THE decade 1920-1930 saw New York become the financial center of the world. At the time we took considerable satisfaction in supplanting London in its time-honored rôle. Today the use which we made of that opportunity is looked back upon as one of the less creditable incidents of a now discredited period.
Five years ago foreign bond issues were a matter of almost daily occurrence. Now, for about three years, practically no foreign loans, except Canadian, have been made in the United States and there is no immediate prospect of any being made. Neither 1928 nor 1933 can be viewed as normal. Judging by British precedents, we some day will again resume foreign financing, just as England has continued to lend money abroad despite periods of widespread default incident to previous economic crises. But the present lull in foreign financing does afford a useful occasion for us to take stock of the advantages and risks of foreign loans and, particularly, to appraise the bearing on such loans of the new Securities Act.
That Act was primarily designed to compel an adequate disclosure of facts with reference to securities offered to the public. It requires, as a precedent to the offering of any security, the filing of detailed information; and it imposes heavy financial liabilities upon those associated with the offering if the information filed proves incorrect in any material respect. As to the desirability of the Act's objective there can be no question. The Act embodies many excellent features. It is, indeed, a most creditable piece of legislative draftsmanship if account be taken of the speed with which it was enacted and the extremely complicated and little understood nature of the subject with which it deals. In the limited time available the special session of Congress found it impracticable to consider all of the manifold forms which financial transactions assume, with a view to assuring in advance that the law might not inadvertently embarrass certain desirable operations. Inevitably, then, the Act has
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