That last compromise turned out to be for the better. While securities and exchange regulatory power was held by the FTC, it would be just one of many concerns--hardly the tightly focused administrative agency Landis envisioned.
The functions of the new agency would be many. It would regulate securities exchanges and over-the-counter markets and register the securities traded there. It would have the power to scrutinize members of exchanges and issuers of securities by demanding statements from directors, officers, and principal stockholders.
The amended legislation was not as liberal as the framers of the act had hoped. Some stock exchange practices that original drafts had prohibited were now simply to be subject to study. Margin purchases--the buying of stock on credit--had been a chief cause of the crash, and the legislation left margin specifications alone.
But the reformers had an agency, and the American people had the federal government's promise that it would do its best to do away with the excesses of the 1920s and make financial markets, if not entirely safe for the small investor, at least a bit less hazardous. The Securities Exchange Act, like so much of the legislation that marked the early New Deal, was an attempt by FDR at compromise--an effort to get both private enterprise and the federal government working together to create a stronger, more equitable economy.
On June 6, 1934, FDR signed the Securities Exchange Act into law with Pecora, Cohen, Corcoran, and Landis all standing by. At one point Roosevelt asked Pecora, "Ferd, now that I have signed this bill and it has become law, what kind of law will it be?" "It will be a good or bad bill, Mr. President," replied Pecora, "depending upon the men who administer it." (Ritchie, 59)
The act did not give Roosevelt the choice of Chairman. But FDR was determined that the SEC would work in harmony with, rather than against, capital and had a choice. Roosevelt advisor Raymond Moley was already backing Joseph P. Kennedy, believing that top contenders Landis and Pecora were too ideologically inclined. Kennedy, he realized, was a pragmatist who could conciliate different points of view and, perhaps more importantly, knew what he would be up against. FDR agreed and sent a clear signal by giving Kennedy the only five-year Commissioner slot.
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