(5 of 7)
Chairman Frank has a split, faction-ridden Commission. Seeing the chairmanship as a temporary job, he and Wife Florence Kiper Frank still live poised for flight in Washington's Wardman Park Hotel. Twice his resignation has been postponed at the President's behest; only now is he beginning to be regarded as a fixture. Besides backstage splits, he has open disagreement among his four commissioners. Two (since no more than three may be Democrats) are Republicans: bald, dumpy George Mathews, formerly of Wisconsin's progressive Public Service Commission, and tall, taciturn Judge Robert E. Healy of Vermont. Opposite them are Democrats Henderson and plodding Edwin Eicher of Iowa, a Corcoran-Cohen rubber stamp. No rubber stamp, no Republican, Frank bridges this split as Chief Justice Hughes bridged the Supreme Court of 1937, therefore holds the balance of power over as much of U. S. industry as SEC controls. Tougher than was Douglas', tougher than was Kennedy's is his job: to put up or shut up on all the threats and promises implicit in SEC.
In Wall Street, Frank found SEC's job partly done, the remainder "clearly indicated ... a technical job." Main point at issue was Douglas' idea for making customers' balances with brokers as secure as they would be in a bank. Frank announced that the Martin-Douglas "roundtable" method of regulation was "still doing business at the old stand." Last summer, however, Frank delivered a speech at the Roosevelt in Manhattan in which he bluntly told the Stock Exchange to solve the customers'-balance problem or accept SEC surveillance of all brokers' offices. Since then the Wall Street-Washington axis has been twisted and strained. One reason: the sodden state of the market, which gives all Wall Streeters more & more need for a goat. This week, Exchange President Martin was on his way to Washington to round-table several points with SEC. In his briefcase was a progress report on the customers'-balance problem: a fidelity insurance plan. In his ears were the mutterings of Exchange members, including his own progressive backers. Irked by uncertainties and red tape, Wall Street has long accused SEC of "mental cruelty." Last week, with the worst February (in volume of trading) since 1921 behind them, Martin's men were talking about something more ominous: a "fundamental cleavage" between the Street and Washington over principles of regulation. But Semanticist Frank, foe of word-spun principles, would rather avoid hostilities on the Stock Exchange front when he has more important things to do.
Power. Toughest, most tangled piece of unfinished business left by Chairman Douglas on Chairman Frank's desk is enforcement of the Holding Company Act, especially Section 11. Last week, more than two years after its effective date, SEC issued its first Section 11 command. It was directed at Electric Bond & Share, biggest, most far-flung holding company system of them all. Taking 121 paragraphs to list all its subsidiaries, pointing out that its Oregon properties are 3,100 air miles from its New York headquarters, SEC asked Bond & Share to show cause why it should not be unscrambled. Similar orders went to smaller Engineers Public Service and Middle West Corp., while six other major systems were told to expect theirs any day.