abuses which characterize the New York Stock Exchange characterize other exchanges?

Mr. THOMPSON. No, sir; I do not.

Senator BARKLEY. Mr. Thompson, assuming that the big bad wolf up in New York needs regulation, what would you do toward minimizing the restrictive influences of any regulatory bill that would cover them as it might apply to local stock exchanges?

Mr. THOMPSON. Well, I would say that in general the business as conducted in local stock exchanges is practically the same as conducted on the New York Stock Exchange, but there are so many things done in New York that are not done on local exchanges by reason of the fact that the New York Stock Exchange is primarily a large national market, upon which there is, quite naturally, a great deal more speculation than there is upon the local markets, which are more semi-investment markets, or I might say perhaps three fourths of the business done is semi-investment to one fourth speculation. Yes; I should say that three fourths of the business done on all exchanges outside of New York is a cash business.

Senator GORE. Did you say three fourths of the business?
Mr. THOMPSON. Yes, sir.

Senator BARKLEY. I suppose it is a recognized fact that the evils which brought about, to the extent to which they did bring about the collapse in the market, the nefarious practices that a lot of so-called financially respectable men engaged in, do not to any large extent attach to the small local stock exchanges, and that in large measure they were not responsible for the evils that brought about this whole pestiferous situation.

Mr. THOMPSON. I think that is quite a fair statement.

Senator BARKLEY. But I do not know how we are going to reach the general practices of the big one without in some way including the smaller ones.

Senator ADAMS. Mr. Thompson, have you prepared or can you prepare amendments to the bill which will permit the regulation

of the big exchange, of the evils which you confess are there, and at the same time not destroy the local exchanges?

Mr. THOMPSON. Mr. Whitney yesterday stated that he would confer with the associated stock exchanges, and so forth, in preparation of the amendments they were bringing in. May I say to you that one of the most difficult sections to whip into shape, and the one that will perhaps be delegated more to the exchanges to whip into shape will be section 10, and that is the big one that involves so much on the local exchanges, which are not comparable with New York.

Senator ADAMS. You recognize that the committee probably does not want to release the big exchange from proper regulation in order to protect the little exchanges.

Mr. THOMPSON. I quite agree with you. That is what I am speaking to you about. I think section 10 applies more to our local exchanges than it does to New York. I think in trying to correct the large evil, if I may so call it, that is apparent in New York, consideration has not been given to the damage that is going to occur to the local exchanges.

Senator GORE. You think that in killing the big bad wolf we are going to kill some of the lambs.

Mr. THOMPSON. I am positive of it.

Senator GORE. The problem is to know where to draw the line. Senator MCADOO. As a matter of fact, the listed securities on the Washington Exchange are very few in number, are they not?

Mr. THOMPSON. Relatively few in Washington, because we have not an industrial market here.

Senator ADAMS. You have a good many gamblers here.
Mr. THOMPSON. Not on the Washington Stock Exchange.
Senator GORE. Let us pass a law to stop that.

The CHAIRMAN. Have you any figures or statistics sustaining your view that three fourths of the business on the local exchanges is cash? Mr. THOMPSON. No. I am merely giving that as my opinion, based upon knowledge of the business only. I think it is a fair statement, and I believe an inquiry made of the local exchanges would show that I am a little under, rather than over. It may run as much as 80 or 85 percent cash.

Senator GORE. Do you think it would be better to let the exchanges initiate rules and regulations in the first instance, subject to revision and approval by the National Commission, or to vest the Commission itself with the power to initiate, prescribe, and fix rules and regulations.

Mr. THOMPSON. I would not want to say that, Senator, for I have not given that as careful study as I would like to in order to answer you intelligently. It is a very broad and serious question.

Senator GORE. That seems to me to be the real question that is running through and dividing the two schools of thought on this whole business.

Mr. THOMPSON. I do want to say, Mr. Chairman, that we will cooperate with Mr. Whitney in bringing in to you the suggested amendments and those amendments that we particularly have in mind. I mean those that will deal particularly with the local exchanges. They will be embodied and will be so indicated to the committee.

The CHAIRMAN. Mr. Whitney, you remember, discussed section 10 quite fully and proposed certain amendments to it.

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of Commerce, Mr. John Dickinson, was asked to appear before the committee?

The CHAIRMAN. He will come down later and appear before the committee.

