Franklin D. Roosevelt

Statement on the Formation of an Organization to Protect Holders of Foreign Securities.

October 20, 1933

The President today conferred with a group of persons invited to Washington to discuss the creation of an organization for the protection of American holders of foreign securities. Those attending the conference were:

Laird Bell, of Fisher, Boyden, Bell, Boyd and Marshall, Chicago, Illinois

Hendon Chubb, of Chubb and Son (Marine Insurance), New York City

W. L. Clayton, Anderson, Clayton and Company, Houston, Texas

John Cowles, Publisher, Des Moines Register and Tribune

Herman Ekern, former Attorney General of Wisconsin

Ernest M. Hopkins, President, Dartmouth College

Philip La Follette, ex-Governor of Wisconsin

Mills B. Lane, The Citizens and Southern National Bank, Savannah

Frank O. Lowden, Governor of Illinois

Orrin K. McMurray, Dean, Law School, University of California

Roland S. Morris, former American Ambassador to Japan

Thomas D. Thacher, former Solicitor-General

J. C. Traphagen, President, Bank of New York & Trust Co., New York City

Quincy Wright, Professor, International Law, University of Chicago

In addition, Messrs. Charles Francis Adams, former Secretary of the Navy, Newton D. Baker, former Secretary of War, J. Reuben Clark, Jr., former Ambassador to Mexico, and others who had been asked to share in this work were unable to be present at this meeting. Their help is expected, however ....

The situation now existing in regard to foreign securities is one of substantial concern to the American people. American funds were put at the disposal of over forty foreign Governments and had assisted in their economic development. Many of these loans are now wholly or partly in default. The bonds are held by large numbers of Americans who have at the present no adequate means of getting in touch with each other and organizing in order to keep themselves informed of events affecting their interests and of arranging for the proper handling of the debt situations in which they are concerned. In some instances American interests may be suffering unfair discrimination as compared with the investors of other countries.

A task of adequate organization obviously exists to be undertaken. In many situations the proper organization of the American bondholders is urgently needed in order to make possible fair and satisfactory arrangement with foreign Governments undergoing difficulties, and properly to protect American interests.

This is a task primarily for private initiative and interests. The traditional policy of the American Government has been that such loan and investment transactions were primarily private actions, to be handled by the parties directly concerned. The Government realizes a duty, within the proper limits of international law and international amity, to defend American interests abroad. However, it would not be wise for the Government to undertake directly the settlement of private debt situations.

It was decided, therefore, to call together a small group to take upon themselves the patriotic duty of bringing into existence an adequate, effective and disinterested organization to carry on this work. The organization should exist not for profits but for aiding the American interests which it will represent, and of aiding them at the lowest possible expense to the many thousands of bondholders.

Because of the fact that these interests are widely scattered, the fact that there are so many different loan issues to be considered, and so many different groups to be consulted, this is no easy task. But it must be achieved and the Government expects that it will be achieved. The organization when it comes into existence is to be entirely independent of any special private interest; it is to have no connections of any kind with the investment banking houses which originally issued the loans. It will decide its own affairs independently. Naturally, its decisions will ultimately depend on the will of those who possess the securities. Too, another of its duties naturally will be to keep intimate contact with all American interests concerned and to unify, so far as possible, all American groups that seek to act in protection of American interests. The organization contemplated in a sense will be a unifying center for the activities of all proper American interests.

The meeting was called in order to get the task well launched. Administration officials will follow the course of developments with interest. They have no intention, however, of seeking governmental direction or control of the organization, nor will they assume responsibility for its actions. Toward this organization, as toward all other legitimate American interests, the Government will seek to give such friendly aid as may be proper under the circumstances. The group undertaking the foundation of this organization will announce, as soon as possible, its plans. In the meeting today all phases of the form and work of the contemplated organization were discussed.

At a meeting held at the Treasury before the White House Conference, the State Department and the Federal Trade Commission were represented.

Franklin D. Roosevelt, Statement on the Formation of an Organization to Protect Holders of Foreign Securities. Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/207732

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