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(5) shall have attached thereto as exhibits true copies of all advertisements, circulars, letters, or memoranda to be published or circulated by said bondholders' committee soliciting the deposit of bonds, notes, certificates of indebtedness, securities, or other obligations with said bondholders' committee or with any agency designated by it.

The Commission shall carefully examine all such applications and the exhibits thereto attached and shall within thirty days from the filing of each such application issue such certificate of authority: Provided, however, That the Commission shall require as a condition precedent to the issuance of such certificate the posting of a bond in such reasonable amount as the Commission may specify, conditioned for the faithful performance of its duties by said bondholders' committee in accordance with the certificate of authority: Provided, further, That, if upon examination of the deposit agreement the same does not in the opinion of the Commission adequately protect and preserve the rights of the owners or holders of the bonds, notes, certificates of indebtedness, securities, or other obligations, the Commission shall require the bondholders' committee to amend such deposit agreement in such particulars as the Commission may deem proper and the Commission shall withhold the issuance of such certificate of authority until such deposit agreement has been so amended.

POWERS OF THE COMMISSION

Sec. 5. The Commission shall have power (a) to require the production of the books and records of all such bondholders' committees and to require the attendance of the members of such bondholders' committee and all of the officers, employees, and other persons retained or employed by such bondholders' committees at such times and places as the Commission shall designate for the purpose of giving information to the Commission regarding the conduct of such bondholders' committees; and (b) after five days' written notice to the chairman of any such bondholders' committee to revoke and cancel the certificate of authority of any such bondholders' committee for any violation of any of the terms and conditions of such certificate of authority as provided in section 3 of this Act or for any failure to properly account for any funds coming into the hands of such bondholders' committee or for any act of malfeasance, nonfeasance, or misfeasance: Provided, however, That upon the request of any member of any such bondholders' commission the Commission shall before entering any order revoking or canceling the certificate of authority of any such bondholders' committee fix a time within thirty days of the filing of such request at which the members of such bondholders' committee shall be privileged to appear and produce evidence of its full compliance with all of the terms and conditions of its certificate of authority and if upon such hearing it shall appear that such bondholders' committee has not violated the terms and conditions of its certificate of authority and has not been guilty of any act of malfeasance, nonfeasance, or misfeasance, the Commission shall withdraw its order for the revocation or cancelation of such certificate of authority.

No bondholders' committee nor any member thereof shall continue to act as such after any order has been issued by the Commission revoking or canceling such certificate of authority.

PENALTIES

Sec. 6. Any person who shall act or assume to act as a member of a bondholders' committee in violation of section 2 of this Act, or who shall act or assume to act as a member of any bondholders' committee after the certificate of authority of such bondholders' committee shall have been canceled or revoked in accordance with section 5 hereof, shall upon conviction thereof be fined not more than $5,000 or imprisoned not more than one year.

INJUNCTIONS AND PROSECUTION OF OFFENSES

Sec. 7. Whenever it shall appear to the Commission, either upon complaint or otherwise, that any bondholders' committee, or any member of any bondholders' committee, is acting or assuming to act in violation of the provisions of this Act or of any rule or regulation prescribed under authority thereof, it may in its discretion bring an action in any district court of the United States, United States court of any Territory, or the Supreme Court of the District of Columbia to enjoin any such acts or practices and upon a proper showing a temporary or a permanent injunction or restraining order shall be granted without bond. The Commission may transmit such evidence as may be available concerning such acts or practices to the Attorney General, who may in his discretion institute necessary criminal proceedings under this Act.

Upon application of the Commission the district courts of the United States, the United States court of any Territory, and the Supreme Court of the District of Columbia shall also have jurisdiction to issue writs of mandamus commanding any persons to comply with the provisions of this Act or any order of the Commission made in pursuance thereof.

Mr. West desires to make a statement.

