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Now, we have had experience in the past where the Commission has refused to give information of that character, which is in its confidential files.

Mr. COOPER. What information would you make available to the public?

Mr. HEALY. I would make no information available except that having a legitimate bearing on whether these particular securities should be dealt in or sold.

Mr. COOPER. Have you any information as to how many employees would be required or what would be the increase in the personnel of the Federal Trade Commission to take care of this?

Mr. HEALY. No, sir.
Mr. COOPER. You cannot make a guess on that?
Mr. HEALY. No, sir.
Mr. COOPER. It is a tremendous job, is it not?

Mr. HEALY. It is a difficult job. I do not know how tremendous it may be.

Mr. COOPER. That is all, Mr. Chairman.
Mr. WOLVERTON. Mr. Chairman
The CHAIRMAN. Mr. Wolverton.

Mr. WOLVERTON. Judge, I have incessantly sought to ascertain the attitude of the different departments of our Government with respect to this bill.

Under the terms of this bill the powers of the Federal Trade Commission will be greatly enlarged. A very great responsibility will be placed upon the Commission in the administration of this act. This has been recognized by the fact that the bill provides that additional members shall be appointed to the Federal Trade Commission. In other words, the Federal Trade Commission will be the administrative body of this important act, that affects for good or for ill the entire country. We are seeking to pass a bill that will be helpful from the standpoint of the public.

Has any study been made by the Federal Trade Commission of either the original bill introduced or this present bill, and as a result of such study is the Commission, or anyone speaking for it, prepared to give its approval or indicate its disapproval of this bill as a whole, rather than with respect to a particular section, such as you have indicated today?

Mr. HEALY. I believe that there is such a person; yes, sir.
Mr. WOLVERTON. May I ask who?
Mr. HEALY. I think Dr. Landis.
Mr. WOLVERTON. Whom did you say?

Mr. HEALY. Dr. Landis, one of the Commissioners, who helped to draw the original bill.

Mr. WOLVERTON. Dr. Landis appeared before us when this committee had under consideration the original bill. I assume, taking his statement as a whole, that he said that he approved of the original bill.

Mr. Dickinson, chairman of the Roper Committee appeared before this committee and he objected to the provisions of the original bill and indicated that in his opinion they were too drastic. As a result of that the bill was redrawn. After much study we had presented to us this new bill H.R. 8720.

This bill changes very materially the provisions of the previous bill that Mr. Landis had approved. Do you know whether Mr. Landis approves of this bill as he did of the former bill, notwithstanding the fact that it is not as drastic in its terms?

Mr. HEALY. I think that is a question Dr. Landis should answer himself. I am not authorized to reply for him.

Mr. WOLVERTON. I would like to have the opinion of Dr. Landis expressed as frankly on this bill as he did on the previous bill.

Mr. Healy. I have only discussed this with Dr. Landis once, and that was yesterday afternoon, and he expressed an opinion that was favorable to the bill. He did not undertake to discuss any comparisons between this bill or the old one, nor did I ask for any authority to speak for him here. I had no band in the writing of either of these bills. I was asked to do a specific thing that fell within the particular peculiar knowledge that some thought I had gained from our utilities investigation, and that was to talk about section 12 (b) of the act.

I am informed that Dr. Landis had more to do with this draft of the bill than the first; but I do not think it appropriate at all that I should try to express the opinion of another man.

Mr. WOLVERTON. Of course, you understand I am not endeavoring to put you in that position. I have merely made an inquiry as to whether there was anyone on behalf of the Federal Trade Commission, who would be prepared to come before this committee and indicate the approval or disapproval of the Commission.

Mr. HEALY. I believe that there is such a person in the Commission, and if the committee desires it, he will appear.

Mr. WOLVERTON. Well, it has seemed to me that this bill, affecting as it does, so vitally, the business interests of our Nation in so many and various ways, that the committee because of such, is entitled to have, first, the opinion of the Secretary of the Treasury. We were disappointed in that respect, or I was, at least, in that he did not unqualifiedly give his approval to the bill, but limited his approval to particular sections to which his attention had been directed.

