(See Cover)
On a dollar measure, no arm of the Federal Government has so loud a say in so big a slice of U. S. business as the New Deal's Securities and Exchange Commission. Six different Acts of Congress give it power. Under the first (Securities Act of 1933) it has in six years passed on the registration statements of over 2,500 corporations issuing $15,591,262,000 of new securities. Under the second (Securities Exchange Act of 1934) it daily watches fluctuations in about $150,000,000,000 worth of stocks and bonds listed on 20 U. S. exchanges, can stop trading (for cause) in any one of them at a hat's drop, has done so 18 times. Under the Maloney Act (1938) it has additional authority over some 80 billion dollars' worth of securities not listed on these exchanges, watches their brokers regulate themselves. Under the Chandler Act (1938) it has loud kibitzing powers over corporate reorganizations, has watched the progress of 548 companies with pre-bankruptcy assets of $640,200,000 through the courts. Under the Barkley Act (1939) it must approve trust indentures. Under the Public Utilities Holding Company Act (1935) it has the broadest, toughest job of all: authority over the affairs of about half the U. S. power industry, the half (gross assets: $15,000,000,000 plus) that belongs to the great interstate holding-company systems. SEC, with a $5,300,000 budget and a staff of 1,618, has its hands full. Last week Senator Wagner was readying a bill to give it one more big job: regulation of the $4,500,000,000 investment-trust industry, in whose stinking entrails SEC has been probing for over two years.
SEC owes its existence, many of its powers, to a wave of front-page indignation engineered by Ferdinand Pecora, who took over the Senate Banking & Currency investigation of 1932-33. When he showed how Charlie Mitchell rigged the market in Anaconda; how Rudolph Spreckels made over$14,000,000 in the Kolster Radio pool while suckers lost their shirts; how Dick Whitney, pegging a German bond issue, waited till the Morgans were out before he "pulled the plug"; how the Stock Exchange of 1929 really worked—the New Deal was able to write its own ticket for Federal regulation of security issues and trading.
SEC's later powers came by narrower squeaks. Ben Cohen's Holding Company Act (after a stormy fight over its famed "death sentence," Section 11) passed the Senate by only one vote. A drastic remedy for bugs like Foshay, plagues like Insull, it aimed to reform the power industry, shift its control from Wall Street back to local managements. But the need for an SEC has never been seriously questioned, was recognized in the Republican platform of 1936. Its powers are really derived from the vast fear and suspicion of Wall Street that exists west of the Hudson. Established, effective, cocksure, SEC has a, long list of discretionary powers, many of them as yet untried.