Sentiment in the Street has it that there is more to the proposed Stock Exchange Bill than meets the eye; that, in fact, Felix Frankfurter and the rest of the borers-from-within at Washington are trying to lay foundations for a bloodless revolution, a socialization of industry to be effected through strangulation of private outlets for capital.

In the face of such a consideration as this, Whitney's precipitation of the familiar conflict between government by statute and government by permanent commission dwindles into insignificance. The immediate effect of all securities legislation must, practically by definition, be a reduction in the total amount of new flotations. And as this reduction actually takes place, recovery is insofar postponed.

The Administration, as usual, must face the issue squarely: Are you going to finance the capital industries by subsidy or are you going to finance them privately? What is happening now is that they are not being financed at all. And what the Administration is going to have to face if it imposes permanent restrictions on private financing is a permanently unbalanced budget with immediate and unprecedented industrial collapse as the immediate penalty of any attempt to balance it.

Thus the growing disaffection among small capitalists at the President's summary treatment of the whole mechanism of private investment is entirely justified on the basis that, all other things being equal, the treatment is making a fair bid to thwart what feeble forces towards recovery are already under way.

Such a state of mind as this on the part of the reactionaries, however, offers the government a superb opportunity to realize the suspected designs of Professor Frankfurter upon the virtue of the Constitution. If the budget is not balanced, if the C.W.A. is not curtailed, is, in fact, revived on an even larger scale than at present, and if Wall Street is effectively abolished, then the depression can be blamed upon the money changers and everything will be fine and dandy. In view of the fact, moreover, that private outlets for capital have proven themselves inadequate in the past to effect the necessary conversion of savings into investment to keep the country on its feet industrially, it will never be possible to balance the national budget in the future anyway without precipitating economic disaster; and so the present administration might as well do a through job of it now. If it wipes out the Wall Street crowd, it will scatter all but sentimental opposition to the principle of the unbalanced budget, and can in this way execute a coup of the first magnitude without alienating anyone but the victims of the purge.

But perhaps this is too much to hope for. Probably the budget shall be balanced and the Stock Market Bill and similar bills shall be passed and we shall have to accustom ourselves for a few more years to the artificial scarcity of the stupid paradoxes which are our present economic system. Unless the western senators get out of hand! TERTIUS.