Coulee City dispatch. [volume] (Coulee City, Wash.) 19??-19??, 1937-06-03
SEEN
HEARD
around the
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By Carter Field y
By Carter Field .

=. NOISdIl dllo
company and other great banking
firms, which in the past have mar
keted huge amounts of foreign bonds
to American investors, may never
see the return of the "good old
days" The business hasn't been so
good for some years, now-not since
the depression began, and default
ing by so many foreign govern
ments developed. Also it has been
handicapped sharply by the Hiram
Johnson law, which prevents mar
keting in this country of bonds OF
any government that has defaulted
on it's debts to the United States
government.
But-many bankers have thought
all this would pass. 1t was just
temporary. Some day something
would be done about the war debts.
There would be settlements" or
forgiveness, or both. Whereupon the
business would 60 back to normal.
But for some time the securities
and exchange commission has had a
ishy eye on these prospects for an
other day of foreign bond selling,
and an even fisher eye is being
cast by many members of the house
and senate.
The most recent gesture in this di-
rection was made by Senator Allen
j. Ellender of Louisiana, who in
troduced a bill which is receiving
so much quiet support that it seems
a practical certainty something like
it will be passed, sooner or later.
There is nc hurry. Americans have
not quite recovered from the burn
ing they took on the defaulted for
eign bonds. AS a matter of fact, the
average investor thinks that partic-
ular debacle was worse than it
was, which attitude is most dis
couraging to would-be bond sales
men for foreign issues.
The Ellender bill would add a new
section to the securities act making
it unlawful to sell in the United
States securities issued by a foreign
government unless the net proceeds
derived from such securities by the
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the par value Of the securities, ex-
cept that the securities commission
may allow a service charge of not
to exceed two per cent of the par
value to be deducted from the pro-
ceeds to be received by the govern
ment selling the bonds.
Enormous Profits
"The purpose of the BILL" MI.
Ellender explains, sis to reduce the
spread between the price paid to
foreign governments for their
bonds and the price at which such
bonds are offered to the public. A
foreign bond for which the issuing
government receives Lightweight
per cent of it's face value may now
be sold on the American market
for ninety-nine. The investing public
is led to believe that it is getting
a bargain since the sale price is
still below par. The underwriters
receive enormous profits. It is be-
lieved that such a situation leads
to an unwarranted amount of for
eign financing in this country and
encourages unhealthy practices in
the conduct of such financing.
"Under the proposed bill the gov
eminent would receive face value
for it's bonds, less the service charge
allowed by the commission, which
could not for this purpose exceed
two per cent. Thus the profits of
the underwriters could be excessive
only if the bonds were offered to
the public at a price above par. 1t is
felt that this fact would tend to
reduce the large price spread now
possible and lead to more careful
consideration of the value of such
bonds by the investing public"
No allowance is permitted in the
bill 'tfor the assumption of risks
or for the value of the trade name
or good will of the persons render
ing such service" = which seems
rather unnecessary in view of the
fact that the total "service charge"
permitted is to be two per cent.
The bond salesman seems to quail
ify as the Vanishing American!
Inks Air Officials
The race between bigger and
heavier airplanes and the larger,
better, surfaced airports that the
new planes require is bringing gray
hairs to aviation officials. 1t seems
a natural enough development, but
it has plenty of complications. 1t
is somewhat like the older story of
the production of armor which will
resist a shell from any existing gun,
then a bigger gun that will pierce
it, and then thicker and tougher
armor-and then repeat!
Perhaps an apter comparison is
whether to build bigger locks at
the Panama canal, or build the big
new ships according to freak speci-
fications so they may still 60
through.
The difficulty in this race be-
tween airplanes and airports lies
in the answer to the question: Who
will finance the bigger airports?
American cities have already in
vested more than $500, 600, 900 in air.
ports. They have about got to the
end of their willingness to spend, it