Overseas Achievements

By last week the Foreign Bondholders Protective Council, a wholly private agency sponsored by President Roosevelt to sidestep the international embarrassments of Title II of the Securities Act, had two solid achievements to its credit.

Shortly after an irascible holder of a German bond tried to attach the S. S. Europa one day last January, the Council dispatched Lawyer Laird Bell to the Berlin conference between the German Government and John Foster Dulles, acting as representative of the U. S. banking houses which had issued German bonds. Upshot of that conference was a slight increase in interest payments on German dollar bonds and a promise by the German Government that it would cease treating European creditors more handsomely than U. S. creditors.

To represent holders of $380,000,000 defaulted Brazilian dollar bonds at conferences in Rio de Janeiro, the Council dispatched J. (for Joshua) Reuben Clark Jr., Mormon lawyer from Salt Lake City who succeeded the late Dwight Morrow as Ambassador to Mexico. The negotiations involved all the 100 or more issues comprising Brazil's $1,000.000,000 of external debt. French, Dutch and British bondholders were also represented. Upshot of this conference was a pact segregating the various issues into eight classes on which service on all but one (old defaults) will be promptly resumed in whole or in part. A few Federal issues will pay full interest and sinking funds charges. The rest, including most State and municipal issues, will pay from 7 1/2% to 50% of the interest due. Slicing about $75,000,000 per year from Brazil's external debt service, the pact will run for four years, after which another will be negotiated.

Max Winkler, foreign bond expert, flayed many details of the pact, claiming that since the U. S. buys 70% of Brazil's annual coffee exports, U. S. creditors deserved better treatment. And no sooner were the terms of the decree published than British bondholders also began to grumble.

Just back from Rio with the pact in his pocket, Mr. Clark last week was made acting head of the Council in place of Raymond Stevens, who was granted a leave of absence "until such time as his health is restored."

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