Government-Out-of-Business

For the purpose of protecting, conserving and advancing the interests of the holders of foreign securities in default, there is hereby created a body corporate with the name "Corporation of Foreign Security Holders . . ."--Title II, Federal Securities Act of 1933. Wall Street found Title I of the Securities Act so onerous that the flow of long-term capital into U. S. Industry practically dried up. Last week Wall Street had the unmixed pleasure of seeing President Roosevelt forced to wriggle out of the equally unhelpful provisions of Title II. For when Congress passed the bill, it blithely overlooked the fact that a Federal bondholders' protective committee would put the Government straight into the business of dunning.

That fact did not escape Secretary of State Hull, who knows that in the eyes of foreign nations all arms of a Government are attached to the same body. He would find himself in a pretty fix if, while he were negotiating a reciprocal trade agreement, the Corporation of Foreign Security Holders were trying to squeeze out of the same country a few more sols, drachmas, pesos. Britain, France and Switzerland, old hands at debt-collecting, long ago learned that direct dunning of public debtors is best left to private creditors. Furthermore, if the U. S. Government were pressing for payment of private debts, the defaulting nations would surely ask such embarrassing questions as: Why did the U. S. Government shelve the gold clause in some $20,000,000,000 of its own bonds? Why did the U. S. extend credits to such notorious defaulters as Russia and China?

So Secretary Hull persuaded President Roosevelt to sidestep Title II. And last week it was announced that an "American Bondholders Protective Committee," with the blessing of the State Department, had held its first meeting. After discussing ways & means of collecting on $2,000,000,000 of defaulted foreign issues held by U. S. citizens, the committee adjourned to the White House for a Presidential blessing. In a long press release, the point was carefully made that although "the Government will seek to give such friendly aid as may be proper under the circumstances," the committee was purely a private affair. The committee:

Charles Francis Adams, onetime Secretary of the Navy; Newton Diehl Baker, onetime Secretary of War; Joshua Reuben Clark Jr., onetime Ambassador to Mexico; Laird Bell Chicago attorney; Hendon Chubb of Manhattan's insurance firm of Chubb & Son; W. L. Clayton, Houston cotton tycoon; John Cowles, Des Moines publisher; Herman Lewis Ekern, onetime Attorney General of Wisconsin; Philip La Follette, onetime Governor of Wisconsin; Mills Bee Lane, Savannah banker; Frank Orren Lowden, onetime Governor of Illinois; Orrin K. McMurray, Dean of the University of California's law school; Roland Sletor Morris, onetime Ambassador to Japan; John C. Traphagen. president of Bank of New York & Trust Co.; President Ernest Martin Hopkins of Dartmouth; Thomas Day Thacher, onetime solicitor general; Quincy Wright, University of Chicago Economist.

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