Storms

Through sunshine and showers President Roosevelt and Secretary of the Treasury Woodin motored conspicuously together down U. S. Highway No. 1 to Quantico, Va. Saturday afternoon. At the Marine Barracks dock they boarded the trim white yacht Sequoia which promptly cast off for a week-end cruise down the Potomac. Shortly before dark a bad storm swept the river. A near-gale staggered the Sequoia, threatened to blow her ashore. Her pitching and tossing, amid the crash of wind, rain and thunder, broke up the President's dinner, sent him up on deck to gauge the danger. Less seasoned sailors aboard were thoroughly scared. In 30 minutes the storm passed.

Hardly less severe was the political storm President Roosevelt and Secretary Woodin left behind them that day in Washington. The Senate Banking & Currency Committee's investigation had revealed that in 1929 Mr. Woodin, then president of American Car & Foundry, had been let in on profitable stock deals as a preferred customer of the House of Morgan (see p. 51). Though that had been four years ago when he was a private citizen, the cry of "Wall Street!" was instantly raised against Secretary Woodin at the Capitol. Democrats and Republicans alike demanded that he resign immediately. Loudly recalled was the President's intention to keep his Cabinet free from the "Wall Street influence," his inaugural denunciation of "money changers." Would he, could he keep as the Government's No. 1 financial officer a man thus obligated to Wall Street's most famed house? Washington seethed with rumor. One was that Mr. Woodin wanted to re-sign if the President would let him. Another was that the President had long known all about his Morgan stock deal, refused to let him get out on that account, had taken him down the Potomac as a public demonstration of confidence.

When the Sequoia returned to Washington, all cheery little Secretary Woodin had to say about the political storm was, "I have not resigned," but added he would do so if the Administration felt embarrassed. Of the other storm he was voluble: "It was the greatest scare of my life. . . . None of us knew whether the boat would be blown ashore. . . . The President realized our danger thoroughly. . . . For 30 minutes we didn't know whether it was the end or not."

President Roosevelt ordered the Senate committee to push its investigation "without limit." Ignored was some shouting by

Republican Congressmen for the recall of Ambassador-at-Large Norman H. Davis, another Morgan beneficiary. P:''To restore some old-fashioned standards of rectitude" President Roosevelt last week gladly signed the bill which gives the Federal Trade Commission Autocratic supervision over the issuance of new securities. The principle of the new law, effective in ten days, is Caveat venditor ("Let the seller beware"). It provides for public registration under oath of all details of each stock issue--the company's financial condition, its purposes and business, its principal operators and owners, underwriting costs, commissions, bonuses, etc., etc. Company directors are made civilly and criminally liable for any misrepresentation to investors. The law's purpose is not to stop the honest businessman from raising new capital for an honest business (though many a financier feared that that would be the result) but to catch fraudulent stock promoters who have gulled U. S. citizens out of some $25,000.000,000 in the last ten years. Speculative securities may still be sold, provided they are so labeled. Cut rate sales to insiders, such as figured in the House of Morgan investigation last week, will not be prohibited but they will be transacted, if at all, in the open spaces of the Press.

P:All one morning last week President Roosevelt sat in his office having a farewell heart-to-heart with his delegates to the London Economic Conference--Secretary of State Hull, James Middleton Cox, Senator Key Pittman and, appointed last week, Tennessee's Samuel D. McReynolds, chairman of the House Foreign Affairs Committee. His instructions were broad and general, for the U. S. had no cut & dried formula for world recovery to lay before the conference the first day. The delegation, with 30 experts and assistants, was to sail this week on the President Roosevelt. Day later the President heard the Senate's first formal reaction to his proposal that, in return for deep disarmament, the U. S. would waive its strict neutrality rights in cases where it agreed there had been aggression. The Foreign Relations Committee approved an arms embargo resolution but only after amending it so that the President could not pick & choose which side of a foreign fight he would be on but had to withhold war munitions impartially from "all of the parties in the dispute or conflict."

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