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Richard Nixon Presidential Library
White House Special Files Collection
Folder List
Box Number
Folder Number
Document Date
Document Type
Document Description
17
12
n.d.
Report
The Role of the Securities Industry in the
American Economy with cover sheet. 4 pgs.
Duplicate not scanned.
17
12
n.d.
Report
Suggested Recommened Position on
Securities Industry's Role in American
Economic Life. 2 pgs.
17
12
n.d.
Report
The Role of the Securities Industry in the
American Economy with writing. 3 pgs.
17
12
n.d.
Memo
Memo for Colson- Key Issues Committee.
Notes. 3 pgs.
17
12
n.d.
Memo
Memo for Colson- Key Issues Committee.
Draft Statement on the Role of the Securities
Industry in the National Economy. 5 pgs.
17
12
n.d.
Report
Draft statement on the Role of the Securities
Industry in the National Economy. 4 pgs. 13
duplicates not scanned.
Friday, May 22, 2009
Page 1 of 2
Box Number Folder Number Document Date
Document Type
Document Description
17
12
09/17/1968
Memo
Memo from Chuck Colson to Allen
Greenspan. 1 pg.
Friday, May 22, 2009
Page 2 of 2
1. Issues: Regulation of Securities and Financial Industries.
2. Interested Groups: Investment Bankers, NASD, American Bankers, Mutual
Fund Industry.
3. Platform Position: "The dynamism of our economy is produced by millions
of individuals who have the incentive to participate in decision-making
that advances themselves and society as a whole. Government can reinforce
these incentives, but its over-involvement in individual decisions
distorts the system and intrudes inefficiency and waste."
4. Comment: The financial and securities industries are deeply troubled
by what they consider the Administration's failure to recognize their
vital contribution to a healthy economy. As reflected in the attached paper,
they believe that less attention should be focused in pushing them
around and more stress should be given to freeing them to meet the
needs of an expanding economy which requires dynamic adjustment unhindered
by laborious regulatory processes.
The platform, and Republican tradition, recognize the need for
minimum regulation and maximum decision making freedom. The industry
has invested large sums in institutional advertising to further its
image and has provided many services for larger numbers of voters.
Since the demands of the attached paper are mild, and the
countervailing interests limited, a statement should not be too difficult
to draft.
THE ROLE OF THE SECURITIES INDUSTRY
IN THE AMERICAN ECONOMY
The American economic system is a truly remarkable machine.
During our generation it has demonstrated that when properly
managed it can fight wars, battle poverty, better life for its
growing numbers of citizens.
Its greatness is exemplified no where more than in the dramatic
growth in share ownership and the boom in activity on the nation's
stock exchanges. One out of every 8 Americans 124 million people
own shares of common stock or mutual funds. Actually one hundred
million Americans benefit from stock investments via their pension
plan and insurance policies.
This broad base of public ownership of American Industry lies at
the very heart of the American free economy. Millions of people are
truly participants in the rewards of our free enterprise system and
the investment by millions of individuals of modest means provides
the flow of equity capital, so essential to the growth of the American
economy.
Government should encourage this investment, this free flow of
equity capital, this participation in American Economic democracy.
The Democratic administration has all too often shown little, if
any, appreciation for the vital role played by our financial insti-
tutions and for the need to maintain viable and innovative
-2-
institutions. When sophisticated and important economic issues have
arisen, this administration has reacted with the same tired old
solutions of the Democratic Party-that is, more heavy handed
Bureaucratic regulation.
The Administration, frequently under the guise of "consumer
protection" has sought to achieve more and more governmental
control over the everyday operation of our financial institutions.
Acting without the benefit of any economic study or analysis, the
Justice Department and the SEC have attempted to revise drastically
the stock exchange rate structure and to alter the basic character
of the securities markets. The Administration has sought wide-sweeping
new regulatory powers over the Mutual Fund Industry, which powers
would be tantamount to "rate-fixing" in a highly competitive industry.
Agencies of this administration have sought, sometimes with, but more
often without legislative authority, to control the competitive
relationship and every day business of banks, savings institutions,
insurance companies and institutional investors. The actions of the
administration have been characterized by a legalistic and bureau-
cratic approach, rather than one sensitive to the needs of our free
economic system.
-3-
The new administration will conduct, therefore, an independent
and comprehensive economic study of the role of our financial
institutions before steps are taken which might seriously affect
our ability to continue to raise the capital needed for future
economic growth.
Suggested Recommended Position on Securities
Industry's Role in American Economic Life
The American economic system is a truly remarkable
machine. During our generation it has demonstrated that
when properly managed it can fight wars, battle poverty,
rebuild its cities and still provide food, shelter and a
better life for its growing numbers of citizens. Its great-
ness is exemplified no where more than in the dramatic growth
in share ownership and the boom in activity on the nation's
stock exchanges. Owners of common stock and mutual fund shares
today total $24 million - one out of every 8 Americans. Actually
100 million Americans benefit from stock investments via their
pension plan and insurance policies.
