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The Commission under this bill will have power to prevent an industry from listing stock on the market, in order to get the money to make an improvement, and it does seem to me that it is Government control of private capital, and I want to get your viewpoint on that.

Now, just what do you think about that? You stated a few days ago that you would touch on those questions. Mr. CORCORAN. Yes.

Mr. COOPER. Now, as I say, it is far afield from a regulation of the stock market. I am in favor of the regulation of the stock market, but I do not know how much further we are going to go, and have Government control of private business and private capital.

Mr. CORCORAN. That is the argument that Mr. Whitney made in the letter he sent out to all of the corporation executives, trying to get them to oppose this bill.

Mr. COOPER. Pardon me. I have not heard from Mr. Whitney. Mr. CORCORAN. I am not saying that you have.

Mr. COOPER. I have heard from the people that I represent, the industries, and businesses, and so forth.

Mr. CORCORAN. Yes.

Mr. COOPER. I have a right to speak for them as their representative.

Mr. CORCORAN. Yes, absolutely, and to be absolutely frank about it.

Mr. COOPER. Yes.

Mr. CORCORAN. That idea has become widely disseminated. I mean, I recognize the seriousness of it.

Mr. COOPER. Pardon me for just one further thing, that I forgot, and that is, you are requiring them to do something that they have never done before, and that is file these monthly reports, and so forth.

Mr. CORCORAN. That idea has received a very wide dissemination. Mr. Whitney has circulated letters among all of the big corporations executives telling them that is exactly what this bill does.

I think I have a circular right here (exhibiting paper). Here it is, right here.

Mr. COOPER. Will you tell the committee whether it will do that or not.

Mr. CORCORAN. Just one other point. I noticed yesterday that Mark Sullivan, writing for the New York Times, said the same thing. He said that this bill concealed "a technique of revolution." The only technique of revolution that I know of in a revolutionless country, is the sort of thing that the stock market has been doing for the last 5 or 6 years. That might bring on a revolution.

Mr. COOPER. Do you think that in regulating the stock market, we should regulate private capital of American citizens?

Mr. CORCORAN. What the section comes down to is this: These registration requirements on securities, and provisions for reports are designed to take care of the fact that the stock exchange listing requirements, by which they have attempted to give those buying into a stock some idea of what the stock is worth, have been rather hopelessly inadequate. This section is designed to give the stockholder an idea of what his company is like.

The specific language that worries your correspondent, and worries you is on page 22. Section 11 (a) forbids dealing with a security on a national securities exchange, unless that security has been listed both with the Commission and with the stock exchange, This is to make sure that enough information gets out to the public. Listing has to be made with the Commission as well as the stock exchange so that the stock-exchange rules cannot be too lax as to what the public is entitled to know

about the security. The specific language you are worried about is down here in (b). A security may be registered with a national securities exchange; it may be listed on the exchange, upon application by the issuer, by filing with such exchange and with the Commission such undertakings, information, and documents as the Commission may by its rules and regulations require in the public interest and for the protection of the investors.

Now, if you go over to page 23, the next page, there are set out specifically, or set out insofar as they can be set out at the present time, the kinds of undertakings that the Commission would require of an issuing corporation. Notice under (c) (I) the Commission shall require an undertaking by the issuer to comply with and so far as is within his power to enforce compliance by its officers, directors, and stockholders with the provisios of this act and any amendments thereto and with the rules and regulations made or to be made by the Commissioner thereunder and, unless the issuer is a member bank of the Federal Reserve System, not to lend any funds in the money market of any exchange or to any member thereof or to any person who transacts a business in securities through the medium of any such member except in accordance with such rules and regulations as the Commission may prescribe.

The objection has been made that under the broad language, “such undertakings as the Commission may, by its rules and regulations require, in the public interest and in the protection of investors," there is concealed a purpose to have the Federal Trade Commission act as a capital-issues committee for the whole country.

Mr. COOPER. They could do it under this act.
Mr. CORCORAN. No, I do not think so.
Mr. COOPER. They could set up their own rules and regulations.