I think it is equally important that we should have the opinion of the Comptroller of the Currency, because of his supervision of the national banks of the country. He should be prepared to state the effect of the bill on our banking institutions. I think the same is true of the Department of Commerce. The Secretary of Commerce should give to this committee his opinion of the effect on the business of the country, particularly because the President delegated to that Department the preparation of the Securities Act as well as the duty to make a study of stock exchange regulations proposed by this present act. The same also applies to the Reconstruction Finance Corporation. We should have an opinion from such because of its large holdings of bank stock and railroad and insurance stocks which has been stated would be effected by this act.

Up to the present time, the only unqualified opinion we have had from any department, was the opinion expressing approval given to us yesterday by Governor Black of the Federal Reserve Board. It was very reassuring in its character.

I had hoped that the Federal Trade Commission, as the administrative body, would be in a position to express its approval or disapproval, after making a thorough study of the bill in connection with representatives of all these other departments of the Government.

Mr. HEALY. Mr. Wolverton, I think that you are entirely right, and I think that some one acting for the Commission should speak before this committee on the bill as a whole and express either approval or disapproval. I have not attended any of the hearings and do not know these things about it that you know, but I think that Dr. Landis will be glad to appear before the committee and tell you frankly, without qualification,

exactly what he thinks of the bill. Mr. WOLVERTON. Of course, you understand I am expressing only my own opinion. I do not know what action the committee may take. It may be that the committee will decide whom they would like to hear. I have in mind that this bill, which originated at the suggestion of the President, and is expected to serve a worth-while purpose of great value to our people, has been, represented to the country as being disastrous in its effect. I do not believe that the administration would present or be interested in a bill that would have the disastrous effect that has been represented to the country that this bill might have; but I think it is very unfortunate that if it does not have that effect, that those who hold responsible positions in the Government, do not come here and state, out of the abundance of their experience, that such is not the case, and permit the country thereby to be reassured as to the effect of this bill, and thereby enable this committee to present it more intelligently and more effectively upon the floor of the House.

Mr. HEALY. The labors of the Commission have been rather onerous recently. My department has been pretty well snowed under with the steel report and the utilities investigation, and I have not had close contact with the administration, and I have not had close contact with the administration of the securities act or with the drafting of this bill. I have had this experience with corporation balance sheets and income statements.

Now, I agree with you, if it has not been done, that it would be very appropriate for Dr. Landis, as one of the authors of the bill, one of the members of the Federal Trade Commission, and the man on the Commission who probably knows more about securities than anybody else down there, to come here and make just such a statement as you suggested, and reply to such inquiries as the committee sees fit to make.

Mr. WOLVERTON. I have expressed only my individual thought. It may be that the committee does not feel that they need that assurance from the several departments of our Government, which I have indicated.

Now, may I just ask a question or two with regard to the matters you have made a study of, section 12(b)?

You have recited very forcefully and impressively your opinion with respect to the Cities Service Corporation, and a few other corporations, the purpose of which was to indicate to us the importance of dealing with these matters in an effectual way.

Now, I would like to ask whether this bill will correct the conditions which you have related and which we all agree should, by some means or other, be prevented in the future? If so, how, in your opinion, does it prevent those conditions arising again in the future?

Mr. HEALY. My belief about it, not having made a careful study of the bill, or as I stated at the opening, is that through the regulation of the exchanges and various provisions of the bill, the making of

prices by dealings on the exchange during a period when the stock is being peddled throughout the country by individual salesmen, would be prevented. I cannot be more specific than that.

Mr. WOLVERTON. Will the margin requirements in this bill have any effect on situations such as you have revealed to us as existed in the Cities Service?

Mr. HEALY. I should doubt it.

Mr. WOLVERTON. You have indicated the importance and the value of having corporation reports as provided for in this bill. After the Commission has received the reports, in what manner will such information be utilized under the provisions of this bill to protect the investing public?

Mr. HEALY. That would be made possible, as I see it, through the disclosure of the pertinent sections in which, in the judgment of the Commission, where necessary, for the protection of the investor.

Mr. WOLVERTON. Is there any power lodged in the Federal Trade Commission, by this bill, to deal with a situation such as you have referred to as having existed in the Cities Service?

