Portrait of Ferdinand Pecora , circa 1933 . Portrait of President Franklin D . Roosevelt , by Leon A . Perskie .
George C . Mathews , pictured here in 1938 , was one of two Republicans chosen by FDR to sit on the first Securities & Exchange Commission .
Underwood & Underwood and grimly silent . At age 52 , he didn ’ t want to serve on the commission for very long ; after two years as a low-paid Senate counsel investigating Wall Street , he needed to revive his law practice and replenish his savings . But he was furious that he would not be chairman during his short SEC tenure . Without a word to reporters , Pecora followed Landis into his office . Behind that closed door , Landis began the long , quiet process of persuading the legendary “ hellhound of Wall Street ” to change his mind about fighting publicly for the chairmanship .
The reporters in the stifling hallway grew more curious as the minutes wilted away . Perhaps the rumors of the past week were true ; perhaps Pecora was defying FDR and refusing to defer to a stock market manipulator .
A few days earlier , Roosevelt had summoned Landis , Mathews and Healy to his oval study upstairs at the White House and urged them “ to take a good look at Kennedy ” and keep an open mind . Roosevelt could go no further .
Kennedy could , and had . He had made a quick morning call at the White House to get FDR ’ s note endorsing his chairmanship , and then gone to the FTC to lobby Landis .
Landis was just 35 , but he seemed a decade older , with thinning hair , a stern profile and an unseasonably dark suit on his lanky frame . But his mature manner hid his inner doubts . “ Healy and Mathews would have voted for me ,” he said in an
oral history recorded years later . “ They had confidence in me , more confidence that I had in myself .” Could he win the trust of Wall Street ? That “ was a big question in my mind .”
Kennedy , a decade older than Landis , had seemed boyish by comparison as he hobbled to the wooden chair Landis offered . They had talked for most of the morning . In his blunt , breezy way , Kennedy asked Landis to vote for him as chairman . “ I was very impressed with him …[ he ] was the best man ” for the job , Landis recalled . Landis had shared his views with Mathews and Healy , who accepted his judgment . Thus , by midday , Kennedy had the votes he needed .
But to be elected chairman without the support of Pecora , the crusading knight of the New Deal hard-liners , would be a terrible way to begin . The SEC had to be credible to both the suspicious Wall Street leaders who hated Roosevelt and the angry Roosevelt voters who hated Wall Street . To do that , Kennedy needed more than a four-vote majority ; he needed Pecora .
By the time the SEC opened for business in July 1934 , Main Street and Wall Street had parted ways . After the long grim years of the Great Depression , the improving lives of average citizens made them more supportive of FDR . But after more than a year of almost inconceivable economic gains under the New Deal , the improving lives of America ’ s capitalists made them less supportive of FDR — fiercely hostile , in fact . Wall Street , which
had quietly prayed Roosevelt could save the shattered financial system in March 1933 , was now complaining bitterly about how he was going about it .
Around this time , FDR addressed corporate America ’ s discontent in a speech in Green Bay , Wisconsin . He told the crowd he ’ d gotten a letter from a businessman urging that the only way to restore “ confidence ” was for him to abolish any form of government supervision over business — restoring “ the unregulated wildcat banking of a century ago ,” the sale of “ fraudulent securities and watered stock ” and “ stock manipulation which caused panics and enriched insiders .” He added , “ If we were to listen to him , the old law of the tooth and claw would reign once more . My friends , the people of the United States will not restore that ancient order .”
In the absence of that restoration , however , Wall Street had simply refused to function , claiming the Securities Act of 1933 made it impossible for new securities to be issued and demanding deregulation . If Kennedy couldn ’ t cajole these pouting capitalists back into the market , congressional support for the New Deal ’ s financial reforms could melt away .
Thus , Roosevelt knew how much was hanging on a unanimous vote for the chairmanship . It would give Kennedy the credibility he needed to be effective . Wall Street would see he had enough moderate support to temper any “ radical ” impulses from New Dealers ; New Dealers would see Pecora ’ s
12 FINANCIAL HISTORY | Fall 2023 | www . MoAF . org