I am appearing before you as chairman of the Committee for the Nation. This is a volunteer organization of some 1,500 business men and industrial leaders with membership in every State. In our directing committee is a representative and spokesman for five of the major farm organizations.

Following months of previous investigation by individuals in an endeavor to chart a way out of the depression, our committee was formed in December 1932. Its research disclosed the impending bank collapse and traced the cause of deflation and collapse of property and commodity values to a change in the purchasing power of the gold dollar. This committee recommended going off gold and vigorously supported the President's monetary policies in opposition to the deflationary banking viewpoint.

Our interest in the National Securities Exchange Act arises from the fact that this bill vitally affects the business and credit structure of the country. This fact became evident to business men as soon as the first draft was published. Our committee was asked for its opinion.

As has been our practice, we withheld judgment pending a thorough, unprejudiced investigation. This we employed the National Industrial Conference Board to make for us.

The conference board went to work under the guidance of its chief economist, Dr. F. Spencer Baldwin, in a most intensive effort to study the bill. Last Saturday, under the strain of this work, Dr. Baldwin collapsed, was taken to a hospital, and his obituary notice appeared in yesterday's papers.

I cite that to show you the pressure and strain under which the members of the conference board staff have been working to try to prepare a report and an analysis of this bill before the bill had been rushed through.

The CHAIRMAN. You say that was last Saturday?
Mr. RAND. That was last Saturday.

The CHAIRMAN. Well, this bill was not introduced until Monday. Mr. RAND. The new bill. This was working on the other bill, and immediately the new bill was introduced, the conference board started study of the revised bill.

The conference board, working with its regular staff and specialists called in to cooperate, has given us four extensive preliminary reports, each showing different and far-reaching ways in which this bill would affect our economic and political life.

Despite utmost efforts, the conference board has not had time to entirely complete its summary and conclusions.

It should be remembered that the complexities of this problem are so great that the Government's committee formed by Secretary of Commerce Roper at the request of President Roosevelt, early last spring, was unable to complete and make public the results of its studies until January 23 of this year, in the so-called "Dickinson report."

Now, after 10 days of careful analysis, a committee of business men that have studied this bill have found that the bill before you is almost totally at variance with the recommendations of the so-called "Dickinson report."

In one of these sessions with business men studying this bill, I saw a cable from London, England, urging support for this bill as it

was originally placed before your committee and introduced into Congress. This opened my eyes and the eyes of other business men to the mysterious back-stage influence at work.

The CHAIRMAN. From whom was that cablegram?

Mr. RAND. That cablegram was from Dr. Felix Frankfurter.
The CHAIRMAN. He is an American citizen, is he not?

Mr. RAND. Yes.

The CHAIRMAN. He is at Oxford.

Mr. RAND. He is in London at the present time.

The CHAIRMAN. He has been loaned to Oxford for a few months, I understand.

How does that make it appear that there are mysterious influences behind this bill?

Mr. RAND. Well, the atmosphere seems to be one in which influences from all over England, as far away as Great Britain-

The CHAIRMAN. You do not intend to try to say because Felix Frankfurter sent a cablegram over here, a man who is an America. citizen sojourning in England, to make a few lectures, that the English people are interested in this bill?

Mr. RAND. Personally, I believe that the debtor countries in Europe would prefer to have the recovery program in this country delayed and retarded.

The CHAIRMAN. What connection do you make with that and Mr. Felix Frankfurter sending a cablegram? What difference does it make whether it was sent from London or from Boston?

Mr. RAND. No particular difference.

The CHAIRMAN. Well, then, let us not leave the impression that there is some mysterious influence behind this bill, just because an American citizen is for it or for legislation along this line.

Mr. RAND. I have heard other persons, from the other side, in this country, also express the view.

The CHAIRMAN. Who are they?

Mr. RAND (continuing). That they hoped this bill would pass as it was. I have heard no comments since the bill was revised. Mr. MILLIGAN. I wish you would state the names of these gentlemen from abroad who made those statements.

There has been a lot of insinuation at these hearings, and I would like to have the names of these people to go in the record.

