Evening star., 1932-01-03
Foreign Bonds.

The Senate Finance Committee Is
ventilating the subject of American In
vestments in foreign securities, light
on which appears to be timely and of
value to the investing public in this
country. 1t has been well understood
that huge holdings of foreign bonds
existed in this country. Indeed, the
Department of Commerce estimated
them at the end Of June, 1880, at a
total of 1886, ,OoO,O American
money, 1t is clear, has been used to
build great public works and industries
abroad Isolation of this country from
the rest of the world, under these cir
cumStances, seems an irnpossibility,
whether desirable or not.
The Senate committee has en-
desvored to ascertain how these for
eign securities have been fieated here,
and with what profits to the so-called
international bankers and with what
profits or losses to the investing Amer
lean public. 1t has developed the fact
that three great American banking
houses, since the World War, have
foated in the United States about So
958, 8,l86,000 or about half of all tho
foreign bonds outstanding here. The
profits of these houses in the fotations
in the handling of which they partici-
pated have been large. Outside of the net
profit to the banking houses has been
agencies which took some part in the
transactions.
The business of the international
bankers in this country is not to buy
and hold foreign bonds. 1t is to sell
them to the investing American public.
The consequence is that these foreign
bonds have been widely distributed
They are held by American corpora
tions and by American banks, as well
as by the individual investors. Whether
the international banking group has
acted in the best interest of the coun-
try by its flotation of foreign bonds on
huge scales in the United States is a
question to which various answers prob
ably will be made. The great wealth
in this country has sought, and will
continue to seek, fertile fields of in
vestment. Money always does. Doubt
less there are many investors in Amer
lea today who wish that they had kept
their money in this country. On the
other hand, the list of American Sc
curities which have tumbled in market
value since the depression set in two
years ago is long and impressive.
1t is not a good thing for a banking
group to dominate the foreign policy of
this country. There is too much at
stake to allow any group, which may be
guided by self-interest, to dominate the
policy Of this Government toward other
peoples of the world. The criticism is
frequently raised today that interna-
tional banking interests, welding great
power because of the huge sums of
money and the large number of in
Vestors Whom tney represent, nave too
much to do with the foreign policy of
this country. These criticisms are un-
fair to the administration of the Gov
ernment, whether they were made dur
ing the Wilson administration or during
that of President Hoover This Gov
ernment faces situation, not a theory,
as can readily be understood when the
evidence now presented before the Sen
ate committee is digested. The Govern
ment has never undertaken to say to
its citizens where they can or cannot
invest their moneys, here or abroad
Nor is it likely to do so. But it is the
duty of the Government not to let the
investment of American funds abroad
influence its policies to the detriment
of the entire people