The Indianapolis times., 1936-01-01

and Exchange Commission,
the Federal Reserve Board,
and President Roosevelt him
self.
Under the stock market act of
1884, the SEC was instructed to
submit recommendations to Con-
gresSs by next Friday as to the
feasibility and advisability of segre-
eating the functions of brokers and
dealers. The possibility of reducing
the present great volume of over
the counter trading, and forcing
such business onto the regular eX-
changes, is expected to be discussed
The full report of the SEC may
be delayed for a few weeks, with
perhaps some general suggestions
filed in preliminary report.
Meehan May Go to Courts
The Reserve Board is expected
soon to issue its regulations, long in
preparation, covering loans on Sc
curities by banks. These will sup
plement existing restrictions on
loans by brokers.
Affecting the stock market, like
wise, is the current SEC hearing on
charges against Michael j. Meehan,
New York trad, /, of manipulating
Bellanca Aircraft stock. The hear
ing may run for two or three weeks
or more, after which the commits
sion will make its decision. If it is
adverse, Mr. Meehan is expected to
challenge the conStitutionality of
the stock market act in the courts.
Thus far the measure has escaped
court test.
Bankers are interested in the ac-
ton the President will take to re-
constitute the Federal Reserve
Board. The 1885 banking act en-
larged the board from six members
to seven and instructed the Presi-
dent to appoint the new board by
Feb. /.
EccleS to Be Renamed
Mr.. Roosevelt has announced he
will rename Mariner S. Eccles, the
44-year-old Utah banker, as head
of the board He may reappoint
other members of the present board,
but there are likely to be two or
three new figures on this important
agency, which will operate under
greatly increased powers.
Facing the new board-if a
change in policy is not made pre-
viously by the present board-will
be the question of what to do, if
anything, about the $3,300,OOO, 900
of excess reserves piled up in the
nations banks, which some see as
possible source of a dangerous
credit imitation.
Bankers and economists differ as
to whether the board should put a
check-rein on these reserves. The
method usually suggested is to in
crease the reserve requirements of
nankS and thus freeze" a part of
the excess.
Suggests Careful Watching
The board also has two other
means of restricting credit-open
market operations and increases in
the rediscount rate.
The boards open market COM
mlttee, consisting of governors of
the IL regional banks, declined to
recommend restrictive measures
when it met here recently, but sug-
geSted that the situation be watched
carefully.
Mr.. EccleS holds that these re-
serves do not constitute an invita-
ton to imitation at this stage of re-
coVery, with 10 million persons still
unemployed and credit still needed
for business and industry to absorb
this load.
No More Banking Legislation
Recently SO eminent a banking
authority as S. Parker Gilbert. a J.
P. Morgan & Co. partner, supported
Mr.. EccleS' view. Bankers who take
the contrary attitude are led by
Winthrop w. Aldrich, chairman of
the Chase National Bank.
The Federal Reserve Board is
more conscious of a possible spec
ulative boom on the stock market
than it is of the danger of credit
imitation for general business, and
through its forthcoming regulations
on bank loans, as well as by other
means at its disposal, will seek to
check any tendencies toward a
stock boom that might react in
juriously on business.
Bankers need not be concerned
about further banking legislation at
the new session of Congress, for
this is not on the Administration
agenda.