Evening star. [volume] (Washington, D.C.) 1854-1972, 1955-05-27
BY the Associated Press

A close watch on stock mar
ket speculation is urged by
a majority report on the
Senate Banking Committees re-
Gently closed investigation of a
16-month market rise. ...
The report, issued yesterday,
stated that if business, investors
and the Government use re-
straint I'VE have no fear of the
stock market upsetting the sta
bility and healthy growth of the
economy"
Close Watching
At the same time, it said:
1--WE cannot rule out the pos
sibility of the recurrence of bust
ness fluctuations despite the
progress that has been made to
cope with the problems of in
stability. Therefore. the develop
ment Of speculative trends in
the stock market bears close
watching.
1.-THE evidence supplied by the
hearings, the questionnaires and
the staff report indicates un-
mistakably that there has been
an increase in unhealthy specu-
lative developments in the stock
market since the fall of 1854"
The New York Stock Ex-
change, the American Stock Ex-
change and leading brokerage
firms declined comment on the
report.
To assist in it's inquiry the
committee, headed by Senator
Fullbright, Democrat, of Arkan-
Sas sent out questionnaires to
$500 brokers, dealers, invest
ment advisers, financial writer's,
economists and others. It got
more than 1900 of them back.
A dissenting committee report
by Senators Capehart, Republic
can. of Indiana; Bricker, Repub-
lican, of Ohio; Bennett, Repub-
lican, of Utah and Beall, Re-
publican, of Maryland COM
planned that the majority re-
port was silent on what the 1900
received missionaries revealed.
The minority report continued:
Ninety per cent of the re-
sponses attributed current took
market price levels, in one way
or another, to confidence in the
Eisenhower administration.
Political in Nature
THAT omission, coupled with
the thread running through tie
report suggesting an impending
bust indicate that the report,
as well as the investigation, is
political in nature and intended
to weaken the confidence of the
people in the administration of
President Eisenhower"
The majority report said the
symptoms of rise in speculative
activity are not nearly so APP
parent as they were in 1929
when the great crash came, "but
this is no justification for ignor-
ing their existence"
Among the majority findings:
l. The Federal Reserve Board
should have taken more vigorous
action in January of this year
to curb speculation by increasing
m arg in requirements. 1.-THE
board apparently recognized this
when it again increased margin
requirements in April"
2. The role of group invest
ments-purchase of stocks by in
surance companies, pension
funds, etc.-"is of sufficient i'm
portance to warrant a more ex-
tenSive inquiry" It said there is
evidence that these investments
reduce the available supply of
blue chip" stocks.
3. Stocks traded outside the
national securities exchanges
should, as a general thing, be
subject to the same rules and
regulations as companies whose
stocks are listed on the big |
markets.
4. Prompt and vigorous &C
ton should be taken by the Sc
curities and Exchange Commits |
sion" to curb abuses cited in the |
sale Of penny" stocks. It said |
much speculative fever was
j