FOREIGN DEBTS

Rotorua Morning Post, Volume 1, Issue 145, 11 February 1932, Page 5

FOREIGN DEBTS

(Press. Assn.-

SENATOR DIRECTS BILL ■ - AGAINST DEFAULT ABROAD SOME SCATHING COMMENT

— By Telegraph— Copyright).

Rec. Feb. 10, 8.55 p.m. WASHINGTON, Tuesday. Senator Johnson, California, has introduced a Bill to make it unlawful for any individual partnership, corporation or • association, .subject to the United States laws, to lend to or purehase or sell bonds or other obligations to any foreign Government or political subdivision thereof while such a Government or subdivision is in default in payment of its obligations in whole or in part to the Government or people of the United States. - , A violator of the Act would be punished by a fine of 10,000 dollars or five years' imprisonment, or both. Senator Johnson asserted many individuals and officials abroad were blithely and merrily suggesting that debts due to the United States from foreign governments will never be paid. Perhaps the proposed enactment would have a different effect. Some Other Aspects The "New York Times" financial writer stated that the report on the Bill evoked considerable comment in Wall Street, "mueh o'f which eannot be printed here, but when Europe reads the Bill it is not unlikely some reference will be made to certain States of our Union whose obligations are held by the British Council of Foreign Bondholders,- to be in default, and fl.ll these-- obligations were created during • the 'carpetbagger regime' either." The latter reference is to the voided Obligations of the Civil War of the American Confederacy* The Bill has evoked further scathing comment by bankers, who remarked that some .of the legislative efforts expended on the foreign situation mio-ht be devoted to numerous Florida municipal defaults holding • some 300,000,000 dollars* or the situation in 12 counties in Northern Carolina, where a further 40,000,000 dollars of local Government bonds are in de- " Responsible bankers asserted that they are sympathetic to any effort of Washington which might be of genuine aid.- to American investors in foreign bonds, but it is feared that a distinct "disservice will be done by a t^h^eney \ iivhioh' seehtS '.calettlated ^ to induce the spirit of repudiation among foreign borrowers. i i .