Visitors

While investigating the dark bog of protective committees and corporate reorganizations, the Securities & Exchange Commission took a long look at the Foreign Bondholders Protective Council, the quasi-public body whose duty it is to salvage something for the luckless owners of foreign dollar bonds. On the whole the Council received a clean bill of health from SEC. But the SECommissioners are perfectionists at heart, and in their report to Congress last May they had several suggestions to make.

Most of these suggestions had to do with the Council's finances. At present the Council is supported by voluntary contributions, three-fifths of its income being gifts from bankers. SEC has no very high opinion of bankers, particularly those bankers who helped foist on the U. S. public the $2,000,000,000 worth of dollar bonds now in default. Moreover, SEC found that bankers in their various capacities of trustees, paying agents and underwriters were frequently lined up on the side, not of their customers, but of their clients, the defaulters.

An implied criticism of the Council's banker ties was contained in strong suggestions that the Council's work should be broadened, i) to include bondholders' suits against underwriters, 2) more vigilance in seeing that short-term creditors--almost always bankers--do not yank their own chestnuts from the fire one jump ahead of the long-term bondholders. In Germany, of course, the big Manhattan bankers did that consistently throughout the Depression.

Having cogitated SEC's friendly criticism and suggestions, the Council's president, able, chubby J. (for Joshua) Reuben Clark Jr., requested the Secretary of State and SEChairman to appoint a two-man "Board of Visitors" to descend upon the Council ''from time to time with or without notice." For his man. Secretary of State Hull last week designated Herbert Feis, State Department adviser on international economic affairs, and SEChairman James McCauley Landis named the SEChairman--presumably Commissioner William O. Douglas, who is slated to succeed Mr. Landis when that New Dealer retires next September to take up his new duties as dean of the Harvard Law School.

Scrupulously Mr. Clark pointed out that his "visitors" would not constitute a link with the Federal Government. Having served the State Department for eleven years as solicitor, legal representative, Under Secretary (under Herbert Hoover) and finally as the late Dwight Morrow's successor as Ambassador to Mexico, Mr. Clark well knows that any hint that his dunning agency was an arm of the U. S. Government would play ned with the New Deal's good neighbor foreign policy. Chief job of Mr. Clark's visitors will be to assure the public that the Council is not linked on the other side with the bankers. As SEC pointed out, the Council has not yet seen fit to publish a financial statement.

It is SEC's idea that the Council should seek support from some private foundation, borrowing meantime from the Treasury.

In addition to gifts from bankers, the Council now requests voluntary contributions from both bondholders and defaulting governments, a precarious source of income since the request is made after settlements are arranged. For future defaults on future dollar bonds, SEC offers the practical, if cynical, suggestion that bankers be made to contribute a fixed percentage of their underwriting profits to a permanent trouble fund.

*Awaiting the arrival of the body of the senior Rockefeller in Tarrytown last May. From the left: Father Rockefeller, Sons David, Nelson, Winthrop, Laurance, John D. III.

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