The Waterbury Democrat., 1934-05-19

economic position, therefore, ts not essentially unlike that of rubber. coffee, and sugar. in which TO. striction schemes havo been tried at numerous times in the past. in. variably without success. In every instance 1t has been found that the limitation of output from ono pro- duclng area has stimulated pro. duction elsewhere, with the result that the price of the commodity has not been permanently raised. but that the country or region where limitation was enforced has simply sacrificed . part of It's for- eign markets to It's competitors.
 The Johnson act makes 1t unlaw. ful In the United tSates to lend money to, or to purchase or sell the obligations of. any foreign gov- crnment or political subdivision thereof while such foreign gov- ernment or political subdivision is In default in the payment of It's obligations to tho United States government. It does not affect the Notation of securities of foreign corporations tn tho defaultlng na- tons, nor does 1t prevent the pur. chase and salo of securities of the defaulting governments by Amert- can citizens in foreign markets.
 Exactly what constitutes default within the meaning of the law Is U matter of doubt. In particular, the status of the debtor nations that have recognised their obligations by making token" payments to the United States Treasury Is yet to be determined. If such pay- ments are not recognized as avoid- Ing default under tho law, then every debtor nation with one minor exception falls under the ban, in.. cluding every important industrial country of Europe that pnrticipat- cd In tho World War.
 Tho bill guaranteeing loan bonds was sent to tho president for his approval on April 25. The meas- ure places the guaranty of the fed- eral government behind the prln. clpai, as wcil as the interest, of the $2, 900, GOO, ,000 of homo loan bonds authorised by the last Congress. It also liberalixes the terms of tho law to permit advances for rehabllita. ton and enlargement of homes, as well as for repairs and mainton- ance. It's unfavorablo feature is. ~of course, that 1t Imposes q further potential contingent liability of $2, o %, 000, ,000 on, the already heav. fly burdened federal government.
 Tho outlook for sound business recovery has improved materially with tho increasing likelihood of modification of the Securities Act ut the present session of Congress. Experience has made 1t increasing. ly clear that tho excessive penal ties and liabilities placed upon Is. suers of securities by this measure have been among the most potent influences retardtng recovery. Con. sequently, the business community has dorlved encouragement from the growing support for construc- tive amendment of tho act in Con. gress and In the administration.
 A bill to limit penalties and IL. abilities under the act was lntro- duced in tho Senate on April G. Tho proposed amendments would requlre plaintiffs seeking to res cover damages from investment losses to show reliance on the reg istration statement or prospectus, would limit damages to those caused by tho untrue statement or omission, would limit the omis- sions from which liability might arise, and would limit the liability of underwriters to purchasers who bought from thom or in reliance on their name, A measure con- taining substantially similar pro- visions wus introduced in the House of Representative on April IS, after the New York State I.egislaturo had adopted resolu. ton asking Congress to amend the act In tho Interests of sound re. cOYery.