The American financial system has reached a size and
stage in its evolution that is unique. Savings and investments
have become a mass market, and it is vital that this be SO.
We truly have a people's capitalism. The savings to fuel con-
tinued growth of a trillion dollar economy can only come from
the broadest possible base. The challenge will be to design
regulatory controls to fit the new conditions without destroying
the vitality and consumer services of our financial institutions.
We are convinced that the party now in power and its
agencies give too little weight to the need for vital and
innovative financial institutions. They fail to see the critical
need for real savings if investment is to grow. They fail to
see that only by encouraging savings and investment by growing
numbers of Americans can we produce enough investment dollars to
create the jobs that will be needed for the use of Americans
tomorrow. They fail to see how vital the role of savings
institutions, brokerage offices and mutual funds are to the future
growth of the American economic system. Specifically, the
Securities and Exchange Commission and the Justice Department
have embarked on a program which bodes ill for the financial
systems that has produced such great economic gains for Americans.
These agencies have approached the problems of our financial
institutions strictly from a legalistic point of view without
adequate economic study of the impact of their recommendation
on our ability to raise capital for vital growth.
- 2 -
We would propose, therefore, an independent and
comprehensive economic study of the role of our financial
institutions before steps are taken which might seriously
affect our ability to continue to raise the capital needed
for future economic growth.
THE ROLE OF THE SECURITIES INDUSTRY
IN THE AMERICAN ECONOMY
The American economic system is a truly remarkable machine.
During our generation it has demonstrated that when properly
managed it can fight wars, battle poverty, better life for its
growing numbers of citizens.
Its greatness is exemplified no where more than in the dramatic
growth in share ownership and the boom in activity on the nation's
stock exchanges. One out of every 8 Americans-124 million people-
own shares of common stock or mutual funds. Actually one hundred
million Americans benefit from stock investments via their pension
plan and insurance policies.
This broad base of public ownership of American Industry lies at the
very heart of the American free economy. Millions of people are truly
participants in the rewards of our free enterprise system and the
investment by millions of individuals of modest means provides the
flow of equity capital, so essential to the growth of the American
economy.
Government should encourage this investment, this free flow of
equity capital, this participation in American Economic democracy.
The Democratic administration has all too often shown little, if
any, appreciation for the vital role played by our financial institutions
and for the need to maintain viable and innovative institutions. When
sophisticated and important economic issues have arisen, this ad-
ministration has reacted with the same tired old solutions of the
Democratic Party-more - -thet's, heavy handed Bureaucratic regulation. A The
administration, frequently under the guise of "consummer protection"
has sought to acheive more and more governmental control over the
everyday operation of our financial institutions. Acting without
the benefit of any economic study or analysis, the Justice Department
and the SEC have attempted to revise drastically the stock exchange rate
structure and to alter the basic character of the securities markets. The
has Sought
Administration seeks wide-sweeping new regulatory powers over the Mutual Fund
^
Industry, which powers would be tentamont to "rate-fixing" in a highly
competitive industry. Agencies of this administration have sought, sometimes with but
more often without legislative activity, autuanty to control the competitive relationship
and every day business A of banks, savings institutions, insurance companies and
^
large institutional investors. The actions of the administration have been
characterized by a legalistic and bureaucratic approach, rather than one
sensitive to the needs of our free economic system.
The New administration the well conduct
We would propose, therefore, an independent and
comprehensive economic study of the role of our financial
institutions before steps are taken which might seriously
affect our ability to continue to raise the capital needed
for future economic growth.
United States Senate
MEMORANDUM
Colsen key 155000
Pargoes
/n
XX
Look out for this. So-called "regulatory schemes" were
recommended by the Wharton report. May have to use some regulation,
3
so best suggestion might be to aim toward "self regulation" ideas
that would encompass comparable penalty for
failure or break-
down in such regulation.
-entinity
There can be no "independent" study as long as somebody
has to pay for it. Whatton study was paid for by SEC. Whether that
had anything to do with Wharton recommendations being favorable,
for most part, to SEC thinking or whether it is pure conincidence
is anybody's guess.
Sparkman's S.J. Res. 160, calling for a study of the
total activities of institutional investment will be done by SEC-
directed employees operating under an appropriation in the SEC Act
of $875,000. This could hardly be called an independent study which
is deadlined for next September.
This is the type of private activity, having great effect
on the total economy, which requires expert knowledge of the
industry and which
currently is in deep controversy.
