NEW DEAL TRIUMPH

Failure of Richard Whitney's brokerage house on Tuesday upset the New York Stock Exchange immediately, although but slightly, and filled the nation with probably unnecessary fears as to the financial condition of Wall Street. Yet the bankruptcy of such a prominent firm, the business of which was mostly concerned with banks and other respectable institutions, has significance. To the conservatives it must mean the crashing of the old and established foundations, the giving way to the new order. For the S.E.C. it is a bolster to their insistence upon strict regulation of national securities and exchange members and a great aid to their program for the complete reorganization of exchanges. To the New Dealers in Washington and Wall Street it must signify a definite victory over both the Republican dichards and bad boys of the financial world.

A Harvard graduate, Richard Whitney has had a spectacular career in Broad Street, which makes his failure more important than the loss of the two or three millions by his firm. As vice-president in charge of the New York Exchange in October, 1929, when securities were plunging down at the rate of ten points a day, Mr. Whitney temporarily halted the crash. Representing the hastily-formed pool of Morgan and other bankers to save the market, he bid high on 25,000 shares of Steel and saved the day, thus creating the "Black Thursday" legend. Later, as President of the Exchange, he was a truculent critic of the Administration, since he opposed federal regulation of security markets. To end the feud between Wall Street and the S.E.C., friends and foes forced Whitney to retire in 1935, and a New Dealer replaced him.

It is difficult to find reasons for Mr. Whitney's downfall in the light of his integrity and personal success. One report says his house violated the Martin Act, which regulates the sale of stocks and bonds; another, that the charges to be preferred against him involve his connection with a liquor concern, in which he held 12,000 shares. Obviously, it is unfair to judge his business or himself until he has had a chance to speak at the March 17 hearing. But what happens to Mr. Whitney and his firm will not be remembered so much as what their failure proves. First to be noticed is the relative steadiness of the market, since under the S.E.C. short selling in a declining market is impossible. Formerly, bankruptcy of such a large house would have caused a speculative wave of selling. Second, Mr. Whitney marks a milestone in the rapidly disappearing element of "old guardism," which is seeing the eradication of its laissez-faire doctrine. With the triumph of governmental control comes the end of an era in which historians will include both the prosperity of the twenties and the barrenness of the thirties.