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Seventy-Two
Years of Editorial Freedom
VOL. LXXIII, No. 17-S ANN ARBOR, MICHIGAN, THURSDAY, JULY 18, 1963 SEVEN CENTS
FOUR PAGES
SEC Hits Policy
Of U.S. Exchange
Advises Abolishing Floor Trading;
+ Seeks Restrictions on Specialists
WASHINGTON (M)-Investigators of the Securities and Exchange
'Mommission criticized yesterday the mechanics and policing of
America's stock exchanges and recommended dozens of sweeping
} changes.
The scope of the criticism and the proposals was unexpected.
The recommendations would do away with personal floor trad-
ing, put more restrictions on stock specialists and odd-lot traders, and
Stassen Announces Presidency
Plan
Igive the
over the
market in
SEC more supervision
vast over-the-counter
the United States.
Rails Dispute
Raises Crisis
By VAUGHN WALKER
The current railway labor dis-
pute "raises fundamental ques-
tions about the adequacy of pres-
ent collective bargaining methods
in the railroad industry," Prof.
Russell A. Smith of the law school
said yesterday.
"The present controversy is go-
ing to induce a lot of thinking
about the Railway Labor Act, the
current statute covering labor-
management disputes in the rail-
road industry," he continued, and,
the present law should be re-ex-
amined. "Its provisions appear to
be in adequate to handle the fun-
damental questions now being
raised in the dispute."
Unlike past controversies in the
rail industry, "the carriers are the
prime-movers in the current dis-
pute." Prof. Smith commented
that they sought since 1959 to
put the new work rule changes
into effect. "The unions have ex-
hausted every legal measure to
prevent these rules from taking
effect, culminating in the recent
Supreme Court decision, which
would allow the carriers to make
the changes they desire."
Other Commissions
The two previous commissions
appointed to handle the matter
made several recommendations
which were accepted by the car-
riers, but rejected by the unions.
Prof. Smith does not foresee the
present Wirtz commission making
any recommendations acceptable
to both the carriers and the un-
ions. The matter would then go
to Congress.
Prof. Smith said that "Congress
appears unlikely to act before the
deadline at the end of this month.
Congressional action in the mat-
ter would probably result in either
seizure of the railroads by the gov-
ernment or compulsory arbitra-
tion or a combination of both.
"The initiative now rests with
the administration convincing the
carriers to delay the work rule
changes." he said. He predicted
that the carriers would accept
such a delay if Congressional ac-
tion appeared C imminent.
Stimulate Thought
"At least the current dispute
will stimulate a great deal of
thinking on these matters, if not
action by Congress," Prof. Smith
said.
Prof. Smith observed the likeli-
hood that government seizure of
. the railroads might well not settle
the fundamental matters raised
by the current dispute. The basic
issue is the replacement of rail-
road firemen who are superfluous
on modern diesel engines- used by
the railroads.
Appoint Two
To Committee
No Approval
William L. Cary, chairman of
the SEC, sent the five-volume, 14-
pound, 2100-page report to Con-
gress without official approval or
disapproval.
"We expect to send a letter
within the next few days detail-
ing our views on the specific rec-
ommendations," he told Congress.
Prices on the New York Stock
Exchange slumped badly as soon
as the news from the capital
reached New York..Some traders
on1 Wall Street said they were
shocked at the proposals.
Part Two
The report was the second in-
stallment of a study requested by
Congress. after some scandals
rocked Wall Street two yearsnago.
The special study committee, head-
ed by Chicago lawyer Milton H.
Cohen, plans to release the last
part of the study in a few weeks.
The most drastic recommenda-
tion of the committee would elim-
inate floor traders on the New
York Stock Exchange and Ameri-
can Stock Exchange.
A floor trader is a member of
the exchange who, while hunt-
ing for a quick profit, buys and
sells stocks for himself and not
for clients. The committee said
there are more than 300 floor
traders, but 15 of them account
for half of all the buying and sell-
ing.
No Responsibilities
The committee said these floor
traders, are the only members of
the exchanges who may buy and
sell on the floor without having
any responsibilities to the market.
Although supporters ,of traders
say their buying and selling helps
stabilize the market, the investiga-
tors, disagreed.,
"Their trading . . is inimical to
the orderly functioning of the mar-
ket, tending to accentuate rather
than to stabilize price movements,"
their report said.