Mr. CORCORAN. I know; but there is a very clear provision as to the kind of regulations which may be required for securities in here; the requirements ali relate to giving publicity about the position of the company. I mean, you must read this necessarily broad language, which has to be broad to give the Commission power to adjust itself to individual cases, in the light of the purpose of the whole section, which is to protect investors against nondisclosure of the condition of their company,

You must read that broad language in relation to the purposes of the bill. There is no purpose such as you suggest that an act designed to protect the stockholders against not knowing what is going on in a corporation is to be stretched to permit the Federal Trade Commission to run all of the industries of the United States, to decide how much of the capital savings of the country may go into the steel business, how much into the coal business, now, and next year, and the year after.

Mr. COOPER. But, the Commission could prevent the issuance of that stock, could it not?

Mr. CORCORAN. You mean under that language?
Mr. COOPER. Yes.

Mr. CORCORAN. It could not, arbitrarily, because that would not be in the public interest.

Mr. Cooper. They can prohibit that stock from being put on the market?

Mr. CORCORAN. They cannot prohibit it from being put on the market; no.

Mr. COOPER. From being put on the exchanges?

Mr. CORCORAN. They can prevent it being listed on the exchanges. So far as any new investment, or new issues being listed on the exchange, is concerned they are not listed any way. The exchanges do not list securities until they have been seasoned. The Commission would not be in any position to prevent anybody who wanted to make an investment in a new company, because no exchange will list securities until they have been seasoned. When I say stock exchange, I am thinking in terms of the New York Exchange. I think that the seasoning term in that exchange is about 3 years. Since the exchanges want to wait a certain very definite length of time before a new issue will be admitted to listing anybody who wanted to evade any alleged power of the Commission could simply incorporate a new company. That certainly shows there is no intent in here to steal a jurisdiction over the disposition of the capital of the country.

Mr. CORCORAN. There was a great deal of talk, you remember, at the time of the consideration of the Securities Act last year to the effect that it was not stringent enough. There was a very distinct school of thought that the Securities Act should have gone as far as setting up just exactly the kind of a body what you are worried about here, 5 or 6 men who would be empowered to say that certain industries were overcapitalized and that no more money could be advanced in those industries for 4 or 5 years every one who wanted to issue any stock would have to get a permit from this Commission, and have it pass upon the economic necessity of the issuance of the security. But the act very carefully disclaimed any such intention.

Mr. COOPER. Well, as I said å moment ago, the President has already endeavored to have Congress establish a policy of that kind, where the Federal Government can stop production.

The CHAIRMAN. How?
Mr. COOPER. In the sugar industry.

The CHAIRMAN. You mentioned cotton a while ago. How about cotton?

Mr. COOPER. Mr. Chairman, I am not familiar with cotton. I read his message with regard to the sugar industry.

The CHAIRMAN. I know that he is not doing anything, or trying to do anything about cotton. I do not know anything about sugar.

Mr. CORCORAN. Now really that worry is a red herring drawn across the trail by the Stock Exchange.

Mr. COOPER. That is your statement?

Mr. CORCORAN. I mean, that if you are afraid that the language in section (c) goes beyond what might decently be necessary for the protection of investors, I do not think that anybody interested in this bill will object to the changing of the language to make sure that you are not going to have the commission passing as an economic matter, upon the designation of the amount of capital that may go into particular industries.

Mr. WOLVERTON. In other words, your thought is that this section is no broader in its effect than was the provisions in the securities act which merely require the giving of information to the Tariff Commission to enable individuals to determine whether they wish to make the investment.

Mr. CORCORAN. The whole purpose of the section is to give the stockholder a chance to know what is going on in his corporation.

Mr. WOLVERTON. And, you do not consider that there is any more discretion lodged in the Federal Trade Commission under the terms of this bill than was lodged in the Trade Commission under the terms of the securities bill?

Mr. CORCORAN. Well, I cannot remember verbatim the terms of the securities act here and now. I know certainly it never was intended that there would be any control of industry under this bill such as Mr. Cooper and the stock exchange are talking about. I know that that was not intended.

