Evening star., 1934-11-20
HULL SEESLEAGUE
FINANCIAL EXPERT
Visitor to Explain Work of
Group Handling Loans to
Small Nations.
BY CONSTANTINE BROWN.

Secretary of State Cordell Hull re-
ceived Alexander Loveday, head of the
League Of Nations financial section
and chief of economic intelligence Of
the League yesterday.
While Mr.. Loveday is in Washing
ton in no official capacity he IS
merely gathering news and impress
sions Of Americas economic re-
covery-certain quarters attribute
good deal of Importance to his con-
versations with high Government Of
ficials and especially with the Secre-
tary of State with whom he spent a
half hour.
1t is admitted that Mr.. Loveday is
endeavoring to convince the United
States Government of the necessity
of taking a more active part in the
Financial Committee of the League
in which it is nominally represented
by Ambassador at Large Norman H.
Davis.
To Handle Loans.
This Financial Committee has been
created chiefly to handle loans to the
less solvent smaller countries of Eu-
rope-such as Austria and Bulgaria.
The League believes that a more ac-
tive cooperation by the United States
might facilitate the handling of the
financial situation Of these countries.
There is belief-partially founded
that an improvement in the financial
and the economic situation of these
countries might ease the political ten
sion in Central and Southeastern Eu-
rope. Because the administration is
interested in the preservation Of peace,
the financial section of the League
thinks this may be the psychological
moment to obtain a more active finan-
cial cooperation from America.
This belief is further strengthened
by the fact that during the last two
weeks the Treasury has not objected
to loans to foreign countries, under
the guise of gold purchases. despite
the fact that in certain quarters these
purchases" are considered to violate.
if not the letter. at least the spirit
of the johnson act passed last April
as a retalitory measure against the
nations which have defaulted the
payment of their war debts.
The principal beneficiary of Amer
ica's interest in the financial situation
of the gold block is Belgium. which
obtained credit of $25, ZOO, 900 to
bolster up the tottering belga.
1t is true that officially this ad-
vance IS regarded as a purchase of
gold from Belgium. but there has
been so far no transfer of gold from
the National Bank of Belgium to the
New York Federal Reserve Bank
which put through this deal with the
approval of the Federal Reserve
Board
The johnson act, which was avow-
edly directed against the defaulter
nations. provides q penalty "of not
more than $4,000 or Imprisonment
for not more than five years, or both" :"
for any person who purchases or sells
the bonds. securities or other obliga-
tions Of any foreign government or
political subdivision thereof or any
organization or association acting on
behalf Of a foreign government or
political subdivision thereof, or makes
any loan to such foreign govern
ment, political subdivision ex-
cept renewal or adjustment of exist
ing Indebtedness ."
The National Bank Of Belgium,
which has been fighting for the main
tenance of the belga on the gold
standard. is in fact an organization
acting on behalf of the Belgian gov
ernment, and although technically no
loan was made to Belgium the fact
that the gold purchased by the Fed
eral Reserve Bank Of New York has
not been shipped to this country ap-
pears to violate the johnson act.
Second Clause.
OF course, there is the second para
graph OF that act which provides that
the term person" includes only lin
dividual, partnership, corporation or
association other than a public cor
poration created by or pursuant to
special authorization of Congress, or
corporation In which the Govern
ment of the United States has or ex-
ercises q controlling interest through
stock ownership or otherwise"
This second section of the act was
intended by the author of the bill to
facilitate business transactions with
certain foreign countries which were
only technically in default, such as
the Soviet government.