"THE YEAR AHEAD: COPING WITH OUR COMMON PROBLEMS"
THE OPENING PAGES OF THIS SPEECH AND OTHERS, GIVING A PERSONAL IMPRESSION OF RAY GARRETT, JR., HAVE BEEN GRACIOUSLY PROVIDED BY HARVEY L. PITT.

An Address by
Ray Garrett, Jr., Chairman
Securities and Exchange Commission

Presented before
THE NATIONAL SECURITY TRADERS ASSOCIATION
October 6, 1974
Scottsdale, Arizona

Whether the past year has been one to celebrate depends upon where you sit and what you expected. It's been a good year for Arabs and for Evil Knievel -- when you consider what might have happened. It's been good, generally, for our detractors, including those curious people in our own midst who find pleasure in the distresses of democratic government and a free economy. It's been a good year for the Securities and Exchange Commission as an institution.

For the second year in a row we are getting a good budget increase, so that by next spring our staff will number over 2,000, nationwide, for the first time in our history. And we did it all on declining revenues. Our best source of revenues are the feeds paid on '33 Act registration statements and in that department we have suffered a notable, and unfortunate, decline. It my not cheer you to contemplate our growing staff, and I suppose it is indecent for me to flaunt our new prosperity at this particular time. But I hope you won't begrudge us the new building we hope to occupy next spring.

If your fears and expectations were sufficiently dim a year ago, then we can rejoice in the fact that most of us have survived, and in the manner in which our Government survived its worst Constitutional crisis in over a century.

But is was not a good year for our capital markets or for the securities industry. We all know that, and we are deeply worried about it.

Several industry spokesmen have been generous enough to tender advice on how we at the Commission should behave in such a time of troubles. The tenor of this advice is that we should do something affirmative and helpful. We should stop thinking only about who we can sue tomorrow and get out there and fight -- get those market prices and revenues up and those costs down. Since those proposals extend to matters outside our jurisdiction, it may appear as though we have not been listening, but that is not true. And we have been trying

While considering more mundane proposals, my wife and I have been conducting some secret experiments that even the other Commissioners don't know about. We have been trying to appease the Gods of the stock markets, to see if I could bring a little rain. It all began last June when Virginia, my wife, said, "I think the Gods are mad because you are talking too much, as though you know it all. If they aren't sick of it, they ought to be. All of us down her are." Well, I realized that she is prejudiced in this area, but I decided to give it a try. From July to Labor Day, I kept very quiet. Gave no speeches. It didn't work.

Toward late August, Virginia said, "There's little time left to stop this drought with a summer really. Maybe the Gods are offended at your very presence. So we took off for Northern Minnesota to concentrate on fishing and let the Gods believe that I had completely forgotten about the stock market -- which was pretty well true. This gambit had a curious effect. Bemidji broke all records for the coldest Labor Day in its history, well below 30, but after a brief flurry on my first day at the lake, the market flopped back down.

We were puzzled, as you can well imagine. About this time I had been invited to speak to Japanese securities and financial men in Tokyo. So Virginia said, "That's it. The Gods want you clear out of the country." So, we went to Tokyo. But, like Jonah, I couldn't escape. Prices were down in Japan, and the day I visited the Tokyo Stock Exchange was the slowest of the year, and of recent years. It was tempting to head on for Nepal or the Gobi Desert, but President Ford wanted me to attend the pre-summit conference on banking and finance. Virginia thought that if I explained our rainmaking experiments, the President would understand, but I lost my nerve and came back. Obviously it was not the right thing to do. My presence at the pre-summit and, even more, at the summit itself, so infuriated the Gods that you can see what happened.

One of the Japanese with whom Virginia got quite friendly listened with great interest to her description of our program. He said the Japanese had much experience in these matters and that there was one more measure I should consider. If she would like to buy an appropriate robe and pillow and a long knife, he would be glad to instruct me in the proper procedures.

That's the other reason I came home quickly. Much as I love the securities industry and our capital markets, I'm not sure even Hara Kiri would work, and I don't intend to find out.

If deity propitiation fails, what else is there? Obviously the big problems are fundamental ones of worldwide economic conditions and fiscal and monetary policy and hopelessly beyond the reach of remedies concerned with capital market structure and regulation. Inflation, recession and high interest rates will not be curbed by the consolidated tape or composite quotes of the full-blown central market system or whether commission rates go up or not or become unfixed or not. These matters can only be dealt with directly by the Government itself, and probably by cooperative efforts among many governments, so interdependent have the economies of the free world become.

I sat through the entire summit conference with great interest. It was, among other things, a fascinating spectacle and unique in our history. There have been some good summaries of it appearing in the financial journals, but the coverage of it at the time seemed inadequate. There were some special interest harangues that were colorful and naturally drew the pictures and headlines, but there was much more of solid substance. Surely there could not be a better device for giving the President and his advisors a firsthand feel for, and understanding of, what is bothering Americans of all sorts. It is true, as several observed at the time, that the conference was directed to curbing inflation, which presumably means spending less....

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