SEC Historical Society , www . sechistorical . org

By Diana B . Henriques

On June 6 , 1934 , President Franklin D . Roosevelt signed the Securities Exchange Act , using several pens to do so . The young Federal Trade Commission ( FTC ) member Jim Landis , who had been so important to the survival of the bill , was out of town , but FDR handed pens to three of his allies : the Senate Banking Committee ’ s special investigative counsel Ferdinand Pecora , a driven Sicilian immigrant who had exposed Wall Street ’ s sins in headline-making congressional hearings ; Benjamin V . Cohen , the brilliant Jewish lawyer from New York with a gift for writing sound statutes ; and a Roosevelt troubleshooter named Tommy Corcoran , a charming networker from “ lace-curtain Irish ” roots in Rhode Island . All three men had been summoned to Washington from the diverse edges of the legal profession to help challenge and change the patrician and powerful world of Wall Street .

As Roosevelt handed the final pen to Pecora , he impishly asked , “ Ferd , now that I have signed this bill and it has become law , what kind of a law will it be ?”

Pecora replied , “ It will be a good or bad bill , Mr . President , depending upon the men who administer it .”

Which men would administer it ?

1934 photograph of the original Securities & Exchange Commission ( left to right ): Ferdinand Pecora , George C . Mathews , Joseph P . Kennedy , Robert E . Healy and James M . Landis .

By law , FDR had to pick two Republicans . He chose FTC commissioner George C . Mathews and Judge Robert E . Healy , the FTC ’ s general counsel . “ Bud ” Mathews , a 48-year-old progressive in the midwestern mold , was a seasoned state railroad and utilities regulator with a strong background in accounting and a strong distaste for the reckless brand of capitalism exposed during the Roaring Twenties . At age 51 , Judge Healy — the tall , lean Vermonter pronounced it “ Haley ”— was an old-fashioned self-taught corporate lawyer who had served briefly on his state ’ s supreme court . His national career was launched in 1928 when President Coolidge , looking for someone to whitewash a mandated investigation of the public utilities industry , made the mistake of thinking Healy was the man to do that . For the next four years , Healy doggedly led FTC hearings that filled dozens of volumes with evidence of utility industry misdeeds . Roosevelt could hardly have found two Republicans more supportive of his reforms .

The other three members of the new stock exchange commission would be Democrats and one of those would be chairman . Most in the media expected the gavel to go to Jim Landis , the workaholic legal whiz from the Harvard law faculty who had helped draft FDR ’ s major securities statutes . But Landis was a lightning rod for Republican anger toward the New Deal — former President Hoover ’ s Secretary of State had called him “ the most dangerous man in the United States .” In

Congress , Pecora was seen as the logical chairman — and , according to his biographer , he himself thought he had the strongest claim to the job . On Wall Street , however , Pecora was perhaps the only candidate for chairman who could make Landis look acceptable . His exposure of Wall Street ’ s sins had left deep scars .

Ray Moley , one of FDR ’ s foremost policy advisors , felt the first SEC chairman should be someone who at least had a chance of defusing Wall Street ’ s resentment and resistance . Neither Landis nor Pecora could do that — but Moley thought he knew who could , if he would take the job .

The diplomacy began on April 12 , 1934 , before work on the law was completed . Returning to Washington from Miami , FDR paused his train trip in West Palm Beach for a quick , quiet parlor-car visit with Joseph P . Kennedy . A sly Wall Street speculator and Hollywood tycoon with a large attractive family , Kennedy had been a major donor to FDR ’ s 1932 campaign but had felt angry and humiliated ever since Roosevelt had passed him over as Treasury Secretary . A few days later , Roosevelt invited Kennedy and his wife Rose to stay at the White House , and the two men talked deep into the night . FDR ’ s famous charm worked ; at 5 p . m . on June 28 , Kennedy was back at the White House . With Moley looking on , the President indulged in hours of cat-and-mouse conversation before finally popping the question : Would Kennedy take on the chairmanship of Wall Street ’ s new watchdog ?

10 FINANCIAL HISTORY | Fall 2023 | www . MoAF . org