Sets Deadline
The committee recommended
that the activity of small floor
traders b0 ended ry next Jan. 2
and that of all others by Jan. 2,
1965.
The report was critical of spe-
cialists on the New Yorke Stock
Exchange - the traders assigned
the exclusive right to buy and sell
the stocks of certain companies.
It also asked for stiffer polic-
ing of odd-lot dealers, the small
traders who buy and sell in blocks
of fewer than 100 shares.
Other Items
In other analyses and recom-
mendations, the committee:
-Said that "data on short sell-
ing presently compiled by the New
York and American Stock Ex-
changes are inadequate for regula-
tion." Short selling is the practice
of selling stock that the seller does
not own or has to borrow.
-Found that the third market
-the sale of exchange-listed
stocks over-the-counter - "has
been, on balance, beneficial to in-
vestors and the public interest."
-Discussed and found little cri-
ticism of the 14 small regional ex-
changes in the United States.\
To Seek '64
Nomination
If Suppted.
Talks on Key Issues
In Lecture Series
By MARILYN KORAL
F o r m e r Minnesota Governor
Harold E. Stassen announced here
yesterday that he plans to enter
the 1964 Republican presidential
primaries in at least three states-
New Hampshire, Wisconsin and
California.
If he receives "substantial sup-
port from Republican voters," he
will "definitely be a candidate for
the Republican presidential nom-
ination."
Stressing a peace program, Stas-
sen commented, "if the members
of our Republican Party will not
otherwise have an opportunity to
consider policies such as those in
which I believe deeply, I will be
inclined to provide that oppor-
tunity, even though I recognize
the heavy handicaps in doing so."
Former Candidate
Stassen has previously been in
the running for the Republican
nomination in 1948 and 1952. He
led an unsuccessful move in 1956
* *
*
*
*
Ban
Talks
Progress;
M.Voscow,
Communist s
Confab Nears
By PHILIP S
Fu e ii *£h Co-Edito
The Institute of
Technology is "willin
Attempt To Arrange classified material"
Suitable Statement does "not impede t
of scientific materi
MOSCOW (P)-The Soviet-Chi- ing-director Prof. Ja
nese ideological negotiations ap- of the geology de
peared last night to be sliding to- plained yesterday.
ward a futile finish. He said that the
A session yesterday was wrapped a policy of never1
in the usual secrecy, but reports materialtake up a
circulated that the negotiators are of its -laboratories'
arguing about a final communique, Basically, Prof. Wi
which may be issued this weekend. sponsored research
According to one report, there will support education. T
be no meeting today, but one to- avoids heavily-class
morrow. as it avoids applied
None of the reports could be cause neither adds t
confirmed but here is a summary
of the main ones:
-The Russians want a com- Troops1
munique which will put the blame
for the ideological dispute square-
ly on the shoulders of the Chi-
nese. Charles
-The Chinese are demanding a
communique which recites the fact
that a meeting was held, and
which leaves the door open for a WASHINGTON-
future meeting. The Chinese would that "law and order
like to call a meeting of all the dered state troopers
world's Communist parties and six policemen and a
ask them to decide who is right, Nearly 100 Neg
Moscow or Peking. Tuesday refused to
There is also a report that the the integration ofa
Chinese have suggested that each cilities and public s(
side issue its own communique, In Cambridge, Md.
summarizing the respective argu- o rc nNg
ments. of a truce on Negr
Although there was no solid in- tions brought renew
formation as to precisely what was city, plagued with r
going on in the conference room, The Negro leader
the war of words raged elsewhere. Cambridge non - vi
The official Chinese news agen- committee would wit
cy indirectly accused the Soviet demonstrations pend.y
Union of collaborating with the of actions taken by
United States in an alleged at- committee and the
tempt to set up a nuclear weapons In Harrisburg, Pa.,
monopoly. Scranton said tha
Referring to the East-West nu- commodation featur
clear test ban talks now under Federal civil righ
way here, the Chinese agency said should apply onl
the Americans are participating licensed facilities.
because of "sinister motives." In Providence, R.
