Salted

Up for election last week as New York Stock Exchange governors were 27 out & out reformers, a complete change from the "Old Guard" whose long rule reached a climax two months ago in the Richard Whitney scandal. This revolution in the most capitalistic organization in the U. S. drew 924 members to the polls, a record. Since the reform slate was unopposed, those die-hards who wished to show disapproval had only one way to do so: by scratching names off the ballots. The man whose name was scratched most--163 times--was shock-haired Broker Paul Vincent Shields of Shields & Co. For this the reason was clear: Broker Shields, more than any other Wall Streeter, is responsible for the Exchange's change of front.

Born in St. Paul 48 years ago, Paul Shields grew up in Canada where his father was president of Dominion Iron & Steel Co. He graduated from Loyola, flunked out of Cornell Law, sold real estate, took a crack at investment banking and in 1923 went into the brokerage business for himself. Presently Shields & Co. was one of the largest wire houses in Wall Street with offices in 16 U. S. cities, four abroad. Paul Shields became something of a yachtsman and golfer, and his step-daughter married Gary Cooper, but reform in Wall Street remained his chief interest.

In 1935 he and two similarly minded gentlemen, Brokers Edward Allen Pierce and John Hanes, helped elect mild, supposedly liberal Charles R. Gay as Exchange president in place of Richard Whitney. But Gay presently swung to the right: when the market crashed last August he made a speech blaming it on SEC regulation. Paul Shields then took it upon himself to go see SEC Chairman William O. Douglas. Thenceforth, while Douglas attacked from Washington, Paul Shields and John Hanes worked from within. The Richard Whitney affair was the Trojan horse which delivered the Exchange into their hands. John Hanes then went blithely to Washington as a SECommissioner. Broker Shields had a finger in choosing the 27 new governors provided by the new Exchange constitution voted two months ago.

Chairmanship of this group went to 31-year-old William McChesney Martin Jr. Last week Paul Shields landed a berth as head of the important public relations committee. Next job ahead of the new management is the selection of the first paid president in the Exchange's history. Meanwhile Chairman Martin will fill the job. Last week, chaperoned by Bill Douglas, he bustled off to Washington, to get Franklin Roosevelt's benediction.

What the President said to Mr. Martin was not disclosed. In any case Wall Street and Washington were much more interested in what Franklin Roosevelt had just been saying to John Hanes. With some difficulty the President had persuaded him to resign from SEC, take a berth as Assistant Secretary of the Treasury. Overt explanation of this step was that Broker Hanes disliked SEC routine, wanted more time for his other activities. These had lately centred around being a mediary between Big Business and the New Deal. Mr. Hanes having begun his activities by persuading 16 bigwigs to send a note of cooperation to the President. And scarcely had Franklin Roosevelt gracefully accepted when one of the 16 (Banker Winthrop Aldrich) cracked out a warning to stop priming the pump. Rumor had it last week that Mr. Roosevelt was annoyed. Rumor also had it that SECommissioners Douglas and Jerome Frank had found John Hanes a trifle pushing, had arranged to get him kicked upstairs.

Before he would take his new job he was promised he could have all the scope he wanted to arrange love feasts between Business and Franklin Roosevelt. But Washington gossips last week were agreed that a New York Herald Tribune misprint struck pretty close to the truth: HANES SALTED TO GET POST AS TREASURY AID.

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