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Before the SEC: Bucket Shops, Fraud, and the Market Reform That Saved Capitalism
Audio is available on Spreaker — see link below.
Before 1933, you could sell stock in a company that didn't exist — and no federal law would stop you. This episode traces the unregulated chaos that made the 1929 crash inevitable and the sweeping New Deal reforms that rebuilt American capitalism from the ground up.
Audio is available on Spreaker — see link below.
Before nineteen thirty-three, you could sell stock in a company that didn't exist. You could take investors' money, promise them returns, file no paperwork with any federal authority, and walk away.
Charles Merrill saw the warning signs. He told clients to reduce their market exposure before the crash.
Roosevelt came to power in nineteen thirty-three with the country in a state of genuine emergency. Banks were failing.
The Securities Exchange Act of nineteen thirty-four established the Securities and Exchange Commission. Before that, securities regulation existed only at the state level, through so-called blue sky laws, and those varied wildly and were easy to evade.
The architecture built in nineteen thirty-three and thirty-four held for decades. Glass-Steagall stood until nineteen ninety-nine, when it was repealed.
Here's the clean version of what the SEC's creation represented. American capitalism in nineteen twenty-nine was a system that had grown large and powerful without developing the regulatory infrastructure needed to sustain itself responsibly.
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