Evening star., 1936-04-07
GUFFEY DECISION
|SEXPECTED SOON
Supreme Court Abridges S.
{. c. PoWerS-Beard
Denied Review.
BY JOHN ii. CLINE.

BY JOHN III. CLINE.
An early decision on validity OF the
Guffey act, described as the little
N. r. A. of the soft coal industry,
was anticipated today following q
Supreme Court ruling yesterday
abridging the asserted powers Of the
Securities Exchange Commission.
With the truth in securities case
out of the way, observers believed the
Guffey act would be the only other
New Deal measure to receive Supreme
Court judgment this year.
In other rulings yesterday. the high
court refused to review the conviction
of Sam Beard, big shot" Washing
ton gambler, and declined to inter-
fere with lower court decision that
the congressional resolution barring
payments of obligations in gold did
not prohibit the collection OF the
equivalent value of foreign currency
if that alternative method of payment
was specified.
Constitutionality Not Touched.
In the securities case. the court, in
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could not compel j. Edward Jones,
New York broker, to testify concern
ing proposed issue of securities, but
did not pass on the conStitutionality
of the 1888 securities act itself.
Although conceding the ruling
placed difficulties" in its path, the
commission announced that, in gen.
eral, enforcement of the securities act
would remain unchanged Wall Street
opinion agreed with the commission
that the decision called for no cur
tailment in the general administration
of the act, but experts would not pre-
dict Just how specific cases would be
affected in the future.
Jones hailed the decision as a blow
to "tyrannical bureaucracy"
Desiring to sell a 100000 issue of
securities, Jones had filed a registra-
ton statement with the commission.
When the latter body questioned the
truth of some of the statements in
Jones' registration, he attempted to
withdraw it.
Court Order Obtained.
The commission obtained a court
order requiring Jones to show cause
why a stop order should not be issued
against his proposed issue Of securi-
ties, and from this lower court order
the appeal to the Supreme Court was
taken.
In holding the commission had no
authority to do this, the Supreme
Court said:
when proceedings were issued by
the commission and the registrant
was notified and called upon to show
cause why stop order should not be
issued, the practical effect was to
suspend, pending the inquiry. all ac-
ton of the registrant under his state
ment."
Under these circumstances. the court
held, since Jones could act only at
his peril, the registration statement
could in no real sense be called effec-
tive
Registration Held Nullified.
1t was contended this action nulli-
fed the registration. but even if this
were not the case, the court held the
action of the commission in refusing
to let Jones withdraw his registration
was wholly unreasonable and ar
bitrary"
Arbitrary power and the rule of
the Constitution can not both exist"
the opinion stated. They are an
tagonistic and incompatible forces,
and one or the other must of neces-
sity perish whenever they are brought
into conflict.
"The philosophy that constitutional
limitations and legal restraints upon
official action may be brushed aside
upon the plea that good, perchance,
may follow, finds no countenance in
the American system of government.
An investigation not based upon speci-
fed grounds is quite as Objectionable
as search warrant not based upon
specific statements of fact. Such an
investigation. or such a search, is un-
lawful in its inception and cannot
be made lawful by what it may bring,
or actually succeeds in bringing to
light.
IF the action here of the commits
sion be upheld, it follows that produc-
ton and inspection may be enforced
not only of books and private papers
of the guilty, but those Of the inno-
cent as well, Notwithstanding that the
proceeding for registration. so far as
the power Of the commission is con-
cerned, has been brought to an end
by the complete and legal withdrawal