banks out of the business of issuing notes, that did not make any difference. The court would not look at it.

So, to my mind, the only satisfactory distinction that can be set up between those cases, on the one hand, and the Bailey case, on the other, is that in the Bailey case the thing was not a tax; that it is not a real tax which, if you do not make it apply except in case of the violation of some regulatory provision.

Now, that is not true of a regulation. That is exactly what a regulation is. And, therefore, a regulation of interstate commerce which operates by not letting a person come into commerce unless he does so and so, is a regulation of interstate commerce, while an attempt on the other hand to hold a bludgeon over his head and make him pay a tax, is not a tax.

I may be wrong. That is simply my conclusion in this very debatable field of constitutional metaphysics which we have to go through with as a foundation for our statutes, to place them upon a satisfactory basis; but my own feeling is that the attitude of the courts is expressed in such cases as the Olsen case, and the stolen automobile case, where they held that the facilities of interstate commerce could be denied to stolen automobiles, because they were morally bad, and other things of that kind.

Now, you know those cases used to be placed sometimes on the ground, the rather metaphysical ground, that the excluded objects were immoral and tainted the stream of commerce, and therefore you were really protecting the stream of commerce by keeping this tainted object out of it. But that is, to my mind, a rather metaphysical explanation.

Mr. HUDDLESTON. Now, this bill, in some of its aspects is a penal statute. We propose to punish, by imprisonment, and so forth, violations of it. We require the exchanges to obtain licenses, and as a condition of that, we require that they carry on their operations after a certain fashion. Then, we require that their members shall behave themselves and conduct their activities in a certain fashion, activities which have no necessary relationship to the activities of the exchanges; activities which might be performed by someone who was not a member of the exchange. Then we deal with the activities of corporations whose stock is listed with reference to their accounts and various other things, but which have no necessary relation to that listing or to the trading or to their connection with the exchange or with anyone who trades thereon.

That is about the third degree of removal, but not satisfied with that, we deal with the activities of those who are neither corporations nor members of stock exchanges, with outsiders, to wit, the activities of officers of corporations, the which have no necessary relation to their status of officers, even. Such, for illustration, as dealing in stocks.

I am disturbed about that degree of remoteness to which we are going, and I am wondering whether you can justify it upon constitutional grounds or not.

Mr. DICKINSON. Mr. Huddleston, I think that your mind is running along the same channel that mine was when I felt that I had guarded myself in my original statement by saying that I would not undertake to underwrite the constitutionality of all of the specific provisions of this particular bill. What I have been speaking of was the consti

tutionality of the general-licensing method which I understood that we were discussing before.

Mr. HUDDLESTON. As I understand this bill, it does not deal with the exchanges altogether on their status as markets of interstate commerce, but it assumes to deal with them without regard to whether the stocks listed are a part of interstate commerce. If we may assume that an exchange listed only local stocks and that they were dealt with locally, and not as interstate commerce, this bill, it seems to me, would have an application to that exchange. Is that not your understanding of it?

Mr. DICKINSON. Mr. Huddleston, I have never read the bill with that particular point in mind, so that I do not know that I would care to express an opinion on that point.

Mr. HUDDLESTON. Well, it is certain that the bill does not relate only to interstate transactions, or to interstate commerce; does not assume to relate to that, and that its application would be the same so far as the listed stocks were concerned to stocks which were not dealt in in interstate commerce.

Now, what effect would that have on its constitutionality, the fact that it assumes to deal with interstate commerce and intrastate commerce at the same time without distinguishing between the two, neither being bound up in the other in a manner that would make such dealing necessary in order to accomplish the purpose of regulating interstate commerce?

Mr. DICKINSON. Mr. Huddleston, I think that the bill rests upon what seems to me tactually a sound assumption, namely, that these transactions are bound up with each other in such a sense that you cannot effectively regulate one without the other, and that, of course, leads to the line of though that the Supreme Court had in mind in the Wisconsin Railroad case under the Transportation Act of 1920, where it held that the Interstate Commerce Commission could, in effect, regulate the entire system of intrastate railroad rates in the State of Wisconsin because they were related to the returns to the carrier from its interstate business.

Now, to be sure, we were dealing there with a carrier, but after all, commerce is not limited, sir, to carriage. It is a much broader term. Commerce is intercourse, as Marshall said, and it is rather interesting to note that in the beginning in Gibbons v. Ogden, the first case under the commerce clause, it was argued as against the congressional power that there that power was asserted over carriage, and they argued that commerce does not include carriage, commerce means buying and selling.

Now, we have rather got around to the opposite position and we sometimes are tempted to limit our construction of the word commerce simply to carriage.

Now, here we are dealing with buying and dealing on such a scale that if you cannot regulate the intrastate you cannot regulate the interstate, and I would like to cite just one other case. I would like to cite the case of Ruppert v. Caffee-I cannot give you the citation here where under the congressional power to regulate intoxicating liquor, it was held that the Congress might prohibit the use of nonintoxicating liquor if the prohibition of nonintoxicating liquors was essential to regulate intoxicating liquor.

Mr. HUDDLESTON. Passing from that

Mr. PETTENGILL. That was a case of prohibition, and not a case of regulation?

