Joseph Kennedy's top priority as Chairman was to restore the health and vitality of capital markets that had seen an unprecedented decline. The monthly average value of new securities issued had plunged from a high of $849,000 per month in 1929 to $59,000 per month in 1933. During the contention over the Securities Exchange Act, the possibility that corporations were intentionally staying out of the markets was often raised, and although anecdotal evidence was strong, there was little proof of an organized "capital strike" aimed at forcing concessions or a rollback of securities regulation.
Certainly most of the decline in investment can be attributed to the Crash and the Great Depression. But in 1933 and 1934 some industrialists did claim to be waiting for the uncertainty introduced by the new, untested legislation to be resolved. Others maintained that registering under the FTC was too burdensome. Republic Steel, for example, had to prepare 2,000 pages of documentation to do so.
Some concessions had already been made to corporate investors. There were numerous amendments to the 1933 Securities Act included as riders to the Securities Exchange Act. These reduced time limits on civil suits, cut the liability of underwriters, and lessened the responsibility of directors. Although the value of new securities issued rebounded somewhat in 1934, late in the year things got even worse, dropping from $113 million in July 1934 to a mere $11 million in January 1935. "I want to see the business in securities start up again and grow larger," Kennedy said the next month. (Wall Street Journal, February 18, 1935)
Roosevelt's advisors differed about the problem: Raymond Moley accepted the corporate explanations; Felix Frankfurter called them "rubbish." Typically, Kennedy cared little what the precise cause was--he wanted only to fix the problem.
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