I would, at least, strike the word "independent". It might
even be a "dependable" study.
No study of the nature mentioned in this statement should
be made without recommendations from such
agencies
as the
Justice Department.
Since it is a foregone conclusion Justice would be involved
this reference could be eliminated.
Paragnap R (4) 7
It would seem to me the "epublican nominee could find some
other label for legislation than "Truth" in anything. "Truth-in-lending"
"Truth-in-packaging", et cetera have all been misnomers.
I don't see why we couldn't use "assuring the exact quality
of securities"has been the order of the
day
Finally, I would move cautiously for the time being on this
subject due to what might become a real clambake in the securities
field over the recent exposure on "tip sales".
SEC' "domination" over the industry may not be blamed for
this one.
United States Senate
MEMORANDUM
Return to Colson,
key Is sued
Committee.
To
To be cleared-
Sevatn Tower
Tentature alspromal-
awaiting COREENSPAN Comments
DRAFT STATEMENT ON THE ROLE OF THE
SECURITIES INDUSTRY IN THE NATIONAL ECONOMY
Today, one out of every eight Americans own shares
of mutual funds or common stocks in American industry.
Directly, and indirectly, one hundred million Americans
benefit from stock investments by way of pension plans or
insurance policies. Nowhere is the greatness of the American
economic system more dramatically exemplified than in the
tremendous increase in the number of individual shareholders.
This broad base of public ownership of American industry is
the foundation of our free economic system.
The fantastic growth of our securities industry and
ever-increasing public participation has created new problems
such as the overburdened condition of our Nation's stock
exchanges. The enormous increase in institutional investment
has raised new public policy questions, the impact of institutional
investing on the market and on our economy, and the effectiveness
of existing law in providing full and adequate protection for
the investor.
The reaction of this administration to these issues,
however, has been simply to trot out the same tired old "cure=alls"
3
of the democratic party, that is more heavy-handed bureaucratic
regulatory schemes.
2 --
What is needed - and it will be a first priority of
my administration - is an independent, comprehensive, economic
study of the role of our financial institutions in our economy,
2
the relationship of our financial institutions to our nation's
growth, requirements for investor protection and the inter-
relationship of all financial institutions, banks, savings
institutions, insurance companies, mutual funds and pension
plans. Such a study is imperative before steps are taken which
might seriously affect the nation's ability to continue to raise
the capital needed for its future economic growth.
During the past Congress, a joint resolution was adopted
authorizing a study which would involve some of these issues.
Even before the study initiated, however, the Justic Department
and the SEC advanced proposals designed to revise the basic
5
3
character of the securities market, involving drastic changes
in the stock exchange rate structure and altering the economic
relationships of brokerage firms, institutional investors and
individual investors. The administration further sought wide
sweeping new regulatory powers over the mutual fund industry,
which powers would be tantamount to "rate fixing" in a highly
competitive industry. Agencies of the administration have
sought, sometimes with, but more often without legislative
- 3 -
authority, to establish bureaucratic domination over the com-
petitive relationship and everyday activities of banks, savings
institutions, insurance companies and institutional investors.
In short, in areas affecting the viability of our financial
institutions, the actions of this administration have been
characterized by a legalistic and bureaucratic approach rather
than one sensitive to the needs of our free economic system.
Another priority of my administration, and an important plank
in the Republican Platform, is a thorough and long overdue study
of the Executive Department by an independent commission patterned
after the Hoover Commission. One of the major items on the
agenda of that commission must be a determination of the proper role
which those agencies now regulating our economic institutions are
to play in insuring our nation's economic stability and growth.
Our securities laws were designed to protect the investor
by insisting upon full and complete disclosure. "Truth in
securities" has been the order of the day since the Securities
4
Act of the 30's was written. I believe in the full enforcement
of the securities law to assure absolute protection for the
1
investor; abuses of these laws should be vigorously prosecuted.
I believe furthermore that the Federal Government should be
continually sensitive to the needs for improvement in these laws
to assure investor protection. The philosophy of this administration
- 4 --
however, has been that disclosure alone is not enough and that
somehow the government can make decisions for the investor better
than he can make them for himself. This philosophy I reject.
By its actions, my administration will evidence its faith in the
American investor and in the strength and viability of American
financial institutions so essential to the success of our free
economic democracy.
J
DRAFT STATEMENT ON THE ROLE OF THE
SECURITIES INDUSTRY IN THE NATIONAL ECONOMY
Today, one out of every eight Americans own shares
of mutual funds or common stocks in American industry.
Directly, and indirectly, one hundred million Americans
benefit from stock investments by way of pension plans or
insurance policies. Nowhere is the greatness of the American
economic system more dramatically exemplified than in the
tremendous increase in the number of individual shareholders.
