Legislative Branch

Congress Investigates: The Senate Investigation of the Stock Exchange during the Great Depression (Pecora Investigation)

Summary

Following the stock market crash in 1929 that preceded the Great Depression, the Senate Banking and Currency Committee investigated the American financial industry. Known as the Pecora Investigation, named for its skilled chief counsel Ferdinand Pecora, the investigation captivated public attention at the depth of the Great Depression. The committee’s expose of suspicious practices by banks and their affiliates inspired legislation to clean up Wall Street through increased government regulation.

As a result of the hearings, Congress passed the Securities Act of 1933 which increased regulation of the stock market. A year later, the Fletcher Rayburn bill created a Federal agency, the Securities and Exchange Commission, to enforce the new regulations on the stock market. The debate over this bill in the spring of 1934 attracted a great deal of correspondence from individuals who shared strong opinions for and against increased regulation.

In this lesson students will learn about Congress’ power to investigate by reading a brief summary of the Pecora Investigation. They will also learn about Great-Depression-era public opinion of Wall Street abuses and increased government regulation by analyzing examples of correspondence received by the Committee.

Rationale

Investigating is one of Congress’ most important responsibilities. Investigations can expose wrongdoing, provide oversight, and inspire legislation to protect the public from future abuses.

Guiding Question

What does the Pecora Investigation show about Congress’s responsibility to investigate, and how did correspondence sent to the committee convey public opinion about increased government regulation of Wall Street during the Great Depression? 

Materials

4 Primary Source Documents
1 Handout
3 Worksheets

Recommended Grade Level

8 - 12

Courses

Civics, U.S. History, Government

Featured Primary Source Documents

Letter from residents of Baltimore to Senator Millard Tydings in opposition to the Securities Exchange Act (Fletcher-Rayburn bill), March 29, 1934; Records of the U.S. Senate; National Archives Building, Washington, D.C. NAID 5557817

 

Telegram from Mary Sharpless Opposing the Securities Exchange Act of 1934, April 3, 1934; Records of the U.S. Senate; National Archives Building, Washington, D.C. NAID 5049669

 

Letter from Harry Fein to Senator Duncan Fletcher in support of the Securities Exchange Act (Fletcher-Rayburn bill), March 9, 1934; Records of the U.S. Senate;National Archives Building, Washington, D.C. NAID 5049740

 

Letter from John Kruttschnitt to Senator Duncan Fletcher in support of the Securities Exchange Act (Fletcher-Rayburn bill) March 9, 1934; Records of the U.S. Senate National Archives Building Washington, D.C. NAID 5557804

Time Required

45 minutes

Learning Activities

  1. Instruct the students to work individually to read Handout 1, Background Summary of the Pecora Investigation, and answer the questions on Worksheet 1.
  2. Divide the class into 4 groups. Distribute Worksheet 2 and one document to each group. Each group should have a different document. 
  3. Instruct each group to work collaboratively to analyze their assigned document by answering the questions on Worksheet 2 and recording their responses.
  4. Instruct each group share its document and answers to Worksheet 2 with the whole class.
  5. Distribute Worksheet 3. Instruct the students to answer the questions on Worksheet 3 by working individually.
  6. Invite the students to share their responses to the reflection questions on Worksheet 3 in a whole-class discussion of the guiding question.

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