The Washington times., 1937-10-19
Curb Speculation

change Commission.
Born out of the heartaches of the last depression,
that institution charged with carrying out Franklin
D. Roosevelts first pledge to the American people, To
drive the money changers out of the temple.
On the whole, the SEC has done good job 1t has
forced ssuers of securities to tell the investing public
the truth about their stocks-though sometimes the
truth is buried in of technicaities as to be
absolutely valueless. 1t has forced the disclosure of
high salaries it has brought soporders and criminal
action against dishonest issues; and it has checked
though not entirely prevented, pool operations.
However, it has done almost nothing within its
own limited power to curail professional hangers-on
along Wall Street, who are the first to market
x, to unhealthy heights and first to get out
from under when their artificial edifice
HO'''''0 begins to teeer.
Not only has the SEC left unscathed this group of
moneychangers, but because of petty internal politics,
1t discharged the only two men, Kemper Simpson and
Willis ]. Ballinger who attempted to apply the curb.
These two SEC economists dared attack the three
great ether machines of the market skilled in pumping
air into stocks-the floor traders, the specialists and
the brokerage houses
The floor trader is an especially favored specu1ator
In that he is the inside what is happening
to stock five to ten minutes before the investing
public outside. He supplies the lit to every rising
market, and the dirge to every crash.
Simpson and Ballnger recommended that floor
traders be abolished be driven off the floor to the side
lines along with the investing public. They also recon-
D.ofooo;o,u1 mended that specialists (those who
c10 trade in special stocks) be confined
0P''"'"''" to operations only for their customers
be restrained from punkng their orders in the
trail Of those for whom they buy and sell.
Finally the economists recommended that brokerage
houses also be prohibited from accepting orders from
their customers, then buying and selling for them
selves; in other Words acting broker for the
toner and then playing against him.
Behind these recommendations is the fact that the
majority of operations on the New York Stock Ex-
change by professional spectators. The latter's
only interest is to drive prices up quickly possible.
They not interested in slow, gradual rises. They
make money both on the way up and the way down.
Activity is their meat The active the market,
the quicker they dodge in out The public is left
behind, holding handfuls of margincals and wonder
ing what it is all about. Therefore, the the SEC
impedes the activity of the market makes it harder to
sell quickly and buy quickly, the difficult the
path Of the speculator, the more inducemen to the
bona fide investor.
Because of internal politics, and because they feared
to put the brakes the then Roosevelt stock markets.
the SEC turned down the Simpson Balinger recon-
p,,hEo Toft mendations. It did nothing. Mean
u,,. while market values continued to
S D"9 soar. They scared to heights diff
fcut of attainment without the artificial stimulus of
observation-disclosures from which recession was in
evitabe.
When that recession came the big specialists and
floor traders were first to get out from under.
The theory always advanced in their defense has been
that they cushioned the slump. Actually they did the
opposite With the first simmer of uncertainty they
scrammed for the ifeboas dumping stocks as they ran
They had exaggerated the future and when the public
began to believe that exaggeraton the specialist and
hoortrader sold Short leaving the public with the bag
There several behind the present stock
market recession For thing, the business rise has