This broad base of public ownership of American industry is
the foundation of our free economic system.
The fantastic growth of our securities industry and
ever-increasing public participation has created new problems
such as the overburdened conditions of our nation's stock
exchanges. The enormous increase in institutional investment
has reaised new public policy questions, such as the impact of
institutional investing on the market and on our economy, and
the existing law in effectiveness of providing full and adequate
protection for the investor.
The reaction of this administration to these issues,
however, has been simply to trot out the same tired old "cure-alls"
of the democratic party, that is more heavy-handed bureaucratic
regulatory schemes.
-- 2 -
What is needed - and it will be a first priority of
my administration - is an independent, comprehensive, economic
study of the role of our financial institutions in our economy,
the relationship of our financial institutions to our nation's
growth, requirements for investor protection and the inter-
relationship of all financial institutions, banks, savings
institutions, insurance companies, mutual funds and pension
plans. Such a study is imperative before steps are taken which
might seriously affect the nation's ability to continue to raise
the capital needed for its future economic growth.
During the past Congress, a joint resolution was adopted
authorizing a study which would involve some of these issues.
Even before the study initiated, however, the Justic Department
and the SEC advanced proposals designed to revise the basic
character of the securities market, involving drastic changes
in the stock exchange rate structure and altering the economic
relationships of brokerage firms, institutional investors and
individual investors. The administration further sought wide
sweeping new regulatory powers over the mutual fund industry,
which powers would be tantamount to "rate fixing" in a highly
competitive industry. Agencies of the administration have
sought, sometimes with, but more often without legislative
- 3 -
authority, to establish bureaucratic domination over the com-
petitive relationship and everyday activities of banks, savings
institutions, insurance companies and institutional investors.
In short, in areas affecting the viability of our financial
institutions, the actions of this administration have been
characterized by a legalistic and bureaucratic approach rather
than one sensitive to the needs of our free economic system.
Another priority of my administration, and an important plank
in the Republican Platform, is a thorough and long overdue study
of the Executive Department by an independent commission patterned
after the Hoover Commission. One of the major items on the
agenda of that commission must be a determination of the proper role
which those agencies now regulating our economic institutions are
to play in insuring our nation's economic stability and growth.
Our securities laws were designed to protect the investor
by insisting upon full and complete disclosure. "Truth in
securities" has been the order of the day since the Securities
Act of the 30's was written. I believe in the full enforcement
of the securities law to assure absolute protection for the
investor; abuses of these laws should be vigorously prosecuted.
I believe furthermore that the Federal Government should be
continually sensitive to the needs for improvement in these laws
to assure investor protection. The philosophy of this administration
- 4 -
however, has been that disclosure alone is not enough and that
somehow the government can make decisions for the investor better
than he can make them for himself. This philosophy I reject.
By its actions, my administration will evidence its faith in the
American investor and in the strength and viability of American
financial institutions so essential to the success of our free
economic democracy.
September 17, 1968
TO: Allen Greenspan 7587202
Morse and Tower felt the previous draft I sent you
did not sufficiently emphasize investor protection. This
has been redone and will be resubmitted. I would like your
opinion, thoughts or comments. Will discuss with you in the
a.m.
Chuck Colson
Document source description
This file contains:
The Role of the Securities Industry in the American Economy with cover sheet. 4 pgs. Duplicate not scanned. [Report], n.d.
Suggested Recommened Position on Securities Industry's Role in American Economic Life. 2 pgs. [Report], n.d.
The Role of the Securities Industry in the American Economy with writing. 3 pgs. [Report], n.d.
Memo for Colson- Key Issues Committee. Notes. 3 pgs. [Memo], n.d.
Memo for Colson- Key Issues Committee. Draft Statement on the Role of the Securities Industry in the National Economy. 5 pgs. [Memo], n.d.
Draft statement on the Role of the Securities Industry in the National Economy. 4 pgs.13 duplicates not scanned. [Report], n.d.
