be described as informal and cooperative acts that would not take place through the application of general rules.

Mr. LEA. Well, would not the commission or regulatory body necessarily have to have some definitions of its authority before it went down to the exchange to tell them what to do?

Mr. DICKINSON. Oh, yes, sir.

Mr. LEA. And Congress would have to define some rules for it to act under?

Mr. DICKINSON. Certainly.

Mr. LEA. And they could not go down there in the exercise of discretion without that?

Mr. DICKINSON. No, sir.
Mr. LEA. And state to the Commission what it should do?
Mr. DICKINSON. Certainly not.

Mr. LEA. Now, when it comes to the question of registration, would you be in favor of leaving to each exchange to determine what the requirements of registration should be?

Mr. DICKINSON. There is a section on registration in the so-called “Roper Report”, which gives the ideas of the members of that committee as they were worked out in the discussions at the committee meetings. It is the section on page 17, at the bottom of page 17 and at the top of page 18, and if you wish me to, I will summarize that section:

Your committee believes that each licensed exchange should be required to adopt listing requirements.

And the statute should go on to provide what, in general outline, those listing requirements should be.

The committee believed that the statute should require the licensed exchange to adopt listing requirements which would provide that at the time of listing balance sheets on both a corporation and consolidated basis should be required to be followed by periodical statement of income accounts and balance sheets, annually, and I believe quarterly.

That the corporation should have its accounts examined annually by independent certified public accountants and should file copies of such annual balance sheets and income accounts with the exchange, and should transmit copies to the securities holders; that the listing requirements should also provide that the corporations should list with the exchange and release for publication quarterly statements of its condition and income; that the corporation should notify the exchange and release for publication any purchase or acquisition by it of its own securities, and that it would not reissue such securities without due notice to the exchange,

That the corporation itself would not participate either directly or indirectly, or finance directly or indirectly, any pool trading in its own securities; that the corporation would require each director and officer not to reveal to any pool any information for the use of such pool, and that it would require every director and officer personally not to engage in any pool; that it would require each director or officer to file with the secretary of the corporation within 15 days after the close of each quarterly period a statement of all of his transactions in the securities of the company during the preceding quarter; and that the corporation would report to the stock exchange any option upon



its stock within 48 hours after such option was granted, together with a copy of such option, which should be open to the public; that the corporation should report to the exchange within 48 hours any agreement to which it was a party or of which it had knowledge, for the purpose of pegging the price of any of its securities, and that it would abide by all of such rules as the stock exchange might promulgate with the permission of the commission.

Now, the idea was, as I understand it, that the statute would provide for those minimum listing requirements and that the exchange might in addition thereto provide any other listing requirements that it saw fit.

Mr. LEA. Do you not reach the same general principles and plans that are in this bill, and that is, in the first place, you must have a definition of the principles.

Mr. DICKINSON. Absolutely.

Mr. LEA. And in the next place, you must give the Commission a large degree of discretion.

Mr. DICKINSON. Yes, sir.

Mr. LEA. So that I take it that your criticism of this bill rather goes of necessity to some of the hard and fast rules prescribed as a matter of law and then possibly as to the undefined limits of regulations,

Mr. DICKINSON. I would put it this way, Mr. Lea. I think that there is no disagreement that any regulatory measure must provide certain rules, and in the statute for the action of the administrative body, and then leave a certain amount of discretion to the administrative body to apply and fill out those rules; but I think there is a decided difference between what I have read you and the provisions of the bill, in two respects. First, as you say, in what the specific rules shall be; and secondly, in this respect, that the scheme of the report provides that these listing papers which would have to be filed in connection with listing and so on, should be filed in the first instance with the exchange, and that the primary responsibility for seeing that the listing requirements were lived up to would be with the exchange, so as not to deluge the Federal agency at Washington with the large volume of individual transactions that it would have to keep an eye on under the terms of the bill as it stands.