Mr. DICKINSON. Yes, sir; but it seems to me that prohibition is but a kind of regulation. Under the power to regulate you can prohibit. And, it is a stronger power, Mr. Pettengill, prohibition is really a stronger power. If you can absolutely prohibit something, that otherwise lies out of your power, why it is going further than if you just regulate.

Mr. PETTENGILL. Excuse me, Mr. Huddleston.

Mr. HUDDLESTON. Passing from that aspect of the matter, we have a section of the Interstate Commerce act known as section 20 (a), which is assumed to regulate the securities of interstate carriers. I am unable to see the basis of the power to regulate those securities, unless it be that the commerce clause gives the power to regulate the securities as such, of corporations engaged in interstate commerce. If Congress may regulate the securities of interstate carriers on that basis, it may by the same sign regulate the securities of other corporations engaged in interstate commerce.

Mr. DICKINSON. I am not hostile to that view, Mr. Huddleston. Mr. HUDDLESTON. Frankly, I want to say that I cannot justify this bill on any other theory and yet, that particular theory is the one that those who have offered the bill most carefully avoid. They have brought in every possible justification except that and that they say there is nothing to.

Mr. DICKINSON. I always like, sir, to feel that a bill has as many feet to stand on as possible.

Mr. HUDDLESTON. So far as I can see it, they have withdrawn the only foot this bill has. It is a mere deduction on my part. I know of no authority I do not know whether section 20 (a) has been passed upon by the courts or not. We have drawn it and there it stands.

Maybe there is such authority.
That is all I wish to say.
Mr. COLE. Mr. Chairman-

The CHAIRMAN. Mr. Cole.

Mr. COLE. Mr. Dickinson, the committee has heard from one member of the so-called "Roper committee," of which you are chairman, I refer to Mr. Landis.

Mr. DICKINSON. Yes, sir.

Mr. COLE. I would like to know who Mr. Berle, Mr. Dean, and Mr. Richardson, the other members of the committee, are.

Mr. DICKINSON. Well, Mr. Berle is a professor of law at the Columbia Law School, and is also to some extent, I believe, engaged in private practice, and he has been active as an advisor of several governmental departments and committees.

Mr. Berle has written several books on the field of corporate practices and finance.

Mr. Richardson is a Washington attorney who is a friend of Secretary Roper and who Secretary Roper placed upon the committee because of his own acquaintance with Mr. Richardson and his experience with stock-exchange matters and practices.

Mr. Dean is a New York attorney who has had a considerable experience in these fields and I am frank to say, that I myself felt that it was desirable on a committee of this kind not to confine the memhership to what might be described as one point of view, but to bring

in a number of points of view; the point of view of the law teacher, the point of view of the administrator, the point of view of the persons who lay emphasis on strict regulations, and the point of view of persons who have had actual experience with the operations of the exchanges.

Mr. COLE. In the President's letter of January 25 to the Chairman of the Banking and Currency Committee of the Senate, printed with your report, which comes from Secretary Roper

Mr. DICKINSON. Is that, Mr. Cole, in print, in this pamphlet?
Mr. COLE. Yes; the first page.

The President states your committee was appointed last spring and also refers to the security bill, which we passed last spring growing out of the work of the committee. Was the investigation preliminary to the security legislation referred to this same committee?

Mr. DICKINSON. The facts are these, Mr. Cole, in that connection, that sometime after the original appointment of this committee, Secretary Roper instructed me that in accordance with a request from the President, as he reported it to me, we were to give some consideration to the question of the securities act. We talked in an informal way about the securities act and then we reached the conclusion that in view of the fact that two members of the committee had more or less publicly taken a position in regard to the securities act, they did not feel that they should take any part in connection with the securities act, and so the stock-exchange report was completed with those two gentlemen participating.

Mr. COLE. Now, in the preparation of this bill, Mr. Landis has stated to the committee he assisted with the drafting of the bill before Were you consulted by Mr. Cohen or Mr. Corcoran?

us.

Mr. DICKINSON. I beg your pardon.

Mr. COLE. Were you consulted at all by Mr. Corcoran or Mr. Cohen in connection with the preparation of this bill that we have before us now?

Mr. DICKINSON. No, sir; I was not.

Mr. COLE. Is it fair to ask, Mr. Dickinson, if your statement here this morning regarding this bill and the references that have been made to your report, reflect the views of the other members of your committee?

Mr. DICKINSON. I have no idea, sir, what their views are.

Mr. COLE. That is all.

Mr. DICKINSON. We have not had any committee meetings. The committee has been functus officio and had no meetings since it sent its report in.

The CHAIRMAN. Mr. Dickinson, it appears that quite a number of the members want to ask you some questions, and I think that we will have to ask you to return tomorrow. We only have 3 minutes. left.

Mr. DICKINSON. All right, sir.

The CHAIRMAN. I think that that would be fair.

Mr. DICKINSON. Tomorrow morning at the same time?

The CHAIRMAN. Yes, sir.

(Thereupon, at 11.43 a.m., the committee proceeded to the consideration of other business, after which it adjourned to meet the following morning, Wednesday, Mar. 7, 1934, at 10 a.m.)

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