Foreign Bondholders Act of
Under Title Ii of the Securities Act of 1933, provision was made for the creation of a Corporation of Foreign Security Holders, to be effective when the President of the United States "finds that its taking effect is in the public interest, and by proclamation so declares." It was contemplated that the activities of the new corporation would be similar to those of the British Corporation of Foreign Bondholders, which has an official status in negotiating with foreign issuers.
The act states that the corporation shall be created "for the purpose of protecting, conserving and advancing the interests of the holders of foreign securities in default."
The secretary of State, however, advised the President that some of the foreign nations whose bonds were in default would regard the creation of such an official corporation as an unfriendly act. In fact, Title II was not contained in the original administration draft of the Securities Act and was added on the floor of the Senate at the insistence of the late Senator Hiram Johnson of California, who had been responsible for the Senate Finance Committee's investigation of sale of foreign bonds in the United States.
Instead of the official corporation provided by the act, the unofficial FOREIGN BONDHOLDERS' PROTECTIVE COUNCIL, INC. was organized in 1933.
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