Letter on Federal Supervision of Securities Sales.

My dear Mr. Chairman:

Before I leave Washington for a few days' holiday, I want to write you about a matter which gives me some concern.

On February 9, 1934, I sent to the Congress a special message asking for Federal supervision of national traffic in securities.

It has come to my attention. that a more definite and more highly organized drive is being made against effective legislation to this end than against any similar recommendation made by me during the past year. Letters and telegrams bearing all the ear marks of origin at some common source are pouring in to the White House and the Congress.

The people of this country are, in overwhelming majority, fully aware of the fact that unregulated speculation in securities and in commodities was one of the most important contributing factors in the artificial and unwarranted "boom" which had so much to do with the terrible conditions of the years following 1929.

I have been firmly committed to definite regulation of exchanges which deal in securities and commodities. In my message I stated, "It should be our national policy to restrict, as far as possible, the use of these exchanges for purely speculative operations."

I am certain that the country as a whole will not be satisfied with legislation unless such legislation has teeth in it. The two principal objectives are, as I see it:

First, the requirement of what is known as margins so high that speculation, even as it exists today, will of necessity be drastically curtailed; and

Second, vesting the Government with such definite powers of supervision over exchanges that it will be able itself to correct abuses which may arise in the future.

We must, of course, prevent, in so far as possible, manipulation of prices to the detriment of actual investors, but at the same time we must eliminate unnecessary, unwise and destructive speculation.

The Bill, as shown to me this afternoon by you, seems to meet the minimum requirements. I do not see how any of us could afford to have it weakened in any shape, manner or form.

Very sincerely,

Hon. Duncan U. Fletcher,

Chairman, Banking and Currency Committee,

Hon. Sam Reyburn,

Chairman,

Interstate and Foreign Commerce Committee,

Washington, D. C.