Memo from Chuck Colson to Allen Greenspan. 1 pg. [Memo], 9/17/1968
Page data
- Page
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- Type
- document
- Media ID
- a1cd650eae3b835b
- Size
- unknown
Document data
- ID
- 26126413
- Core
- doc
- Type
- document
DTO data
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"ocrText": "Richard Nixon Presidential Library\nWhite House Special Files Collection\nFolder List\nBox Number\nFolder Number\nDocument Date\nDocument Type\nDocument Description\n17\n12\nn.d.\nReport\nThe Role of the Securities Industry in the\nAmerican Economy with cover sheet. 4 pgs.\nDuplicate not scanned.\n17\n12\nn.d.\nReport\nSuggested Recommened Position on\nSecurities Industry's Role in American\nEconomic Life. 2 pgs.\n17\n12\nn.d.\nReport\nThe Role of the Securities Industry in the\nAmerican Economy with writing. 3 pgs.\n17\n12\nn.d.\nMemo\nMemo for Colson- Key Issues Committee.\nNotes. 3 pgs.\n17\n12\nn.d.\nMemo\nMemo for Colson- Key Issues Committee.\nDraft Statement on the Role of the Securities\nIndustry in the National Economy. 5 pgs.\n17\n12\nn.d.\nReport\nDraft statement on the Role of the Securities\nIndustry in the National Economy. 4 pgs. 13\nduplicates not scanned.\nFriday, May 22, 2009\nPage 1 of 2\nBox Number Folder Number Document Date\nDocument Type\nDocument Description\n17\n12\n09/17/1968\nMemo\nMemo from Chuck Colson to Allen\nGreenspan. 1 pg.\nFriday, May 22, 2009\nPage 2 of 2\n1. Issues: Regulation of Securities and Financial Industries.\n2. Interested Groups: Investment Bankers, NASD, American Bankers, Mutual\nFund Industry.\n3. Platform Position: \"The dynamism of our economy is produced by millions\nof individuals who have the incentive to participate in decision-making\nthat advances themselves and society as a whole. Government can reinforce\nthese incentives, but its over-involvement in individual decisions\ndistorts the system and intrudes inefficiency and waste.\"\n4. Comment: The financial and securities industries are deeply troubled\nby what they consider the Administration's failure to recognize their\nvital contribution to a healthy economy. As reflected in the attached paper,\nthey believe that less attention should be focused in pushing them\naround and more stress should be given to freeing them to meet the\nneeds of an expanding economy which requires dynamic adjustment unhindered\nby laborious regulatory processes.\nThe platform, and Republican tradition, recognize the need for\nminimum regulation and maximum decision making freedom. The industry\nhas invested large sums in institutional advertising to further its\nimage and has provided many services for larger numbers of voters.\nSince the demands of the attached paper are mild, and the\ncountervailing interests limited, a statement should not be too difficult\nto draft.\nTHE ROLE OF THE SECURITIES INDUSTRY\nIN THE AMERICAN ECONOMY\nThe American economic system is a truly remarkable machine.\nDuring our generation it has demonstrated that when properly\nmanaged it can fight wars, battle poverty, better life for its\ngrowing numbers of citizens.\nIts greatness is exemplified no where more than in the dramatic\ngrowth in share ownership and the boom in activity on the nation's\nstock exchanges. One out of every 8 Americans 124 million people\nown shares of common stock or mutual funds. Actually one hundred\nmillion Americans benefit from stock investments via their pension\nplan and insurance policies.\nThis broad base of public ownership of American Industry lies at\nthe very heart of the American free economy. Millions of people are\ntruly participants in the rewards of our free enterprise system and\nthe investment by millions of individuals of modest means provides\nthe flow of equity capital, so essential to the growth of the American\neconomy.\nGovernment should encourage this investment, this free flow of\nequity capital, this participation in American Economic democracy.\nThe Democratic administration has all too often shown little, if\nany, appreciation for the vital role played by our financial insti-\ntutions and for the need to maintain viable and innovative\n-2-\ninstitutions. When sophisticated and important economic issues have\narisen, this administration has reacted with the same tired old\nsolutions of the Democratic Party-that is, more heavy handed\nBureaucratic regulation.\nThe Administration, frequently under the guise of \"consumer\nprotection\" has sought to achieve more and more governmental\ncontrol over the everyday operation of our financial institutions.\nActing without the benefit of any economic study or analysis, the\nJustice Department and the SEC have attempted to revise drastically\nthe stock exchange rate structure and to alter the basic character\nof the securities markets. The Administration has sought wide-sweeping\nnew regulatory powers over the Mutual Fund Industry, which powers\nwould be tantamount to \"rate-fixing\" in a highly competitive industry.\nAgencies of this administration have sought, sometimes with, but more\noften without legislative authority, to control the competitive\nrelationship and every day business of banks, savings institutions,\ninsurance companies and institutional investors. The actions of the\nadministration have been characterized by a legalistic and bureau-\ncratic approach, rather than one sensitive to the needs of our free\neconomic system.\n-3-\nThe new administration will conduct, therefore, an independent\nand comprehensive economic study of the role of our financial\ninstitutions before steps are taken which might seriously affect\nour ability to continue to raise the capital needed for future\neconomic growth.