Mr. LEA. Mr. Dickinson, I regret very much that I have to leave, but what I was seeking to bring out, is that in the end, we must reach toward uniformity of regulation; uniformity of registration requirements, and uniformity of accounting methods, not immediately—I do not understand that this bill requires that—but ultimately,

Mr. DICKINSON. I think, Mr. Lea, that with that aim toward uniformity in control we can perhaps take a lesson from the way in which we have organized our courts. We have a State supreme court in each State, the object of which, in the last analysis, is to secure uniformity in the law of that State; but we do not make the supreme court the court of original jurisdiction for all cases in order that they may all be uniformly decided.

We do not make the Supreme Court the court of original jurisdiction because we want to have every case uniformly tried. Because we want uniformity does not necessarily mean that we have to bring every case in the first instance into the Supreme Court. We have a large number of courts that are handling their own matters and then

we secure uniformity by having them all subject, in the last analysis, to the decisions of the Supreme Court.

Mr. BULWINKLE. Mr. Chairman
The CHAIRMAN. Mr. Bulwinkle.

Mr. BULWINKLE. I was necessarily absent yesterday morning and did not hear your first statement; but do I understand you are in favor of a regulatory body or a supervisory one?

Mr. Dickinson. I am in favor of a regulatory body if the distinction that you have in mind is between a body with power and a body merely with recommendatory functions. I am certainly in favor of a body with power. The difference is entirely as to how the power should be exercised.

I recur to the analogy that I drew a moment ago between a supreme court, which sits there with power to come in and bring about a uniform rule when that becomes necessary, as contrasted with having a single court which would undertake to decide all of the cases in the State, in order that you might get a uniform rule. I think that that analogy illustrates the point that I have in mind.

Mr. MARLAND. Mr. Chairman-
The CHAIRMAN. Mr. Marland.

Mr. MARLAND. I find the following paragraph in a letter of Secretary Roper, addressed to the President, transmitting the so-called “Roper Report”, on the first page of the Secretary's letter, second paragraph, last sentence:

Our committee will be glad to cooperate with Senator Fletcher in any way that he may think we can assist in constructing any bill or bills which he may wish to present to the Senate on stock-exchange regulations.

I take it that the committee referred to is the committee of which you are chairman?

Mr. DICKINSON. That is my understanding; yes, sir.

Mr. MARLAND. Has your committee ever been called upon to prepare a bill to regulate stock exchanges?

Mr. DICKINSON. No, sir.

Mr. MARLAND. Do you believe that the bill before us, if passed, would have a bad effect on commerce, industry, finance, in the United States?

Mr. DICKINSON. Well, as I said yesterday, Mr. Marland, I certainly think that it would have a decidedly deflationary effect in the immediate future.

Mr. MARLAND. And nothing beside deflation?

Mr. DICKINSON. Well, of course, I do not know exactly what you have in mind. Perhaps if you would ask me a more specific question.

Mr. MARLAND. I am wondering if it just would not stop the wheels of commerce?

Mr. DICKINSON. That, of course, is a very broad question and the wheels may be slowed down without being stopped altogether.

Mr. MARLAND. You are not in favor of the passage of this bill as written?

Mr. DICKINSON. No, sir.
Mr. MARLAND. That is all.
Mr. WOLVERTON. Mr. Chairmar-
The CHAIRMAN, Mr. Wolverton.

Mr. WOLVERTON. I have this in mind, and if I may express it in my own words, I do so to see if I have correctly understood your position.

I understand that the fundamental principle that underlies your opinion, and the conclusions and recommendations of the so-called “Roper Report", or "Dickinson Report”, is this—that exchanges should be permitted or required to regulate themselves; but there should be a Federal authority holding the power which in a previous administration would have been referred to as

a big stick. 5; Mr. Dickinson. Yes; that expresses it very succinctly, Mr. Wolverton.

Mr. MAPES. Mr. Chairman
The CHAIRMAN. Mr. Mapes.

Mr. Mapes. I, too, did not have an opportunity to hear you yesterday. I just want to ask you one question. Have you read the recent book, I think it is called the Twentieth Century Fund report, on regulation of stock exchanges?