Mr. RAND. I do not recall the names at the present time. I have had conversations at various times since the bill was introduced in company of men from foreign countries, and have heard comments passed that they thought the bill would be more or less of a calamity to this country, and would give free, open season to some interests in foreign countries.

Mr. MILLIGAN. You cannot give the names for the record, then? Mr. RAND. Not offhand.

Mr. MILLIGAN. Well, then, do you think that you could think it over and remember later and present the names for the record? Mr. RAND. I will be glad to.

Mr. LEA. Let us see what they said. You say that they want this bill passed, and they thought it would be a calamity to this country. Did they make that statement?

Mr. RAND. One man, in particular, stated to me that he thought that the passage of this bill would be so much more drastic than the

British securities act that it would be very detrimental to American business, and I said to him, "Of course, you would not wish us any hard luck in this country."

"Well," he said, "Great Britain is the greatest, largest competitor of the United States."

And, he said, "Motives of nations are essentially selfish," and he said

Mr. MILLIGAN (interposing). Do you remember that name?
Mr. RAND. No.

Mr. MILLIGAN. You cannot remember?

Mr. RAND. He said, "You cannot blame us for being selfish in looking after our own interests."

He said, "Our competition with the United States in business is a question of life and death with Great Britain."

Mr. MILLIGAN. Do you remember that gentleman's name? Did you submit his name for the record?

Mr. RAND. I do not recall.

Mr. MILLIGAN. You had a detailed conversation with him.

Mr. RAND. He is connected with a London newspaper and sojourning in this country.

Mr. WOLFENDEN. Was he a British subject?

Mr. RAND. Yes; I believe he was.

The CHAIRMAN. You may proceed.

Mr. RAND. Why was the Dickinson report laid aside? Why was the advice of 50 of the most experienced business men, who were invited by the administration to cooperate in the recovery program ignored in the drafting of this bill?

In the writing of this bill, vitally affecting the interests of industry and of every investor in the country, business had no voice.

The CHAIRMAN. You are getting your voice now. We are hearing you now.

Mr. RAND. Up to the present time. This bill was apparently drafted by a group of men, or was originally represented by, or in cooperation with young men, who hold no elective office. It represents an important step in their attempt, by indirection, to establish a "planned economy" is which politically selected bureaucrats will assume powers that have belonged to property owners, stockholders, and business management.

Never, even in war, have such far-reaching powers over private property been asked by any administration. This bill is so important that the demand for hasty, rubber-stamp action, without thorough investigation by Congress, and without ample time in which to consider all of its effects, cannot be justified, in my mind.

A tentative analysis by the Conference Board describes this bill as one of two measures for "Federal control of the private capital market."

Concerning this implication, their report says:

The Fletcher-Rayburn bill and the Securities Act of 1933, considered together, have three basic objectives, some of which are expressed, others of which are implied. These are, to wit:

(a) To protect purchasers of corporate securities from loss;

(b) To give the Federal Government comprehensive control over the acquisition and use of capital funds by corporate business;

(c) To provide the means for comprehensive Federal control over the management of business corporations.

The CHAIRMAN. Who made that statement?

Mr. RAND. The National Industrial Conference Board.
They continue:

Not all of the reasons for the embodiment of these objectives in the two measures are stated in the acts themselves; some of the reasons are expressed in statements of public officials, legislators, and others associated with the administration in sponsoring them.

If the authority given to the Federal Trade Commission under these measures were to be fully enforced, and if its powers were to be fully employed under their specific provisions, the economic consequences as they would affect securityowners, the activity of the capital market, and the management of corporate business would probably be as follows:

(a) The measures would not protect security-owners against loss. The lack of a broad market for securities, and the enforced contraction of loans against securities imposed by these measures would so diminish the liquidity of securities as to subject security-owners to great risk of loss. The denial to securities of their present broad market, and consequently of the facilities whereby owners can convert their securities into cash, would necessarily result in an impairment of their value as investments and in considerable and immediate liquidation.

(b) The diminished liquidity of securities would discourage, and might even prevent, their purchase and sale, thus hampering the acquisition of new capital by corporations, States, and municipalities. Furthermore, since Federal securities would be the only securities that could be freely bought, sold, and loaned upon these measures might ultimately lead to general Federal financing of corporate business and to the nationalization of business enterprise.

