Evening star., 1932-02-07
ECONOMIST CONTENDS BANKING
INQUIRY HAS PROVED FAILURE
Winkler BelievesL Larger Investment Houses
Have Given Good Account of Them
selves in Making Foreign Loans.

mistakes, may be assumed to have come
to an end.
Senator johnson was after the big
bankers. who, after all is said and done,
have, with but very few exceptions,
adhered to the same ethical principles
which they ordinarily observe in all
their transactions, whether at home or
abroad. To be sure, many an error has
been made by them, but they may rea-
sonably be assumed to have learned
from their past experiences, whereas
their inexperienced and smaller COM
petitorS never. or very rarely, do
Senator Johnson has done what he
thought to be his duty. He has sum-
moned all the formidable bankers-the
Morgans and the Kuhn-Loebs and
numerous others. Little has been
learned from the testimony. The Sena-
tor, it is feared. is now Sadder man.
But is he wiser? Hardly. He could
have learned at considerably less ex-
pense most of what came to light in
the course of the hearing.
The Senator from California is about
to propose a remedy. He has intro
duced bill creating foreign loan
board, which will supervise the fiotation
Of foreign loans in the United States.
The management Of the board will be
vested, among others. in the Secretaries
of State and Commerce and the gov
ernor of the Federal Reserve Board.
The bill provides that no Federal Re-
serve bank or member bank of the
Federal Reserve System shall hereafter
make, negotiate or underWrite any for
eign loans without first obtaining the
approval of the board; or accept as
security for any loan or purchase on its
own account any bond or other obliga-
ton evidencing a foreign loan hereafter
made unless the board has approved the
foreign loan; or make any loan or pur-
chase for its own account securities of
any persons engaged in negotiating for
eign loans.
Governmental Supervision.
The board in arriving at its deter
mination of the adviSabtity of any
contemplated foreign loan must take
into consideration the general financial
condition of the borrower, the security
available for the loan, remedies avail
able for enforcement of the obligation
in case of default and proposed methods
OF financing the loan.
This is obviously governmental Su-
pervision with a vengeance. viii it
work? Will the committee be able to
analyze the general financial condi-
ton of the borrower more efficiently
and intelligently than a group of ex-
pertS whom a first-claSs bank inStitu-
ton will be able to employ? If the
board will secure the services of men
whose financial ability and training in
international economic matters are of
the highest order, the chances are that
their services before long will be en-
listed by private enterprises. This has
always been the case in the past. Why
should it be different now?
Would it not be much more desirable
if there were created in the United
States body similar, il most respects,
to the Council of Foreign BondholderS
in England, which for more than two
generations has served the British in
vesting public in all matters pertaining
to foreign investments?
(Copyright, 1882, by North American News
paper Alliance, Inc.)