions are Robert v.
Fleming, first vice president and
president of Riggs National Bank;
Tom K. Smith, second vice president
and president Boatmen's National
Bank, st. Louis, and Winthrop w.
Aldrich, chairman of the Chase Ma
tional Bank of New York.
IoI
troversy on this phase of the bank
bill, displaying comparatively little
concern in the matter, either way,
compared with the opposition they
developed to that part of the act
which would center so much added
power in the Federal Reserve Board.
New York banks are more con-
cerned than any others in the Sc
curities angle of the proposed bill.
1t Is expected that the banking
measure will be disposed of in Con-
gress before long. President Hecht
is optimistic on the outlook, believing
that a bill aimed in the direction
of an improved banking system can
be worked by Senate and House con-
ferences.
Investment Field Held Unique.
The Securities Commission uses CO.
gent language when the facts seem
to justify it. 1t says that the object
of a proposed stock issue was "pri-
marily to extract gold and silver from
investors in this country for the
benefit of the promoters and only
incidentally to eextract gold and silver
from mines in distant Mexico.
So much is siphoned away by the pro-
moters from the money contributed
by investors that an almost negligible
equity is the return for the cash con-
tributed by the public"
So, that particular group will not
dip their hands into the Nations
capital reservoir and mulct the in
nocent, Spere Magazine comments.
No outside agency can keep fool
attached to his money, but even the
fool is entitled to some sort of break.
Thus, one does not have to know the
value Of dry goods if he buys from
a reputable store. He can have faith
in the price and the quality. Only
in the investment field. hitherto, have
crooks been permitted to operate
freely, and they have done more to
create radical political opinion and
undermine capitalism than all other
influences combined.
Knappen Discusses Wealth.
Theodore H. Knappen of Washing
ton, one of the associate editors of
the Magazine of Wall Street and
widely known economic writer, dis
cusses Sharing the Wealth" in the
current number of the magazine. In
his conclusions he comments:
Income returns show the savings
OF families having less than $4,000
incomes are comparatively small, and
the Nation must depend for its ex-
pansion and replacement of capital
upon the savings of those with larger
incomes.
IF the present national income
were evenly distributed the savings
would be utterly inadequate for
maintenance, to say nothing of
growth.
The larger incomes, therefore. are
oAA~ AAAAAAoeoy Va pIOSpcTlIy. 1QQe6O,
they constitute the main foundation
for the hope some day everybody will
have abundance"
Fire Insurance Chiefs Named.
AT the annual meeting of the stock
holders of the National Union Fire
Insurance Co. of Washington, D. c.,
the following directors were chosen
for the ensuing year: William L.
Beale, Charles r. Brown, Floyd E.
Davis, Charles E. Galliher, Alfred H.
Lawson, Walter S. Pratt, jr; John
Saul, James P. Schick and william
H. Somervell.
At the organization meeting held
yesterday the following officers were
elected: Alfred H. Lawson, president;
John Saul, vice president; Floyd E.
Davis, vice president; William H.