No More Cooling

In the long war between U. S. business and the New Deal, one of the wordiest sectors has been in the neighborhood of SEC. Last month, in the truceful atmosphere engendered by Rearmament, this sector began to grow quiet. Last week, on one of Wall Street's sorest salients, there was Peace.

Salient: the 20-day cooling period that must by law elapse between the registration and sale of any new security. During the 20 days, underwriters and dealers chew their nails, hark nervously for stop orders, sometimes watch a good market turn into a bad one (leaving them holding the bag). When Emmett ("Spike") Connely became president of the Investment Bankers Association last year and declared open war on the Securities Acts, the 20-day clause was his first objective.

Month ago, Connely and SEC Chairman Jerome Frank agreed to work out amendments to the Securities Acts together, submit joint proposals to Congress by January. Three weeks ago Frank abruptly offered to go further: Why not get the 20-day clause repealed right away? Surprised I. B. A. agreed. Last week they went to work on the details of an amendment. Probable change to be proposed to Congress: instead of waiting 20 days. SEC would release securities for sale as soon as it had checked the registrations. This should seldom take more than a week.

The concession was an easy one for SEC, which will still have time to issue stop orders against dubious issues. Nor did it betoken a sudden return to 1929 prosperity for the investment bankers. Reasons: 1) it will not help them to compete any more successfully with the insurance companies, whose direct purchases of new securities have enabled many a big borrower to by-pass the market entirely; 2) defense expansion, being mainly for emergency, non-commercial purposes, will probably be financed more by bank and RFC loans than by public offerings of long term debt or stock.

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