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No man alive has covered more acres of newsprint with demands for Federal regulation of stockmarkets than Lawyer Samuel Untermyer. Yet when he read H. R. 7852 at his Palm Springs, Calif, retreat, his old grey head shook in dismay. No one could accuse the investigator of the Money Trust before the Pujo Committee in 1912 of being a friend of Wall Street. Yet last week Samuel Untermyer sounded this grave warning: "[The bill] is more hopeful than anything that has preceded it, except that it goes too far and is likely to defeat its own purpose. It is inevitably the characteristic of a people long denied their rights . . . that the pendulum should swing to the other extreme and unreasonably demand impractical, impossible things."
The proposed Exchange Act of 1934 is a typical product of the liberal legalities of the New Deal. It was drafted largely by bright young men who know how to get from A to B by glittering legal steps, regardless of the economic consequences. It is the same type of legislation as the Securities Act of 1933, which was passed with hardly a peep of protest.
High priest of the bill was Ferdinand Pecora. From his vast experience in unsavory business practice gained while counsel to the Senate's Banking & Currency Committee, he knew just where to apply the strait-jacket the tightest. Right at his elbow was James McCauley Landis, who climbed from a chair in the Harvard Law School to a seat on the Federal Trade Commission by collaborating with Felix Frankfurter on the Securities Act of 1933. Lean, brilliant and 34, Trade Commissioner Landis is a disciple of Supreme Court Justice Brandeis whom, like many another liberal legalite, he once served as secretary. Commissioner Landis' only previous public service was helping reorganize the city government of Cambridge, Mass. In the House hearing which began last week he requested even broader powers for the Federal Trade Commission.
Many another New Dealer chimed in his suggestion. Even such articulate liberals as John Flynn and Max Lowenthal had their say. Most of the actual drafting was done by shy Benjamin Victor Cohen of PWA's railway division and Thomas Corcoran, RFC counsel. Lawyer Corcoran used to work in the Manhattan legal firm of Cotton, Franklin, Wright & Gordon. Lawyer Cohen is a protégé of Felix Frankfurter. Both are young, brilliant, determined. Both live with a half-dozen other New Dealers in "Bachelor Hall," a large, comfortable house in Georgetown. There they all share a housekeeping butler and liberal ideal, live on $50 per month each. Lawyers Cohen and Corcoran are typical of the host of radical young lawyers in Washington who keep well in the background while they fabricate the advanced measures Congress is supposed to pass without reading.
Though the bill was written by New Dealers, the White House has gone to great pains to assure everybody that it is not an Administration measure. With the Securities Act in line for modification, it is practically certain that the harshest features of the Exchange Bill will be softened before it is passed. The degree of modification will depend on how much the Senators hear, not from Gentleman Whitney, but from Big John Businessman and his little brother.