Securities and Exchange Commission Historical Society

William O. Douglas and the Growing Power of the SEC

Dr. Kurt A Hohenstein, Curator
Opened December 1, 2005

"Please convey to Mr. Gay my best wishes. I cannot help but contrast the expressions of regret at his retirement from the management of the Exchange with the feeling in the Street that would follow an announcement that I was going back to Yale."
- May 18, 1938 Telegram from SEC Chairman William O. Douglas to John C. Forrest for Charles Gay, New York Stock Exchange


From the first press conference on William O. Douglas’s appointment as Chairman of the Securities and Exchange Commission on September 21, 1937, it was clear that his approach would differ from the two prior SEC Chairmen.

Facing Washington reporters and Wall Street officials anxious to see "what kind of bird" he was, Douglas declared that the SEC would serve as "the investors’ advocate" seeking to maintain a free market, regulate and prosecute schemes of manipulation in every case, while aiming at "revitalizing the capitalistic system on a conservative basis." (1)

Douglas had served in the SEC as a staff member during the tenure of Chairman Joseph P. Kennedy, as a Commissioner during the tenure of Chairman James M. Landis, and now, finally as Chairman. It was in all three capacities that Douglas left his mark on the early development of the SEC as a vibrant administrative agency. Douglas would, more than Kennedy and his immediate predecessor Landis, articulate "a coherent policy framework for federal corporation law that was to guide the next two generations of corporate reform efforts" at the SEC. (2)

While his tenure coincided with great challenges to the emerging authority of the rise of administrative government during the New Deal, his political leadership and activism at the SEC, coupled with his academic brilliance by which he formulated that policy framework, made the SEC the most lasting and successful of all New Deal agencies.

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(1) "Douglas Wants A Free Market, He Tells Press," The Washington Post, September 23, 1937, 3.

(2) Jordan A. Schwarz, The New Dealers: Power Politics in the Age of Roosevelt (New York: Alfred A. Knopf, 1993) 169.

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Jerome Frank, Robert Healy, William O. Douglas, George Mathews and John Hanes
(Courtesy of David Ginsburg )

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