\nSuggested Recommended Position on Securities\nIndustry's Role in American Economic Life\nThe American economic system is a truly remarkable\nmachine. During our generation it has demonstrated that\nwhen properly managed it can fight wars, battle poverty,\nrebuild its cities and still provide food, shelter and a\nbetter life for its growing numbers of citizens. Its great-\nness is exemplified no where more than in the dramatic growth\nin share ownership and the boom in activity on the nation's\nstock exchanges. Owners of common stock and mutual fund shares\ntoday total $24 million - one out of every 8 Americans. Actually\n100 million Americans benefit from stock investments via their\npension plan and insurance policies.\nThe American financial system has reached a size and\nstage in its evolution that is unique. Savings and investments\nhave become a mass market, and it is vital that this be SO.\nWe truly have a people's capitalism. The savings to fuel con-\ntinued growth of a trillion dollar economy can only come from\nthe broadest possible base. The challenge will be to design\nregulatory controls to fit the new conditions without destroying\nthe vitality and consumer services of our financial institutions.\nWe are convinced that the party now in power and its\nagencies give too little weight to the need for vital and\ninnovative financial institutions. They fail to see the critical\nneed for real savings if investment is to grow. They fail to\nsee that only by encouraging savings and investment by growing\nnumbers of Americans can we produce enough investment dollars to\ncreate the jobs that will be needed for the use of Americans\ntomorrow. They fail to see how vital the role of savings\ninstitutions, brokerage offices and mutual funds are to the future\ngrowth of the American economic system. Specifically, the\nSecurities and Exchange Commission and the Justice Department\nhave embarked on a program which bodes ill for the financial\nsystems that has produced such great economic gains for Americans.\nThese agencies have approached the problems of our financial\ninstitutions strictly from a legalistic point of view without\nadequate economic study of the impact of their recommendation\non our ability to raise capital for vital growth.\n- 2 -\nWe would propose, therefore, an independent and\ncomprehensive economic study of the role of our financial\ninstitutions before steps are taken which might seriously\naffect our ability to continue to raise the capital needed\nfor future economic growth.\nTHE ROLE OF THE SECURITIES INDUSTRY\nIN THE AMERICAN ECONOMY\nThe American economic system is a truly remarkable machine.\nDuring our generation it has demonstrated that when properly\nmanaged it can fight wars, battle poverty, better life for its\ngrowing numbers of citizens.\nIts greatness is exemplified no where more than in the dramatic\ngrowth in share ownership and the boom in activity on the nation's\nstock exchanges. One out of every 8 Americans-124 million people-\nown shares of common stock or mutual funds. Actually one hundred\nmillion Americans benefit from stock investments via their pension\nplan and insurance policies.\nThis broad base of public ownership of American Industry lies at the\nvery heart of the American free economy. Millions of people are truly\nparticipants in the rewards of our free enterprise system and the\ninvestment by millions of individuals of modest means provides the\nflow of equity capital, so essential to the growth of the American\neconomy.\nGovernment should encourage this investment, this free flow of\nequity capital, this participation in American Economic democracy.\nThe Democratic administration has all too often shown little, if\nany, appreciation for the vital role played by our financial institutions\nand for the need to maintain viable and innovative institutions. When\nsophisticated and important economic issues have arisen, this ad-\nministration has reacted with the same tired old solutions of the\nDemocratic Party-more - -thet's, heavy handed Bureaucratic regulation. A The\nadministration, frequently under the guise of \"consummer protection\"\nhas sought to acheive more and more governmental control over the\neveryday operation of our financial institutions. Acting without\nthe benefit of any economic study or analysis, the Justice Department\nand the SEC have attempted to revise drastically the stock exchange rate\nstructure and to alter the basic character of the securities markets. The\nhas Sought\nAdministration seeks wide-sweeping new regulatory powers over the Mutual Fund\n^\nIndustry, which powers would be tentamont to \"rate-fixing\" in a highly\ncompetitive industry. Agencies of this administration have sought, sometimes with but\nmore often without legislative activity, autuanty to control the competitive relationship\nand every day business A of banks, savings institutions, insurance companies and\n^\nlarge institutional investors. The actions of the administration have been\ncharacterized by a legalistic and bureaucratic approach, rather than one\nsensitive to the needs of our free economic system.\nThe New administration the well conduct\nWe would propose, therefore, an independent and\ncomprehensive economic study of the role of our financial\ninstitutions before steps are taken which might seriously\naffect our ability to continue to raise the capital needed\nfor future economic growth.\nUnited States Senate\nMEMORANDUM\nColsen key 155000\nPargoes\n/n\nXX\nLook out for this. So-called \"regulatory schemes\" were\nrecommended by the Wharton report. May have to use some regulation,\n3\nso best suggestion might be to aim toward \"self regulation\" ideas\nthat would encompass comparable penalty for\nfailure or break-\ndown in such regulation.