Securities and Exchange Commission Historical Society

431 Days: Joseph P. Kennedy and the Creation of the SEC (1934-35)

The Kennedy Legacy

Departure with the Second New Deal

Kennedy never made a secret of his desire to stay at the SEC only a short time. He was by nature a builder rather than an administrator. Kennedy "doesn't stay in any job too long," James Landis once remarked, "he gets a little tired of it and wants to move on and do something else."

The Swift registration convinced Kennedy it was time to move on. He had built a strong, effective SEC and helped FDR safeguard his New Deal. On May 27, 1935, he was on his way to the White House to tender his resignation when he learned that the Supreme Court, in the Schechter decision, had ruled the centerpiece of the New Deal unconstitutional. Kennedy returned to his office and tore up the letter. The next month brought trouble closer to home--the SEC itself came under a cloud after securities firm J. Edward Jones mounted a constitutional challenge to the Securities Act.

What became known as the "First New Deal" was premised on the idea, endorsed by Raymond Moley and others, that the government would broker an honest peace between the large institutions in America like labor and business. The Supreme Court ruling in the Schechter decision, and corporate resistance like that posed by J. Edward Jones, convinced FDR that there would be no cooperating with business--not for recovery or anything else. Now Roosevelt began to listen more closely to advisors like Felix Frankfurter, Benjamin Cohen and Tommy Corcoran, who believed that the best way to deal with capital was to confront it.

Americans today recognize Social Security as the centerpiece of the "Second New Deal," but in 1935 most of the talk was about two pieces of legislation that exemplified this confrontational approach--FDR's "wealth tax" and the Public Utilities Holding Company Act.

In the summer of 1935 Joseph Kennedy worked hard to help draft the Public Utilities Bill. But all the while his doubts about its approach multiplied. This dilemma only underscored Kennedy's own status as an economic conservative in an ever more economically liberal administration.

By the fall of 1935 Kennedy had gone as far as he could go. Enforcing the controversial and unpopular Public Utilities Holding Company Act--an act that Kennedy never wholly embraced--would soon be a full-time job. Kennedy tendered his resignation effective September 23, 1935.

Although he never understood it as such, in retrospect Kennedy's Chairmanship can be seen as marking a pivotal period in American history--the time when a "First New Deal" emphasizing cooperation and recovery gave way to a "Second New Deal" committed to regulation and reform.

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Related Museum Resources


April 12, 1935
image pdf (Courtesy of the National Archives)
June 10, 1935
transcript pdf (Courtesy of the Library of Congress)
September 6, 1935
image pdf (with permission of the Franklin Delano Roosevelt Library and Museum)
September 20, 1935
transcript pdf (with permission of the Franklin Delano Roosevelt Library and Museum)


September 23, 1935
Paul Gourrich (front row, second from left); Robert E. Healy (front row, fourth from right); Joseph P. Kennedy (front row, third from right); James M. Landis (front row, far right); George C. Mathews (front row, second from right); Kemper Simpson (back row, fourth from right)

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