Mr. HEALY. The most that I can say is that I have been informed by those most familiar with the bill that there is such a provision.

Mr. WOLVERTON. In other words, the reports required by this bill to be filed with the Federal Trade Commission should reveal the practices utilized in setting up of surpluses?

Mr. HEALY. Yes, sir.

Mr. WOLVERTON. What steps could be taken or would be taken by the Federal Trade Commission, or what would you advise might be taken, under the provisions of this bill, to correct that situation?

Mr. HEALY. Well, in the first place, the facts could be made public and in the second place I believe the Commission, under the provisions of this bill, could go into action under subsection 8 of section 8 of the bill which is in the printed bill at page 23, by which it is made unlawful for persons, through the use of the mail or any instrumentality of interstate commerce to engage in the practices of the character that I tried to describe.

Mr. WOLVERTON. Well then, the exercise of that power would practically or indirectly result in the Federal Trade Commission assuming responsibility as to the value of stocks, would it not?

Mr. HEALY. I do not think so.
Mr. PETTENGILL. What was that answer?
Mr: HEALY. I said I did not think so.

Mr. WOLVERTON. If I remember correctly, the securities act of a year ago was drawn upon the theory that there should be no assumption upon the part of the Federal Trade Commission that the particular security was a good security, but, should merely provide information by which the public could judge for itself as to whether the security was good or bad.

Mr. HEALY. That is true.

Mr. WOLVERTON. Now, do I understand that it is your opinion that this bill carries out that theory, or, does it place in the Federal Trade Commission the power to deal in an initiative and direct sort of a way with a situation such as you have related?

Mr. HEALY. I think the bill goes as far as that. That is, I think it has the publicity feature and then I think it goes further by under

taking to stop these manipulations of securities on stock exchanges. As I have gathered from a rather hasty study of the bill, the purpose of it all is to allow free play to supply and demand in dealing in securities so that the price shall not be artificially made by wash sales and by various other devices that have been used in the past to run up the price, particularly during a period when shares are being sold throughout the country.

Mr. WOLVERTON. It would seem to me, if you are not careful, or if the duty to protect is carried to its logical conclusion, it will result in the Federal Trade Commission listing stocks from the standpoint of desirability and might go so far as to fix the margin value of stocks. Would that be true?

Mr. HEALY. I do not know. The thing that I was talking of, particularly in response to earlier questions, was that if the Commission had reason to believe that prices were being made by manipulation or artificial means, it would be in a position to do something effective about it under the provisions of this act.

Now, if you want to go into the subject of marginal requirements, as I recall part of the responsibility for that rests elsewhere than on the Commission

Mr. WOLVERTON. That may be true, but I would like to know if, as a part of its duties, the Commission ascertains that unfair practices have been engaged in and the true condition of the corporation does not appear in statements submitted, whether that would lead the Commission to publish information for the use of the public, as assistance to them in determining whether it is a good stock or a bad stock, and whether the Commission would publish a list of stock values as a basis for margin requirements.

Mr. HEALY. I am not prepared to answer that question.
Mr. WOLVERTON. That is all.
The CHAIRMAN. Are there any further questions?
Mr. PETTENGILL. Yes, sir; Mr. Chairman.
The CHAIRMAN. Mr. Pettengill.

Mr. PETTENGILL. I would like to ask about this. There is one phrase running through this bill which, personally, I object to, and that is the phrase "protection to the investor." I think that word "protection” should be changed to “information” for investors.

I very much doubt the advisability of the National Government underwriting the honesty of every corporation executive in the Nation or assuming a moral responsibility to the holders of $100,000,000,000 worth of securities.

Now, I say that because there is an evident atmosphere in this country that the National Government has to underwrite everything that is being done in the Nation, good or bad, and I think we are going to break down the Government if we continue to do that. You know the attitude, it is shown with reference to the joint-stock land bank bonds, that the United States Government, although it did not guarantee them, should guarantee them. The principal of the home owner's loan bonds are to be guaranteed under the theory of a moral obligation on the part of the United States Government, and a former Attorney General of the United States argued before a committee of Congress only the other day that because national-bank examiners permitted banks to remain open when they should have been closed that the

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