Law at Last

It took the House 20 minutes to pass the conference report on the Securities Exchange Bill of 1934 last week. The Senate followed suit almost as quickly. When President Roosevelt returned from his New York weekend, the product of a quarter century of liberal agitation and four months of bitter legislative wrangling lay on his desk for signature.

Wall Street scarcely noted the bill's passage. On the New York Stock Exchange stocks were slipping to new lows for the year. Trading volume dwindled to the slowest pace in eleven years. With regulation a fact, weary brokers frankly admitted that in their fight against a Federal strait-jacket they had painted the future somewhat blacker than it was likely to be. Their business would be different under Federal rule but by no means extinct.

Fresh from the hands of Ferdinand Pecora and his young legalites, the original bill was a dogmatic double decalog for brokers, bankers and businessmen. The bill finally enacted still bristled with penalties, liabilities and thou-shalt-nots, but many of its cutting edges had been removed. No longer is a banker both a broker and dealer by definition. No longer is a bank forbidden to loan on sound but unlisted local securities. The odd-lot business and arbitrage are not annihilated by loose language. Even the much disputed margin requirements (45% for a starter) may be altered by the Federal Reserve Board. Most important of all the new Federal Securities & Exchange Commission, established to administer both the Exchange Act and the Securities Act, is given broad discretionary powers to modify and exempt.

Instead of a welter of specific prohibitions, control becomes largely a matter of "such rules and regulations as the Commission may prescribe." The Federal Reserve Board, which has complete control over all stockmarket credit, is likewise permitted to use its judgment. Almost the only sections which still stand practically unchanged are those dealing with information required from listed corporations, their officers, directors and big stockholders.

Thus administration of the new law and the five men President Roosevelt will appoint to the Commission became of prime importance to most businesses. Under the power granted it by Congress the Commission could, if it chose, alter the entire face of U. S. business.

First choice for Commission chairman is James McCauley Landis, 34, Federal Trade Commissioner whom President Roosevelt appointed last autumn. Commissioner Landis is a frequent and welcome caller at the White House because he sees eye to eye with the President on rigid control of the entire securities business. He never let the Exchange Bill out of his sight from the time it was being drafted until it was safely past the conference committee. Lean, serious, energetic and extremely able, he was a full professor at the Harvard Law School at 29. A shining disciple of Justice Brandeis, he is regarded in Washington as the brilliant leader of the small minority of New Dealers who are true economic radicals. As chairman of the new Commission he would dominate its proceedings and make its administration a strict and stern affair for the stock trade.

This file is automatically generated by a robot program, so reader's discretion is required.