STATEMENT OF HON. MILTON H. WEST, A REPRESENTATIVE

FROM THE STATE OF TEXAS

Mr. WEST. Mr. Chairman and members of the committee: At the outset permit me to say that after reading this bill, it is my opinion that the distinguished gentleman named as its author did not write nor so much as read the bill before introducing it, but, no doubt, introduced it by request. He is far too capable and practical to sponsor or advocate the things this bill seeks to do.

I am convinced this bill was conceived in the mind of a theorist and brain-truster and given birth by one who has never had any practical experience. Had the author of the bill desired to pass a law that would have accomplished the things this bill will accomplish he would have done so in less than a dozen lines, and in about the following language: "It shall be unlawful for any corporation, municipal or otherwise, to refinance or adjust its bonded debt"; for that will be the practical effect of this bill should it become a law. I sincerely believe the sponsors of the bill are prompted by the

purest of motives. They, unfortunately, as can readily be ascertained from reading the bill, have had no experience in the field of business, and particularly in refinancing problems; otherwise, they would not have placed many of the provisions in the bill that it contains. While I believe the bill is onerous in most of its purposes and provisions, I am especially interested in and opposed to the provisions applicable to municipal corporations in view of the fact that I have in my congressional district many irrigation, drainage and flood control districts, as well as cities and counties that are municipal corporations in need of refinancing, and if this bill becomes a law it will prevent such refinancing, thereby bankrupting these districts as well as the property owners therein. Fortunately, a good many of these districts have completed their refinancing program through the Reconstruction Finance Corporation, but there are others at this time which have pending with the R. F. C. applications for loans to refinance their bonded debt, some, where loan agreements have been entered into with the R. F. C., and others where the applications have not been approved, and still others that have not yet filed applications with the R. F. C., but contemplate doing so. The passage of this bill in its present form will preclude these districts from successfully terminating their refinancing programs.

These provisions of the bill were called to your attention by Hon. John D. McCall, one of the outstanding and best bond attorneys in the State of Texas, or the United States. I have known him intimately for many years, and am thoroughly familiar with his ability, honesty, and judgment, and here now endorse and adopt the statements he made before this Committee on or about July 13. I assure you he has' a world of experience in bond refinancing, and knows from that experience whereof he speaks, and is not talking theory. I ask that you give careful consideration to his statements, and assure you they are worthy of every confidence, as they are the true reflection of the practical problems of refinancing.

I wish time permitted me to give you some concrete examples of how the present bill would work havoc upon and even destroy worthy municipal corporations.

I do not mean to say that adequate regulations of the operations of bondholders' committees should not be undertaken, as there is no doubt that a racket has been developed in this field and should be destroyed, but certainly no one contends a law is necessary or advisable that would, as this bill will do, forever prohibit the refinancing of bonds.

There is another provision in this bill that is repulsive to libertyloving people, and I refer to the provisions which seek to take jurisdiction from the courts and place it in a bureau. In other words, it is in accord with the trend of events; the Federal Goverpmert, or, I should say, the bureaus thereof, are continually reaching out and grasping more power and taking from the people their right of local selfgovernment and concentrating it in Washington. The time is fast approaching when the Congress must definitely and finally decide whether we are to continue as a democracy or shall change to a bureaucracy, thereby abandoning and turning our backs on those principles which our forefathers advocated, fought and died for, and founded this Government upon. I, for one, am unwilling to admit the American people have so degenerated that they are no longer capable of self-government, nor are able to pick representatives capable of representing them in government. I refer to those provisions of the bill, as well as similar ones, that require the blessings of a bureau on a man before he can represent a municipal corporation or other in its refinancing program.

Please be assured that in making the assertions I have herein, I in no way mean or intend to cast any reflections upon or insinuations against anyone's sincerity or ability, but rather am prompted solely by a desire to prevent the passage of a bungling, misfit bill that will cost the people of this country countless millions of dollars.

(Thereupon, at 10:30 a. m., the hearings were concluded, and the committee proceeded to the consideration of other business.)

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