The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1933-10-16

disclosures brought OUT by F6rQ-
inand Pecora, committee conSel, and
the attending senators doubtless will
confirm congressional suspicious
that the money traders had better
be kept under close watch.
Mr.. Pecora implied last week that
Dillon, Read had set up a vest
pocket subsidiary, the Eastern Trust
Company, to share profits in two
S25 100000 Brazilian government
f1otations as a means of lodging
high bracket corporation taxes. 1t
was merely a passing suggestion, but
it captured headlines.
Dillon, Read Suffers Bad Day
Apart from that the counsel gave
the Dillon, Read forces a bad day.
George Q. Hayward, a vice-presi-
dent, had to concede that a $25,-
600, 900 bond issue earmarked for
electrification of a Brazilian rail-
way twelve years ago had not yet
been applied to that purpose, al
though the money had been spent
Mr.. Hayward, fluently responsive,
also had to admit that Dillon, Read
advised bondholders in 1881 that
interest would be paid at a time
when the house actually had de-
scribed the issue as in default. Last
week I accepted advices regarded as
entirely trustworthy which indicated
that Dillon, Read & Co. would be
able to establish innocence of bad
faith or in dealing with the public.
Perhaps the conclusion was too
hasty.
The whole of South American
financing during the 1920's appears,
in retrospect, giddily irresponsible.
Bankers may point to wholesale de-
faults in bonds of domestic political
units as eXtenuation. That hardly
satisfies the depleted investors.
The mood toward the senate COM
mittee's Investigations may be
slightly apathetic-it being difficult
to keep the public attention con-
centrated on one aspect of a be-
wildering social, political and econo-
mic transformation-but it could
easily enough be reawakened into
interest.
Meantime, the controversy over
the Securities act is maintained I'M
impaired. Bankers, industrialists
and Wall Street lawyers come to
Washington on the innumerable err
rands that draw citizens hither.
They call on, dine with friends in
the government and take part in the
night-long talkfests which are a
feature of New Deal Washington.
A conspicuous New York LAWYER
sat up until 4 a. m. with a group
of friends in the New Deals able
Civil Service.
Act Blocks Capital I .nancing
II haven't enjoyed a night of free
and gusty speculation such as that
since 1 was a sophomore and de-
bated the long hours through on
whether there was a God" he re-
ported.
These visitors emphatically, good
humoredly and convincingly assert
that the Securities act constitutes
a blockade to capital financing.
They, no doubt periodically, see it
as vital impeachment to recovery.
Look at the record, they say
Virtually no long-term issues offered
in the New York capital market
since the act became effective. They
declare that men of substance and
position will not serve as directors
under the act; that corporations
must meet maturities by selling
equities; that no industrial expan-
sion-particularly in the Frustrated
capital goods industries - can
possibly be effected so long as Of
hcers and directors must certify to
the honesty of registration applica-
tions at the Federal Trade Commits
sion.
The propaganda insists that
liability under the act for officers,
directors, underwriters, accountants,
engineers and other experts is I'M
limited. Which is to say that
director signing an application for a
$40, 600 900 bond issue might be held
liable for the whole sum if an ac-
countant's figures happened to be
wrong in material item.
Friends of the Securities act fat
ly dispute that. They assert that
liability is limited to what an officer,
director, underwater or expert may
reasonably be expected to know. At
the Federal Trade Commission little
sympathy is felt for the protesting
point of view.
THE liability and exculpating pro-
visions of the act are almost identi-
cal with those in the English Com
panies act 1 was told at the COM
mission. THE act exeulpates every
principal beyond what he might be
expected, in reason, to know"
A friend of the act asserted last
week that almost every important