The agency claimed that the H. Chafee issued
Kennedy Administration wants a order creating a go
test ban so as to "enable the big force on civil rights
powers to monopolize nuclear In New York, Bis
weapons and facilitate continued Childs, a Negro Pr
United States pursuance of its heads the greater N
policy of nuclear blackmail." mittee for equal opp
The Soviet contribution to the a Federal court sui
public argumeit appeared in the state and city const
issue of the official Soviet labor there is discrimin
newspaper, Trud. In a dispatch Negro workers.
from its correspondent in China, Involved is about
Trud accused the Chinese authori- building projects, m
ties of "attempts, to incite in the have been targets o
fraternal Chinese people unfriend- demonstrations in re
ly feelings and sentiments toward In New Orleans, t
the U.S.S.R." court of appeals was
Trud said the Chinese people NAACP to order tw
actually have warm feelings to- public school' syste
ward the Soviet people. Negroes to all-white
Peking
Still.
Split'
i
*
*
*
T -Lives with' Secrecy
UTIN
r
Science and
ng to live with
as long as it
he normal use
Al' IST act-
6mes T. Wilson
partment ex-
institute has
letting secret
major portion
work.
Ilson declared,
is designed to
Therefore, IST
ified projects
research, be-
o education.
A university has no business
running a completely secret re-
search project or installation in
peacetime, he asserted.
"No laboratory should have so
much classified work that it can-
not furnish open, publishable
thesis material to graduate stu-
dents," Prof. Wilson, explained.
Secrecy in sponsored-research
recently erupted into controversy
when Prof. Lucien M. $ibermann
left the University of Chicago
for the defense department's In-
stitute for Defense Analysis and
broke up his radar research group
because the university administra-
tion was not supporting secret de-
fense projects. (Some of his group
may join 1ST.)
He indicated he could not con-
tinue to work there as long as the
Ordered To Protect
ton fronm Violence
By The Associated Press
-South Carolina Gov. Donald Russell, vowing
will be maintained" in his state, yesterday or-
into the historic port city of Charleston where
fireman were injured in a racial clash.
roes jailed as a result of violence that flared
identify themselves to police. The Negroes seek
all public fa-
HAROLD STASSEN
. . . new approach
*
to "dump" former Vice-President
Richard M. Nixon from the Re-
publican ticket..
Discussing his own program,
Stassen charged that President
.John F Kennedy has formulated
foreign policy on the basis of
"self-interest rather than the in-
terest of humanity.
"However, I should add in fair-
ness that the leading spokesman
of our Republican Party is cur-
rently urging that our policies be
narrowed even more in a nation-
alistic sense." He wouldn't say
who he had in mind.
Deterioration
Stassen said that United States'
relations with England, France
and Germany have "deteriorated"
because President Kennedy has
not called for their advice on im-
portant issues. He said that future
presidential leadership should at-
tempt a closer relationship with
European allies.
He urged that the United States
recognize East Germany, and per-
mit both Germanys to have seats
in the United Nations General
Assembly. This will result in "a
much better prospect of ultimate-
ly uniting Germany and of finally
tearing down the Berlin Wall
without war."
chool systems.
, an extension
o demonstra-
ed hope to the
acial strife.
ship said the
olent action
hhold further
ing evaluation
the bi-racial
town council.
Gov. William
t public ac-
es of proposed
ts legislation
y to state-
I., Gov. John
an executive
overnor's task
S.
shop Alvin A.
otestant who
ew York com-
ortunity. filed
t to halt all
ruction where
ation against
$2.8 billion in
any of which
of civil rights
ecent weeks.
he 5th circuit
asked by the
wo Mississippi
,ms to admit
e schools.'
Council Group
Reap praises
Fair Housing
The Ann Arbor City Council's
committee on housing legislation
last night discussed a revised ver-
sion of the proposed fair housing
ordinance in the fifth of its series
of informal sessions.
Ann Arbor Mayor Cecil 0. Creal
sat in on the discussion last, night.
The changes introduced at 'last,
night's meeting were the result
of "recent testimony from other
groups invited to express their
opinions of the ordinance," com-
mittee chairman Wendell E. Hul-
cher, Fourth Ward Republican,
said.
He was partially referring to
the meeting last week when the
committee was joined by Profes-
sors Samuel J. Eldersveld of the
political science department, Don-
ald C. Pelz of the psychology de-
partment and Luke K. Cooperrider
of the Law School.
At next week's committee meet-
ing representatives from real es-
tate, banking and the construc-
tion industry will be present to
discuss their opinions of the pro-
posed ordinance.
University of Chicago administra-
tion was not enthusiastically sup-
porting or seeking the necessarily
secret contracts.
