No Casino

The 358 members of the Chicago Stock Exchange have lately had to content themselves with trading only 50,000 shares a day. * Hence the Chicago Exchange ranks behind the New York Stock Exchange, New York Curb and the Boston Stock Exchange as a securities market. Last week to prove that it ranks behind no U. S. market in progressiveness, the Chicago Exchange beat the New York Stock Exchange to a major reform proposal by 24 hours.

Two months ago Chairman William O. Douglas of the Securities & Exchange Commission ticked off the "club" aspects of the New York Stock Exchange, declared that "no element of the Casino" could be allowed to survive, recommended such changes as hiring a paid president (TIME, Dec. 6). President Charles Gay of the exchange hastened to appoint a committee under Chairman Carle Cotter Conway of Continental Can Co. to consider Bill Douglas' suggestions.

The Chicago Exchange has never tangled with SEC and it had already initiated a reform survey three months before Bill Douglas cracked down on Charles Gay. Last week Chicago Exchange President Thaddeus Benson suddenly heard rumors that the Conway committee was about to report to Charles Gay. Eager to keep Chicago in the van, President Benson hastily got his governing committee to adopt a plan (subject to membership approval) for reorganization including the hiring of a paid president. One day later Charles Gay and Bill Douglas were handed a very similar plan conceived by the Conway committee.

SEC had just cracked out an order forbidding short selling of securities "at or below" the last sale price. Since the New

York Stock Exchange already had a rule against short sales "below'' the last price, SEC's action was not on its face of great importance. * More significant was SEC's remark that since the exchange's rule had not been effective, SEC would have to take over. Having thus prepared for a drag-out scrap Bill Douglas was surprised and pleased by the new exchange proposal. The Conway committee was made up of three exchange members, two nonmember partners and four outsiders, of whom one was New Dealer Adolf A. Berle Jr. and another, Publisher Kenneth C. Hogate of the Wall Street Journal. Last week Wall Street gossip gave Vice Chairman Trowbridge Callaway most credit for the committee's success. Their conclusion: "It is apparent to us that the organization of the New York Stock Exchange should be revised to accord with changing times and conditions." Their major proposals:

1) The Board of Governors would be reduced from the present 50 (42 exchange members and eight nonmember partners) to 32, of whom 15 would be members of the exchange, six nonmember partners of New York member houses, six from member firms not based in New York City, three representatives of the public, a president, a chairman.

2) No governor might serve more than two consecutive terms of three years each --"to end the criticism that the Stock Exchange is run by a 'self-perpetuating group.' "

3) The president, not necessarily a broker, would be hired by the Board of Governors, would have to divest himself of all other business interests, would have power to appoint, subject to approval by the board, all officers except the chairman and vice-chairman of the board.

4) To prevent the president from becoming a dictator, a new officer, the chairman, would have the power of nominating the three committees to handle admissions, etc.

5) The exchange's 17 standing committees would be reduced and supplanted by personnel paid to handle the details of management.

6) The law committee, now the exchange's dominant inner circle, would be abolished and supplanted by a comparatively feeble Executive Committee.

* That is, an average of 130 shares each. Result: The price of Chicago Exchange seats is about $2,000 compared to a top of $60,000 in 1929. * It means only that shortsellers must wait until bidders offer a one-eighth point above the last sale.

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