(c) The detailed regulations of the financial management of corporations by the Federal Government would tend to diminish the profitableness of existing corporate enterprise, reduce the value of outstanding securities, and prevent the raising of new capital, thus causing loss to investors and unemployment of workers.

In order to understand clearly how these general consequences would follow from the full application of these measures, it is necessary to understand the economic functions performed by the security exchanges and to examine in detail the specific provisions of these measures in their bearing upon the protection of security owners, the operation of the capital markets, and the management of corporations.

That is the end of the quotation.

Now, if this were merely a bill to regulate exchanges, in order to make it effective and enforceable, it should have behind it the support of an informed public opinion. Such opinion cannot be developed by hasty high-pressure enactment without time even for analysis and study of its far-reaching economic effects.

But this bill is far more. It starts us toward a regimented stateand that is too serious a decision to be made by indirection.

Secretary Wallace has startled the country by his assertion that "American must choose" between nationalism and internationalism and a 66 planned middle course." He has mislabeled the road. In this and other legislation the power of Congress is being undermined. Are we being pushed along the road from Democracy to Communism? Here in Washington, a group of theoretical young men have, sincerely but totally inexperienced in government and in business, yielded, or appeared to yield great influence.

The CHAIRMAN. Now, let me just straighten you out. What we are holding these hearings for is to obtain information, and information only. The berating of theorists is not furnishing us information. Criticism of those who drafted this or the original bill is not information, and may I say, for your further information, that the Treasury Department and the Federal Reserve Board, sat on this last draft for 8 days, and we held up our hearings during that time, and Governor Black, of the Federal Reserve Board, I do not think should be taken as a young man without information or having any special pet the

ories that he wants to voice upon the American people. He says that he is for the redraft of this bill.

And, it is my understanding, when our conferences were closed, that the Treasury was in the same position, although they are not quite as positive about their position as the chairman of the Federal Reserve Board.

Frankly, if you have arguments to make for or against this bill, or any provisions of it, we would like to hear you, but I, myself, have sat in these conferences in the redrafting of this bill, and if you did me the honor to listen to me last Monday night over the radio, I said that I was not one of those who believed in any further regimenting of business. I thought that business ought to conduct itself, if it would, in the interest of the American people, but business does not always conduct itself in the public interest, and therefore congressional and legislative authority must be called in.

Mr. RAND. Mr. Chairman

The CHAIRMAN (continuing): And I trust that you understand that when we asked you here, at the instance of a member of this committee, because we wanted to hear all elements in connection with the controversy, that you will understand that your assertions about who wrote the bill or anything of that sort is not information, because everybody knows that.

Mr. RAND. Mr. Chairman

The CHAIRMAN (continuing): And nobody cares who writes a bill, just so it is the right sort of a bill, and that is why we have been sitting here 5 weeks, listening to everybody we thought had information with reference to this bill, and out of the light of those hearings, we revised the bill and it was introduced by me last Monday, and we find everybody coming here saying they are for stock exchange regulation, but when it comes down to the sections of the bill, or any bill that we seem to write, they find great fault in every section, and if we are going to regulate stock exchanges, we have got to have a law to do it, and Congress cannot pass all of the regulations. We have got to give that to some body like we give the regulation of the railroads to the Interstate Commerce Commission; banks and banking to the Federal Reserve Board, and so forth, and so forth. We have got to do something.

Mr. RAND. Mr. Chairman, I referred to the general scheme that seems to be behind this bill in its entirety, because of the similarity between the revised bill and the original bill, as to its practical effect upon business.

The CHAIRMAN. Well, that is what we would like to hear you on, if you have got anything to say about that.

Mr. RAND. The revised bill retains the provisions which gives to the Federal Trade Commission arbitrary power over the management of business corporations to a degree unprecedented even during the World War.

The CHAIRMAN. It does not do that.

Mr. RAND. Section 12 gives to the Commission wide discretionary powers to require reports by issuers of registered securities, and one section, subsection (c), reads as follows:

If in the judgment of the Commission any report or reports required under subsection (a) are inapplicable to any specified class or classes of issuers, the Commission shall require in lieu thereof the submission of such reports, if any, as it may deem applicable to such class or classes of issuers.