\n-entinity\nThere can be no \"independent\" study as long as somebody\nhas to pay for it. Whatton study was paid for by SEC. Whether that\nhad anything to do with Wharton recommendations being favorable,\nfor most part, to SEC thinking or whether it is pure conincidence\nis anybody's guess.\nSparkman's S.J. Res. 160, calling for a study of the\ntotal activities of institutional investment will be done by SEC-\ndirected employees operating under an appropriation in the SEC Act\nof $875,000. This could hardly be called an independent study which\nis deadlined for next September.\nThis is the type of private activity, having great effect\non the total economy, which requires expert knowledge of the\nindustry and which\ncurrently is in deep controversy.\nI would, at least, strike the word \"independent\". It might\neven be a \"dependable\" study.\nNo study of the nature mentioned in this statement should\nbe made without recommendations from such\nagencies\nas the\nJustice Department.\nSince it is a foregone conclusion Justice would be involved\nthis reference could be eliminated.\nParagnap R (4) 7\nIt would seem to me the \"epublican nominee could find some\nother label for legislation than \"Truth\" in anything. \"Truth-in-lending\"\n\"Truth-in-packaging\", et cetera have all been misnomers.\nI don't see why we couldn't use \"assuring the exact quality\nof securities\"has been the order of the\nday\nFinally, I would move cautiously for the time being on this\nsubject due to what might become a real clambake in the securities\nfield over the recent exposure on \"tip sales\".\nSEC' \"domination\" over the industry may not be blamed for\nthis one.\nUnited States Senate\nMEMORANDUM\nReturn to Colson,\nkey Is sued\nCommittee.\nTo\nTo be cleared-\nSevatn Tower\nTentature alspromal-\nawaiting COREENSPAN Comments\nDRAFT STATEMENT ON THE ROLE OF THE\nSECURITIES INDUSTRY IN THE NATIONAL ECONOMY\nToday, one out of every eight Americans own shares\nof mutual funds or common stocks in American industry.\nDirectly, and indirectly, one hundred million Americans\nbenefit from stock investments by way of pension plans or\ninsurance policies. Nowhere is the greatness of the American\neconomic system more dramatically exemplified than in the\ntremendous increase in the number of individual shareholders.\nThis broad base of public ownership of American industry is\nthe foundation of our free economic system.\nThe fantastic growth of our securities industry and\never-increasing public participation has created new problems\nsuch as the overburdened condition of our Nation's stock\nexchanges. The enormous increase in institutional investment\nhas raised new public policy questions, the impact of institutional\ninvesting on the market and on our economy, and the effectiveness\nof existing law in providing full and adequate protection for\nthe investor.\nThe reaction of this administration to these issues,\nhowever, has been simply to trot out the same tired old \"cure=alls\"\n3\nof the democratic party, that is more heavy-handed bureaucratic\nregulatory schemes.\n2 --\nWhat is needed - and it will be a first priority of\nmy administration - is an independent, comprehensive, economic\nstudy of the role of our financial institutions in our economy,\n2\nthe relationship of our financial institutions to our nation's\ngrowth, requirements for investor protection and the inter-\nrelationship of all financial institutions, banks, savings\ninstitutions, insurance companies, mutual funds and pension\nplans. Such a study is imperative before steps are taken which\nmight seriously affect the nation's ability to continue to raise\nthe capital needed for its future economic growth.\nDuring the past Congress, a joint resolution was adopted\nauthorizing a study which would involve some of these issues.\nEven before the study initiated, however, the Justic Department\nand the SEC advanced proposals designed to revise the basic\n5\n3\ncharacter of the securities market, involving drastic changes\nin the stock exchange rate structure and altering the economic\nrelationships of brokerage firms, institutional investors and\nindividual investors. The administration further sought wide\nsweeping new regulatory powers over the mutual fund industry,\nwhich powers would be tantamount to \"rate fixing\" in a highly\ncompetitive industry. Agencies of the administration have\nsought, sometimes with, but more often without legislative\n- 3 -\nauthority, to establish bureaucratic domination over the com-\npetitive relationship and everyday activities of banks, savings\ninstitutions, insurance companies and institutional investors.\nIn short, in areas affecting the viability of our financial\ninstitutions, the actions of this administration have been\ncharacterized by a legalistic and bureaucratic approach rather\nthan one sensitive to the needs of our free economic system.\nAnother priority of my administration, and an important plank\nin the Republican Platform, is a thorough and long overdue study\nof the Executive Department by an independent commission patterned\nafter the Hoover Commission. One of the major items on the\nagenda of that commission must be a determination of the proper role\nwhich those agencies now regulating our economic institutions are\nto play in insuring our nation's economic stability and growth.