(Courtesy of the Library of Congress )
By early 1934 Roosevelt was ready to pursue stock exchange legislation. Samuel Untermyer, who had run the Pujo Committee hearings years earlier, had drafted a bill that depended too much on cooperation and not enough on enforcement. Another plan called for a tripartite commission with exchange, business, and agriculture representatives. Roosevelt, however, wanted "a bill with teeth."
Landis believed that the agency regulating exchanges would need autonomy and the power to compel exchanges to do business a whole new way. Busy at the FTC (which he believed would be that agency), Landis set Cohen and Corcoran again to work. Their "Fletcher-Rayburn Bill" was introduced on February 10, 1934, and set off a firestorm of protest.
Business had been caught off guard with the 1933 Securities Act. Now New York Stock Exchange president Richard Whitney orchestrated what Sam Rayburn later called "the biggest and boldest, the richest and most ruthless lobby Congress had ever known" to defeat or eviscerate the bill. (Ritchie, 56) But while the exchange was conducting a massive letter-writing campaign, it was also implementing internal reforms aimed at staving off further government action.
The stock exchange bill took a drubbing. At one point Tommy Corcoran--who was being smeared with unfounded charges of Communism--was called in on short notice to defend the bill that few understood. Corcoran expertly parried pointed questions, but in the end Congress bowed to political realities and made numerous compromises.
The last one came as a complete surprise to Landis: the FTC would enforce neither the new act nor the old one. Virginia Senator Carter Glass believed that the FTC had been too draconian in enforcement and introduced an amendment creating a whole new agency. Business interests backed him, hoping for more of a voice in the new body. Landis resisted the move for just that reason, but it was done.
