Note 426 — Chapter VII · The Extension of Federal Control through Exclusion from the Mails

Majority Report of the Committee Appointed to Investigate the Concentration of Control of Money and Credit (February 28, 1913), p. 162. A bill embodying these recommendations is given on p. 170. It denies the use of the mails to any stock exchange, “unless such exchange has been incorporated under the laws of the state or territory at which its business is conducted, or unless the charter and by-laws of such exchange or the law under which it is organized shall contain regulations and prohibitions satisfactory to the Postmaster General safeguarding the transactions of such exchange, the character of the securities dealt in thereon, the genuineness of the quotations thereof, and all other information concerning such transactions that is to be carried through the mails, and by telegraph and telephone beyond the limits of the state of the organization of such exchange against fraud and deceit in the following particulars”: These require publicity as to the assets and stock issues of a corporation before its securities may be listed; an annual report by the corporation whose securities are listed, to the secretary of the exchange and the postmaster general, giving a detailed statement of receipts, expenses, net earnings, salaries and commissions paid to officers or directors, etc.; prohibition of arbitrary action by a stock exchange in striking securities from its list, of artificial manipulation of securities, of hypothecation of securities purchased on a margin, of “short-selling,” etc. The bill also contains many requirements as to publicity. For a discussion of the economic features of the Pujo Committee’s proposals, see Regulation of the Stock Exchange, p. 585 ff. (Hearings before the Committee on Banking and Currency, United States Senate, 63d Cong., 2d Sess.).