unable to keep pace with the modernizing front end of the market.
Manual trade processing between broker-dealers and transfer agents collapsed under the surging volume, resulting in settlement delays, costly errors and a sharp decline in investor confidence, which was further exacerbated by a broader market downturn. To manage the backlog, the NYSE began closing one day each week. More than 160 brokerage firms vanished, with half disappearing through mergers and the rest through closures. The crisis exposed Wall Street’ s fragile infrastructure, triggering an urgent need for reform. In 1970, Congress established the Securities Investor Protection Corporation( SIPC) to safeguard client assets at failed firms. In 1973, William T. Dentzer Jr. was named the founding executive director of the Depository Trust Company( DTC), created to centralize custody and automate settlement.
Haack responded decisively. He championed automation, advocated for centralized clearing and pushed to professionalize operations. While he initially defended fixed-rate commissions in congressional testimony, he shocked the industry on November 17, 1970, when he publicly called for their elimination. His remarks broke with decades of NYSE orthodoxy and positioned him as an unlikely reformer.
Haack’ s bold stance alienated the Exchange’ s board, and he stepped down at the end of his five-year term. However, his call to action compelled the NYSE to publicly acknowledge its underlying structural weaknesses and initiate an internal review,
thereby setting in motion the debates that would ultimately lead to Mayday and the lasting transformations.
William McChesney Martin Jr.: Elder Statesman of Reform
In 1971, amid growing regulatory scrutiny and public pressure, the NYSE Board of Governors turned to a trusted elder statesman, William McChesney Martin Jr., to lead an independent inquiry into the Exchange’ s governance and structure. A former NYSE president, Army veteran and the longest-serving chair of the Federal Reserve, Martin was known for his integrity, pragmatism and deep respect for institutions. He agreed to take on the task— but only with complete autonomy, unrestricted access and a public commitment to transparency.
Martin’ s timing was pivotal. With Congress, the SEC, the Department of Justice( DOJ) and institutional investors calling for reform, his five-month review culminated in the influential Martin Report. It called for the establishment of a national market system, greater protection for small investors, and— most provocatively— the experimentation with negotiated commissions.
Although the recommendations were not binding, the SEC had begun a phasedin negotiated rates program that echoed Martin’ s proposals. In February 1971, big block trades exceeding $ 500,000 became negotiable. The threshold was lowered to $ 300,000 in 1972 and by April 1974, commission flexibility reached retail trades under $ 2,000. Martin’ s leadership bridged
Wall Street tradition with rising competitive pressures, laying the regulatory and intellectual foundation for the sweeping reforms of Mayday 1975. His calm, principled approach lent credibility to a movement that would permanently reshape the US capital markets.
The Ford Administration: Regulatory Momentum
When Gerald R. Ford, Jr. assumed the presidency in 1974, the nation was reeling from the Watergate scandal, soaring inflation and the 1973 oil embargo. Unemployment peaked at 9 % in May 1975, and public trust in institutions was at an all-time low. Ford launched the“ Whip Inflation Now”( WIN) campaign and unveiled a comprehensive economic reform agenda. Central to his three-pronged approach to lower inflation was a focus on food and energy, anti-competitive practices and deregulation. The WIN slogan was abandoned a year later and inflation persisted, but the debate over regulatory reform continued.
Wall Street’ s Legacy Fee Structure Under Scrutiny
As institutional trading surged, the NYSE’ s rigid commission structure appeared increasingly out of step with the evolving market. Under mounting pressure, SEC Chairman Ray Garrett Jr. and Commissioners Loomis, Evans, Sommer and Pollack moved toward action. In July 1968, Eugene“ Gene” Rotberg— an
www. MoAF. org | Summer 2025 | FINANCIAL HISTORY 29