Need Classified Data
But, it is hard to keep up in
physcal science research without
access to classified material, Prof.
Wilson commented.
Most of the secrets provide
"peripheral knowledge," he ex-
plainedndealing mainly with
equipment of military planning
rather than scientific theory.
Security precautions used to
guard segments of IST research
"gives an air of secrecy that does
not really exist," Prof. Wilson said.
Semi-Secrecy
He commented that very little
of IST's work is completely clas-
sified secret although parts of
many projects are. "Much of the
work is unclassified, and its re-
sults are published in the usual
scientific journals."
Prof. Wilson explained that
while a research mathematician is
studying theoretical radar con-
cepts, he may need a classified Air
Force radar set to test them, thus
adding a secret factor to his
work.
"The government takes a broad
view on secrecy, seeking no more
than is necessary. It is obvious to
them that classified material
holds back progress," Prof. Wilson
said.
IST has extensive dealings with
federal agencies that require se-
crecy on certain portions of their
projects. The biggest IST program
- Project Michigan - results in
highly-secret detection apparatus.
Another important project is
the Accoustics and Seismics Lab-
oratory Vela-Uniform project
which has made headway in de-
vising means of differentiating
earthquakes from underground nu-
clear tests Some parts of this
program are also secret.
World News
Roundup
By The Associated Press
OKLAHOMA CITY-A special
three-judge federal court, plow-
ing into untouched legal ground,
shattered a half-century of rural
domination in Oklahoma's Legis-
lature yesterday by reapportion-
ing both houses on a strict popu-
lation basis.
It marked the first time a fed-
eral court has actually reshuffled
legislative seats in any state.
* * *
SAIGON-President Ngo Dinh
Diem's government cracked down
hard yesterday on Buddhist street
demonstrations in a church-state
struggle complicating the Ameri-
can-backed war against Commu-
nist guerrillas. Scores were arrest-
ed.
American security officers said
there was deliberate police brutal-
ity that shocked and disgusted
them.
NEW YORK-Gov. Nelson A.
Rockefeller has decided to enter
state primaries in a bid for the
1964 Republican presidential nom-
ination, Newsday, Long Island
newspaper, reported yesterday.
Rockefeller neither confirmed nor
denied the report.
* * *
LISBON-The Portuguese gov-
ernment said yesterday that Afri-
can rebels have seized control of
15 per cent of Portugal's West
African colony of. Guinea and gov-
ernment troops have been unable
to dislodge them.
Negotiations
May Result
In Agreemen
Communique Gives
First Official Word
Of Tri-Power Meeting
By The Associated Press
MOSCOW-Russian, British and
American negotiators announced
last night they have "made pro-
gress in drafting some of the
provisions" for a treaty banning
nuclear tests in-the atmosphere,
outer space and under water.
The announcement, set forth in
a three-power communique after
the third day of negotiations,
LORD HAILSHAM
... British negotiator
gave some promise of a quick
agreement on a limited test ban
that might open the way for East-
West security talks and possibly
a summit conference.
The communique, presented the
first official word that the pro-
jected treaty would exclude un-
derground tests, the, detection and
inspection of which are in dis-
pute, and that the drafting stage
had been reached.
Broad Exchange
"Views were exchanged on other
matters of mutual interest," it
said.
The negotiating teams-led by
United States Undersecretary of
State W. Averell Harriman, Lord
Hailsham of Britain and Soviet
Foreign Minister Andrei A. Gro-
myko-met for more than three
hours yesterday.
The apparently fast pace lent
new force to prospects that with
the limited test ban agreement
might come a quick easing of
East-West tensions and a Russian-
American declaration of non-
aggression.
Action by Kennedy
American sources have said
President John F. Kennedy may
be willing to sign such a declara-
tion if an acceptable test ban
agreement is worked out. Premier
Nikita S. Khrushchev in turn
would be asked to sign a similar
agreement. The two, as outlined in
Washington by an associate of
the President, might commit the
two governments not to try to
change present arrangements in
Europe by forcible means.
In Washington, Rep. Cornelius
E. Gallagher, (D-NJ) said that if
Soviet and Western representa-
tives agree on a basis for control-
ling nuclear testing an early sum-
mit conference would be likely for
signing of the agreement. A mem-
ber of the House foreign affairs
committee, Gallagher added that
"I have no special information
that an agreement is close."
Ann Arbor's Annual Art Fair Attracts Admirers
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