Senator TOWNSEND. I move we adjourn.

The CHAIRMAN. We will meet Monday at 10:30,

Senator COUZENS. Will the hearing on Monday be an open hearing? The CHAIRMAN. So far as I know. There are some doubts as to whether Mr. Whitney would be ready Monday.

Senator GORE. I have a notion Secretary Dickinson will want to appear in executive session.

(Whereupon, at 11:20 a.m., Saturday, March 24, 1934, an adjourn ment was taken until Tuesday, Mar. 27, 1934, at 10:30 a.m.)

Silver and David Saperstein, associate counsel to the committee; rank J. Meehan, chief statistician to the committee; Roland L. Redmond, counsel to the New York Stock Exchange; William A. ockwood, counsel to the New York Curb Exchange; and Eugene C. Thompson, president of the Associated Stock Exchanges.

The CHAIRMAN. The committee will come to order, please. Mr. Whitney, you were to submit a further statement this morning by ay of suggested amendments to the bill. We will be very glad have you proceed.

TATEMENT OF RICHARD WHITNEY, PRESIDENT OF THE NEW YORK STOCK EXCHANGE-Resumed

Mr. WHITNEY. Mr. Chairman and gentlemen of the committee: irst of all I should like to submit to the committee some additional ocuments with regard to the aviation stocks. They are suppleental lists, giving addresses missing in our original reports of ansactions in aviation securities, as well as corrections covering rors which we have found. If I may merely submit them as hibits as has been previously done, I will now be glad to do so. The CHAIRMAN. They will be received and marked for identifition.

(A document entitled "Supplementary List of Addresses Not own in Original Reports ", was marked "Whitney Exhibit No. for Identification, March 27, 1934 ", and will be retained in the es of the committee.)

(Another paper entitled "Curtiss-Wright Corporation, First Supementary Report", was marked "Whitney Exhibit No. 41 for entification, March 27, 1934", and will be retained in the comttee's files.)

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(Another document entitled "Wright Aeronautical Corporation Capital Stock, First Supplementary Report ", was marked "Whitney Exhibit No. 42 for Identification, March 27, 1934", and will be retained in the committee's files.)

(Another document entitled "Aviation Corporation of Delaware, First Supplementary Report", was marked "Whitney Exhibit No. 43 for Identification, March 27, 1934", and will be retained in the committee's files.)

(A document entitled "Curtiss-Wright Corporation Class 'A', First Supplementary Report ", was marked "Whitney Exhibit No. 44 for Identification, March 27, 1934 ", and will be retained in the committee's files.)

(Another document entitled "Douglas Aircraft Co., Inc., First Supplementary Report", was marked "Whitney Exhibit No. 45 for identification, March 27, 1934", and will be retained in the committee's files.)

The CHAIRMAN. You may proceed with your statement, Mr. Whitney.

Mr. WHITNEY. Mr. Chairman, I should like to read a very brief statement first, if I may.

The CHAIRMAN. You may do so.

Mr. WHITNEY. I am entirely in accord with the thought that great speculative excesses are an economic evil and that they can and should be prevented.

I am not in accord with the thought that the speculative excesses of 1929 and preceding years were to a material extent caused by or due to our stock exchanges or the way in which they were operated. I am not in accord with the thought that the stock-market panic of 1929 was the cause instead of one of the earlier results of the industrial depression.

I do not believe that the use of credit in connection with forward commitments, whether in the purchase of securities, of commodities, or of homes, or in the sowing of crops in the expectation of harvest can be otherwise than benefiicial when wisely and reasonably employed.

I am not in accord with the provisions of this bill which seem designed to punish stock exchanges for imaginary offenses, nor am I in accord with those provisions which would throttle industry, contract credit, diminish the liquidity of securities, and postpone the return of prosperity.

I believe that H.R. 8720, in its present form, would prevent excessive speculation but only by seriously interfering with that great system of industry, commerce, and finance without which there can be neither speculation nor prosperity.

I believe that the evils which this proposed legislation seeks to remedy can be cured without risking the dangers inherent in this bill of delaying the return of prosperity.

From this standpoint I have caused to be prepared, within the framework of this bill, certain amendments which will eliminate its most dangerous features while increasing its effectiveness in the promotion of those objects which are vital in the public interest. I submit these amendments as a matter of practical expediency and solely because the stock exchanges of this country-and I am speak