H. R. 1493, H. R. 1821, and H. R. 2019 BILLS TO SUSPEND THE AUTHORITY OF THE SECURITIES AND EXCHANGE COMMISSION UNDER SECTION 14 (A) AND SECTION 14 (B) OF THE SECURITIES EX- CHANGE ACT TO ISSUE RULES RELATING Bane, Mr. Baldin B., Director, Corporation Finance Division, Securities and Exchange Commission... Treeman, Milton V., Assistant Solicitor, Securities and Exchange History and Development of Security Financing and Investment Banking in the United States. By Paul W. Frum, special counsel to the Securities Acts Subcommittee of the House Committee on Interstate and Foreign Commerce_. Regulation X-14 of the Securities and Exchange Commission being Letter addressed to Hon. Ganson Purcell, under date of October 12, Memorandum, accompanying above letter, regarding the revision of proxy rules proposed by the staff of the Securities and Exchange Commission__ III SECURITIES AND EXCHANGE COMMISSION, PROXY RULES WEDNESDAY, JUNE 9, 1943 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE OF THE COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE, The subcommittee met, pursuant to call, at 10 a. m., in the committee room, New House Office Building, Hon. Clarence F. Lea (chairman) presiding. The CHAIRMAN. The committee will please come to order. Yesterday morning Mr. Frum discussed the problems involved in the hearings before this committee in reference to the Securities and Exchange Act. A large part of the discussion was informal and will be omitted from the record. But he gave a discussion that I would say might be described as a history of the initiation and evolution of the sale of securities that I think would be interesting from a historical standpoint. I do not know whether Mr. Frum will agree with me in my classification of what the subject covered, but that will be printed in the record. (The statement above referred to is as follows:) HISTORY AND DEVELOPMENT OF SECURITY FINANCING AND INVESTMENT BANKING IN THE UNITED STATES STATEMENT BY PAUL W. FRUM, SPECIAL COUNSEL TO THE SECURITIES ACTS SUBCOMMITTEE, HOUSE COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE I. Prior to 1820 In the early economic and business history of the United States, there was no security financing of industry and business or of their growth and expansion. Naturally there was no investment banking system to perform the economic function of channeling surplus savings into productive business and industry. The development of security financing, and the subsequent implementing of such financing through a system of underwriting and public distribution of new issues, awaited a stage of industrial, business, and financial development which, on the one hand, would create a need for the performance of such economic functions and, on the other hand, would make their performance possible. The small size of industrial and business units in this period made such a system of financing unnecessary; and nonuse of the corporate form of doing business and absence of any substantial class with surplus savings would have made the establishment and operation of such a system difficult and probably impracticable. It was not until the Nation reached a much higher stage of industrial, business, and financial development that such a system was needed or feasible. Due to inadequacy of early records, there is no evidence bearing directly upon the period before 1820, but the foregoing is a fair inference from the testimony dealing with later periods. 1 |