\nOur securities laws were designed to protect the investor\nby insisting upon full and complete disclosure. \"Truth in\nsecurities\" has been the order of the day since the Securities\n4\nAct of the 30's was written. I believe in the full enforcement\nof the securities law to assure absolute protection for the\n1\ninvestor; abuses of these laws should be vigorously prosecuted.\nI believe furthermore that the Federal Government should be\ncontinually sensitive to the needs for improvement in these laws\nto assure investor protection. The philosophy of this administration\n- 4 --\nhowever, has been that disclosure alone is not enough and that\nsomehow the government can make decisions for the investor better\nthan he can make them for himself. This philosophy I reject.\nBy its actions, my administration will evidence its faith in the\nAmerican investor and in the strength and viability of American\nfinancial institutions so essential to the success of our free\neconomic democracy.\nJ\nDRAFT STATEMENT ON THE ROLE OF THE\nSECURITIES INDUSTRY IN THE NATIONAL ECONOMY\nToday, one out of every eight Americans own shares\nof mutual funds or common stocks in American industry.\nDirectly, and indirectly, one hundred million Americans\nbenefit from stock investments by way of pension plans or\ninsurance policies. Nowhere is the greatness of the American\neconomic system more dramatically exemplified than in the\ntremendous increase in the number of individual shareholders.\nThis broad base of public ownership of American industry is\nthe foundation of our free economic system.\nThe fantastic growth of our securities industry and\never-increasing public participation has created new problems\nsuch as the overburdened conditions of our nation's stock\nexchanges. The enormous increase in institutional investment\nhas reaised new public policy questions, such as the impact of\ninstitutional investing on the market and on our economy, and\nthe existing law in effectiveness of providing full and adequate\nprotection for the investor.\nThe reaction of this administration to these issues,\nhowever, has been simply to trot out the same tired old \"cure-alls\"\nof the democratic party, that is more heavy-handed bureaucratic\nregulatory schemes.\n-- 2 -\nWhat is needed - and it will be a first priority of\nmy administration - is an independent, comprehensive, economic\nstudy of the role of our financial institutions in our economy,\nthe relationship of our financial institutions to our nation's\ngrowth, requirements for investor protection and the inter-\nrelationship of all financial institutions, banks, savings\ninstitutions, insurance companies, mutual funds and pension\nplans. Such a study is imperative before steps are taken which\nmight seriously affect the nation's ability to continue to raise\nthe capital needed for its future economic growth.\nDuring the past Congress, a joint resolution was adopted\nauthorizing a study which would involve some of these issues.\nEven before the study initiated, however, the Justic Department\nand the SEC advanced proposals designed to revise the basic\ncharacter of the securities market, involving drastic changes\nin the stock exchange rate structure and altering the economic\nrelationships of brokerage firms, institutional investors and\nindividual investors. The administration further sought wide\nsweeping new regulatory powers over the mutual fund industry,\nwhich powers would be tantamount to \"rate fixing\" in a highly\ncompetitive industry. Agencies of the administration have\nsought, sometimes with, but more often without legislative\n- 3 -\nauthority, to establish bureaucratic domination over the com-\npetitive relationship and everyday activities of banks, savings\ninstitutions, insurance companies and institutional investors.\nIn short, in areas affecting the viability of our financial\ninstitutions, the actions of this administration have been\ncharacterized by a legalistic and bureaucratic approach rather\nthan one sensitive to the needs of our free economic system.\nAnother priority of my administration, and an important plank\nin the Republican Platform, is a thorough and long overdue study\nof the Executive Department by an independent commission patterned\nafter the Hoover Commission. One of the major items on the\nagenda of that commission must be a determination of the proper role\nwhich those agencies now regulating our economic institutions are\nto play in insuring our nation's economic stability and growth.\nOur securities laws were designed to protect the investor\nby insisting upon full and complete disclosure. \"Truth in\nsecurities\" has been the order of the day since the Securities\nAct of the 30's was written. I believe in the full enforcement\nof the securities law to assure absolute protection for the\ninvestor; abuses of these laws should be vigorously prosecuted.\nI believe furthermore that the Federal Government should be\ncontinually sensitive to the needs for improvement in these laws\nto assure investor protection. The philosophy of this administration\n- 4 -\nhowever, has been that disclosure alone is not enough and that\nsomehow the government can make decisions for the investor better\nthan he can make them for himself. This philosophy I reject.\nBy its actions, my administration will evidence its faith in the\nAmerican investor and in the strength and viability of American\nfinancial institutions so essential to the success of our free\neconomic democracy.\nSeptember 17, 1968\nTO: Allen Greenspan 7587202\nMorse and Tower felt the previous draft I sent you\ndid not sufficiently emphasize investor protection. This\nhas been redone and will be resubmitted. I would like your\nopinion, thoughts or comments. Will discuss with you in the\na.m.\nChuck Colson"
}