Mr. WOLVERTON. As I understood it, the thought underlying the securities bill when it was finally adopted, was to provide information to a prospective buyer and not to pass upon whether or not the security was good or bad.

Mr. CORCORAN. Exactly; yes.

Mr. WOLVERTON. And in this particular instance it is the purpose to get the information, but not with the idea of passing upon whether or not it is a good stock.

Mr. CORCORAN. To get the information and require compliance with the act generally, but not in any sense to control the flow of capital.

Mr. COOPER. That is your viewpoint.
Mr. CORCORAN. Yes.

Mr. COOPER. Of course, business and industry in the country have their good lawyers, and they examine these bills and they say that it will control private capital.

Mr. CORCORAN. Well, sir, what they are doing is looking only at the particular language of a particular section. We have had that trick before, in connection with the securities bill.

Mr. COOPER. What do you mean by “trick”?

Mr. Corcoran. I mean, it is a lawyer's device, instead of looking at the document as a whole, to just look at two or three words, and then conceive all of the possible extreme interpretations of those words. Here you have a bill that is for the regulation of stock exchanges, and securities listed on the stock exchanges in the interest of the investing public. The whole bill, and all of the illustrative purposes included in section 11 (a), (b), and (c), clearly show what the section is aiming at. The language is broad, because you cannot specifically cover every possible contingency. Therefore, the language reads that the Commission can prescribe by rules and regulations what the listing application shall contain.

Now, what information shall be given and what undertakings, to carry out the purpose of the act, shall be entered into by the issuer? You must read this so-called "broad language" in (b), in connection with the specific provisions in the rest of the section.

Mr. COOPER. Now, may I say this: We have thousands of fine people in our country that are interested in industry and in business.

Mr. CORCORAN. Yes.

Mr. COOPER. And, they have suffered tremendous losses during this depression.

Mr. CORCORAN. Yes.
Mr. COOPER. Especially, I have reference to the steel industry.
Mr. CORCORAN. Yes.
Mr. COOPER. They are very much concerned about this measure.
Mr. CORCORAN. Yes.

Mr. COOPER. They seem to think it is going to work a hardship on them, make it harder for them in the future to come. They have a perfect right to analyze this bill.

Mr. COOPER. And express their viewpoint on it.

Mr. CORCORAN. That is true. But I say that they are raising very strong objections on what are unreasonable interpretations, in the light of the rest of the bill, which does not justify anywhere the extreme positions they are taking. And I am saying to you that nobody interested in this bill objects to rephrasing particular language so long as you leave the Commission latitude to make such rules and regulations to see that the act is carried out and in relation to such undertakings, as will insure publicity such as you have under (c). That nobody objects to.

Mr. COOPER. In otherwords, we have thousands of industrial and business institutions that have no idea of trying to beat the public.

Mr. CORCORAN. Yes.
Mr. COOPER. By selling stock.
Mr. CORCORAN. That is absolutely true.
Mr. COOPER. Thousands of them.

Mr. CORCORAN. And, I do not think that anybody wants to have the Government pass on the desirability of capital issues. I should not say there is nobody; there are some people that think that it ought to be done.

Mr. COOPER. And, the

The CHAIRMAN. The answer is, Mr. Corcoran, that this committee is not going to do that.

Mr. CORCORAN. I am certain that it is not.

The CHAIRMAN. I think I have a right to say that this committee is not going to do that.

Mr. CORCORAN. And, after all, the Federal Trade Commission is, supposing it is to be the body that administers this act, under the control of Congress and if any trade commission strained the language of this statute to overstep its bounds and do what you are afraid of, you as a Congressman would change the act in 5 minutes.

Mr. COOPER. I do not know about that.

Mr. WADSWORTH. That is easier said than done. It might take years to change it.

Mr. CORCORAN. Another thing, Mr. Cooper. I do not know of any commission between here and the end of Christendom that could administer any such power as you are afraid that the Commission might undertake.

Mr. COOPER. Just on that point: We have had some experience in trying to change bills in this session of Congress. The very first bill that came before the House. They absolutely prohibited the membership of the House from expressing themselves and advocating certain changes in that legislation. You say that it is easy to do that. It is not.

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