Evening star., 1938-11-13
New Deal Is Seen
Resisting Politics in
SEC. Report
Timing Termed Accident,
With Douglas Opposed
To Vote Angling


To Vote Angling
BY JOSEPH ALsOP and
ROBERT KINTNER.
The shamelessly political conduct
OF several Federal agencies would
make q long footnote to the history
Of the 1888 campaign. The 70-odd
P. w. A. projects announced in
doubtful Minnesota on the eve of
the voting; the fragrant doings Of
the w. p. A. in States like Penn
sylvanta; some Of the deceptively
optimistic flapdoodle about the ma
tional defense program-the list Of
topics worth investigating might be
prolonged indefinitely.
But political shenanigans are an
accepted habit of the agencies of
the New Deal, as they have been
OF most Federal agencies since the
time Of Andrew Jackson. It is far
more Illuminating to examine an
incident which wore the appearance
OF evil, yet was actually a proof
that the Governments executive
branch can resist political pressures
and temptations If it tries. That
incident was the S. E. C.s recent
report Of the Richard Whitney case.
Morgan Firm Criticized.
AS will be recalled, Part II of the
report. issued on November 2, was
strongly critical of J. P. Morgan e.
Co.'S relations with Richard Whit
ney and the New York Stock Ex-
change. Rumors were abroad at
the time that the President would
seize the report as a stick with
which to beat Thomas E. Dewey,
who failed to tackle Morgan's in
his presentation of the Whitney case.
This was not contemplated. But
it is true that men around the Pres
ident strongly urged Gov. Herbert
H. Lehman and Charles Poletti, the
Democratic candidate for Lieuten-
ant Governor, to charge the YOUTH
full gangbuster with favoring big
business on the ground of the S.
E. c. report. Both Lehman and
Poletti refused. annoying their
would-be advisers into whispers
about their Wall Street connections.
On the face Of it, therefore, the
timing Of the report does seem po-
litical in intention. Nevertheless,
the reports story will demonstrate
not only that the timing was acci-
dental, but also that Chairman Will
liam o. Douglas of the S. e. G.
actually resisted considerable pres
sure to give the report political
twist.
The fact is that it was Douglas
original plan to publish the entire
report on August IS, before he left
Washington for his summer vaca-
ton. Part I, including a factual
survey Of the Whitney case: Part
II, the S. e. C.'s recommendation
for curative action by the stock ex.
change, and Part III, which con-
tanned the criticism Of Morgan's,
were all in virtually final form in
the first weeks of August. Part III
had been finished by the end Of
July. and then approved by the
commission, although, for the sake
Of peace. 1t was kept secret from
the friends of business In the New
Deal.
Report Waited on Exchange.
On August !. Douglas called a
conference to discuss the S. E. C..
recommendations for new exchange
rules. Those present were Douglas,
Stock Exchange President william
McC. Martin, jr.: Undersecretary of
the Treasury John w. Hanes, and
several other representatives Of the
exchange and the commission.
Douglas announced that he was
ready to publish the Whitney re-
port on the 18th, but suggested that
before publication, he would like
the exchange officials to make
commitment accepting the s. E. G.
recommendations. Young Exchange
President Martin replied that he was
not authorized to make an immedi-
ate commitment. but promised to
have the recommendations studied
by his experts. Douglas, therefore,
decided to defer publication Of the
report until the exchange had made
up its mind.
On Douglas return from his va.
cation, late in September, confer
ences were renewed, but the ex-
change commitment was not ready
until some time in October. Mar
tin agreed to present the commits
sion recommendations to the entire
Governing Board of the exchange
at its meeting on October l6. In
order to avoid leak, it was neces-
sary for Douglas to publish the
report Immediately thereafter. AS
the report was In three parts, and
Issued serially, that caused Part III,
including the criticism Of Morgan's,
to appear on November 2.
Throughout the whole negotia-
tions. the part of the report attack
ing Morgan's was never altered,
and appeared finally as it had been
written in July. Several excessively
Jealous New Dealers demanded that
Douglas append a severely annotated
copy of Dewey's report on the Whit
ney case, which omitted criticism of
Morgan's. This Douglas fatty re-
fused to do, on the grounds that
it would seem political. For the
same reasons, Douglas refused to
subpoena Thomas w. Lamont after
Morgan's had answered the S. E. G.
criticism. In fact, the S. E. G. pre-
sented an example of non-pontical
conduct which deserves, but will
not receive, the compliment of wide
imitation.
copyright. 1888, by the North America,
Newspaper Alliance. Inc.)