Mr. Dickinson. No, sir; I have not. The gentlemen who prepared that book promised to send me a copy, but they never did. A copy was brought to me by Mr. Cohen and Mr. Corcoran when they visited me night before last, but I have not read the book since that time.

Mr. Mapes. You are not able to give any criticism of it?
Mr. DICKINSON. No, sir.

Mr. MAPES. A rather hasty reading of the report seemed to me to indicate that it was of the opinion that any worth while regulation of stock exchanges would probably do away with a good deal of the sale of stock that is now carried on for speculative purposes, and perhaps to the advantage of the general public. It shows how the very perfection of the machinery of stock exchanges, the use of the ticker service in reporting sales to all parts of the country the minute they take place on the exchange, and the disposition to put the rosiest aspect upon corporate reports and so on, encourage people to get into the stock market, and to speculate.

What is your idea about that? Mr. DICKINSON. So far as concerns that broad question, sir, I think it is certainly true that the establishment of our great machinery, our great credit machinery that we have in this country for drawing all of the savings of the people into a system where they can be made available for the needs of industry, like any other high-power machine carries the possibility of great danger with it, just as the electric dynamo, or system of machines that we have in any great factory, with their wheels and cogs and knives, just as the automobiles on our roads, just as all of those things are fraught with potential dangers that never existed in the days of the water wheel and the horse-drawn vehicle.

Now, the system for the gathering in and distribution of credit to the industry of the country, to my mind, is one of the factors which have made possible the great development and growth in the standard of living which has characterized the last century. That has come, in part through making possible the collecton of savings all over the country into larger and larger pools that are interrelated and making possible the distribution of these savings throughout the country where they are needed on a national scale.

It also results in part from the element of liquidity that has been brought into the situation; but wherever you have a powerful machine of that kind, as I say, there are dangers there due to the very power of the machine. These dangers consist in the possibility of manipulation at the center and the question simply is whether we are going to guard the machine like our factory machinery, whether we are going to try to stop these abuses which exist and pervert the machine from time to time, or whether on the other hand we are going to adopt what seems to me to be a counsel of despair and say we have built something here that is too powerful for us, so we will just smash it and not use it.

Mr. MAPES. Referring to the illustration which you gave of the pool operation some time ago, or earlier in the morning-do you think that a Government regulatory body could get in and act promptly enough to save the situation in an individual case like that?

Mr. DICKINSON. I think that it could get in very much more promptly if it sat at the top with the power of supervision over the exchanges than if it was swamped by initial original jurisdiction to operate all over the field of the country at the same time.

Mr. MAPES. Do you have any question about the exchanges complying with regulation relative to reports and so on, such as you read from your report if those provisions were expressly written into the law?

Mr. Dickinson. Mr. Mapes, I think that we always will have this situation to face, and there is no need to deceive ourselves with regard to it, that in a period when things are booming, in a period when the speculative desire and the speculative attitude is widespread throughout the country, that those who wish to pour cold water upon the heat and fever of that speculative mania, are frequently visited with public disapproval and that that public disapproval operates upon governmental officials no less than upon private business men and tends to deter them from perhaps putting the brakes on, and I think that it would operate as well if the Federal authority were given such direct and immediate original jurisdictional powers as it is given in this bill, as if it were given powers over the exchanges. I think in other words that if you had occasion to use Federal authority, that that Federal authority would be much more effective to act, and act directly, and as I said yesterday, come down like a ton of bricks on what was going wrong, if it were not overloaded with detailed functions, looking into every individual case.

Mr. MAPES. I understand that. I guess I did not make myself clear. I have a theory that if we stated in the law what the reports and balance sheets of corporations should contain in order to be listed on the exchanges, that the great bulk of business men and members of the stock exchanges would comply with that law, and that the exchanges themselves could be trusted to see that the law was enforced.

Mr. DICKINSON. Yes, sir; if I understand you, I think that I agree with that perfectly.

Mr. MAPES. So that so far as possible, it would seem to be desirable to state in the law what should be done.

Mr. DICKINSON. It would seem so to me.

Mr. Mapes. We are confronted as a committee with this practical question: It seems to be conceded on all sides that some law ought

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