The Secretary of State to the Salvadoran Minister (Castro)

Sir: I have the honor to transcribe herewith for your information the substance of a communication addressed to the Department of State on December 6, 1935, by the Chairman of the Securities and Exchange Commission, with reference to the nature and object of the hearing held before that Commission in the matter of protective committees for the Republic of El Salvador:

“We are informed that there is some doubt in the minds of officials of the Government of El Salvador respecting the precise nature and object of the hearing held before this Commission in the matter of protective committees for the Republic of El Salvador.

“This hearing was a routine proceeding in the course of a study and investigation of protective committees which this Commission is directed to make pursuant to the Securities Act of 1933,44 as amended by Section 211 of the Securities Exchange Act of 1934.45 Hearings similar to that held in this matter have taken place with respect to [Page 584] many other protective committees for both foreign and domestic securities. The objective of these hearings is to accumulate complete and detailed information concerning the practices of protective committees as a basis for a report to the Congress of the United States concerning their functions and activities. These hearings are not designed merely to expose culpable practices of committees but to furnish a complete record of their theory and operations. They in no way affect the legal standing of the committees concerned.

“It is, of course, impossible to say at this time whether any legislation will be recommended to the Congress, and if so, what form that legislation will take. The Commission has made no findings as a result of any of these hearings and no report will be made to any governmental authority until the final report is made to Congress. This final report will cover the activities and functions of all protective committees in all fields, foreign and domestic.”

Accept [etc.]

For the Secretary of State:
Sumner Welles
  1. 48 Stat. 74.
  2. 48 Stat. 881, 909.