Evening star., 1938-03-14
SPURS
EXCHANGE REFORM
Whitney Collapse Speeds
Efforts to Bolster Weak =
Spots.
Nv the Associated Press,

BY the Associated fTeSS.
NEW YORK, March l4.-Self-re-
form by the New York Stock Exchange
appears to have been accelerated
under the jolt of the failure of Rich
ard Whitney g. Co. and acknowledge
ment of wrongdoing by the firms
namesake and senior partner.
y Five times Whitney was president
of the exchange while it was going
through the fires of depression and
the pioneering stages of. Federal reg
ulation.
After the first shock of the Whitney
sensation subsidized in Wall Street last
week, signs multiplied it would have
significant consequences in further1ng
efforts to bolster weak spots in the
financial armor and to WOO public
good will.
Others Reprimanded.
$50 In double-quick time the exchange
reprimanded partners in two broker
age houses for permitting the late
Harold Russell Ryder-conVicted Of
fraud in Wall Street dealings-to re-
sumo trading after he had been
paroled from prison: ordered brokers
to furnish customers with statements
of their financial condition on request
and prodded the balloting Of members
on constitutional changes to pave the
way for an administrative shake-up.
Some observers believe the Whitney
jolt has been a hard blow to the So
called old guard and help to the
liberal wing in seeking changes in ad-
ministration and closer cooperation
with the Securities and Exchange
Commission.
have been campaigning for early ap-
proval of the program. Selection of
new Board of Governors and OF a
quasi dictator. on paid basis, to
handle its affairs.
Carried through, this. in turn, may
lead to many more changes.
A special committee, in recommend
ing overhauling the administration,
left suggestions for study and action
to adapt the exchange to changing
times. They amount to recognition Of
its increasing importance as primary
securities market, its semi-public
character and necessity of co-opera-
ton with Washington.
What, if any. effect the Whitney
disclosures would have upon execution
of uncompleted S. E. c. plans for re-
ordering the speculative machinery re-
mains to be seen. The commission has
threatened to intervene unless the ex-
change acted on its own to clean
house and lessen influence of the
."casino element
Brokers have been fighting to pre-
vent self-discipline. The S. E. c., in
using persuasion rather than out
right orders, appears to have worked
on the theory they should be given
opportunity to demonstrate capacity
for self-rule.
The immediate action of the gov
ernors in suspending Whitney, long
one of them. is cited in Wall Street
as an example of ability to strike
quickly and effectively for disciplinary
purposes.
Proposals Listed.
Among proposals simmering in dis
cussion in Washington and Wall
Street are:
A system of associate memberships
to permit exchange firms to split
brokerage fees with banks and dealers,
to divert trading toward organized
exchanges.
Reform of floor trading. including
segregation of brokers and dealers to
prohibit brokers executing orders for
others, from trading on their own
accounts
Alteration in nominations of elec-
tive officers to avoid self-perpetuat-
ing control.
Admission of more stocks. especially
of smaller companies, to listing.
Upbuilding of the smaller, interior
exchanges to encourage regional
financing of industrial development.
Cooperation with Washington in
regulation of the over-the-counter
market.
Close vigilance to guard against
manipulation of issues with small
amounts of stock outstanding and such
near-corners as Whitney had in Dis
titled Liquors on the curb.