15. The creation of the Securities and Exchange Commission
The inefficiently controlled and generally unregulated trading of stocks and securities in the secondary markets was widely believed to have been a major cause of the market bubble which collapsed and spurred on the Great Depression. The criminal manipulation of the markets by insider trading in which a few made millions at the expense of the many was one of the practices the newly created Securities and Exchange Commission was meant to end. Like all of the New Deal legislation, it was condemned roundly as a government overreach by Republicans and other conservatives. Conservatives in congress and in the press declared that it was a government takeover of the nation’s finances, an act of communism.
Roosevelt wrote that the opposition to the establishment of safeguards in the investment industry was based on the amoral nature of what he called “the Wall Street crowd”. He wrote that they had an “inability to understand the country or the public or their obligation to their fellow man”. He established Joseph P. Kennedy, who had made more than his share of money via less than open trading, as the first head of the Securities and Exchange Commission, secure in the knowledge that Kennedy’s experience with the practice would help him wheedle it out of Wall Street.
