S. 425_ CONTENTS Page Amendment No. 24. Letter from Karl E. Bakke, general counsel, Department of Commerce_ Jack F. Bennett, Under Secretary for Monetary Affairs, Department of the Charles W. Robinson, Under Secretary for Economic Affairs, Department of State, accompanied by Richard J. Smith, Director of the Office of Invest- ment Affairs; and Mark B. Feldman, Deputy Legal Advisor_. Jacob K. Javits, U.S. Senator from the State of New York. Howard M. Metzenbaum, former Senator from the State of Ohio---. James L. Pate, Assistant Secretary for Economic Affairs, Department of Commerce, accompanied by Daniel Arrill, Office of Domestic and Inter- national Business Administration; and George R. Kruer, Chief of the International Investment Division of the Bureau of Economic Analysis- Ray Garrett, Jr., chairman, Securities and Exchange Commission, accom- panied by Alan B. Levenson and Carl T. Bodolus__ John M. Niehuss, assistant director of the Council on International Eco- Ian MacGregor, chairman, AMAX Inc., and George W. Ball, partner, Lehman Bros. on behalf of the United States Council of the International Howard Menell, assistant counsel, Senate Subcommittee on Securities____ Seymour Graubard, National Chairman, Anti-Defamation League, ac- companied by Meyer Eisenberg, member, National Commission of the Anti-Defamation League; David A. Brody, director, Washington Office, Anti-Defamation League; Hyman Bookbinder, Washington representa- tive, American Jewish Committee; and Lawrence Rubin, American Louis V. Aronson, president, Ronson Corp---- John Leslie, chairman, Bache & Co.; chairman, New York Stock Ex- change Advisory Committee on Foreign Investments, accompanied by Gordon L. Calvert, vice president-general counsel; Jeffrey M. Schaefer, Director of International Finance, New York Stock Exchange; and James K. C. Doran, assistant vice president_-_- Thomas L. Farmer, chairman, Task Force on Foreign Investment in the United States of the Chamber of Commerce of the United States; ac- companied by L. Oakley Johnson, staff executive__. Fred M. Zeder, member, Executive Committee, Committee of Publicly Owned Companies, accompanied by James J. O'Neill, executive director; 323 446 463 ADDITIONAL STATEMENTS AND DATA American Bankers Association, statement and appendix tables received for the record______ Page 479 American Insurance Association, letter from Walter D. Vinyard, Jr., counsel 510 American Society of Corporate Secretaries, Inc., manual for proxy solicita- 424 Letter to President Ford enclosing letters from international shipping lines complying with Arab boycott__. News release naming Federal agencies and private organizations__. Central Paper Co., letter from David H. Berkowitz, vice president__ Chamber of Commerce of the United States, Task Force on Foreign Investment in the United States, staff report on special restrictions to foreign investment in special U.S. commercial activities.. Commerce Department, letter to Secretary Frederick B. Dent from Senators Wiliams and Javits__. Committee of Publicly Owned Companies: Correspondence with Securities and Exchange Commission regarding beneficial ownership, takeovers, and acquisitions_-- Statement before the SEC, file No. 4-175, public factfinding investigation Dickstein, Shapiro & Morin, letter subsequently received for the record from Charles H. Morin__. General Accounting Office, excerpt from supplement to "Reporting Requirements and Dissemination of Information of Corporate Ownership and Structure" 308 305 515 454 48 477 474 281 142 General Dynamics Corp., letter from John P. Maguire, Secretary to 478 International Economic Policy Association, letter and statement of Justice Department, exchange of letters with Attorney General Edward I. 487 47, 68 Library of Congress, Congressional Research Service, reprint of paper titled "The Regulation of Direct Foreign Investment in Australia, Canada, France, Japan, and Mexico". 174 Machinery and Allied Products Institute, letter from Charles W. Stewart, president 516 Mirabelli, Gould, Noto & Holloway, letter from Mario V. Mirabelli, counsel, 522 National Association of Securities Dealers, Inc., comments on S. 425 in letter from Gordon S. Macklin, president_. 483 National Foreign Trade Council, Inc., letter received from Melville H. 484 New York Clearing House, summary of position on section 4 of S. 425_-- 524 Ad Hock Committee to Improve Proxy Solicitations_ 423 422 Letter to George A. Fitzsimmons, Secretary, Securities and Exchange 407 Letter to Senator Williams from Gordon L. Calvert, vice presidentgeneral counsel____ 406 List of members of Advisory Committee on International Capital 346 List of participating data bank survey firms. 349 Members firm foreign activity study. 347 Paper titled "The Capital Needs and Savings Potential of the U.S. Ronson Corp.: Letter to Senator Williams from Louis V. Aronson II. Letter to stockholders--. News release containing recommendations on S. 425Securities and Exchange Commission: Page 320 321 322 Chairman Garrett's answer to Senators Williams and Javits letter of concern on Arab boycott__. 49 Letter to Chairman Garrett from Senators Williams and Javits expressing concern on Arab League's boycott attempts_ Memorandum dated March 5 on S. 425_. 47 110 Summary of rules and regulations established pursuant to the Federal securities laws with regard to the reporting of ownership of securities 124 State Department, letter to Senator Williams from Robert J. McCloskey, Statement of George A. Vonder Linden, Operations Committee, Securities Industry Association before the Securities and Exchange Commission in the matter of beneficial ownership, takeovers and acquisitions by foreign and domestic persons- 46 436 45 Treasury Department, exchange of letter between Secretary Simon and United States Council of the International Chamber of Commerce Inc., list of members___. 250 United States Trust Co., statement of Charles W. Buek, chairman of the board and president_. 499 Wall Street Journal, article titled "Review and Outlook," dated Feb. 20, 1975 471 Washington Star, reprint of article in which Treasury Secretary William CHARTS AND TABLES Foreign direct investments in the United States: Value by country or origin___. Component of national savings, percent of total savings_. Value by industry__ Foreign tender offers-fiscal year 1973_. Investment and productivity, 1960–73_. Estimated foreign commissions by country. New York Stock Exchange: Commissions generated from foreign activity as a percentage of total commissions of total reported foreign commissions__ 351 355 357 Foreign purchases and sales of U.S. corporate bonds_ 361 Foreign purchases and sales of U.S. corporate stocks‒‒‒‒ 359 Foreign purchases and sales of U.S. corporate stocks and bonds__. 367 Gross foreign activity in U.S. corporate bonds-. 364 360 Gross foreign purchases and sales of U.S. corporate bonds. 366 Gross foreign purchases and sales of U.S. corporate equities___ 361 Savings and investment as percent of GNP_. 472 FOREIGN INVESTMENT ACT OF 1975 TUESDAY, MARCH 4, 1975 U.S. SENATE, COMMITTEE ON BANKING, HOUSING AND URBAN AFFAIRS, SUBCOMMITTEE ON SECURITIES, The subcommittee met at 10:01 a.m. in room 5302 of the Dirksen Senate Office Building; Senator Harrison A. Williams, Jr., chairman of the subcommittee, presiding. Present: Senators Williams, Tower, Helms, and Jacob Javits (by special invitation of Senator Williams). Senator WILLIAMS. This hearing by the subcommittee on Securities will come to order. This morning the Subcommittee on Securities begins hearings on S. 425, the Foreign Investment Act of 1975, legislation which I introduced on January 27 along with Senators Sparkman, Jackson, Thurmond, Weicker, Laxalt, Leahy and Morgan. The purpose of the bill is to rationalize and coordinate the regulation of foreign investment in the United States through three amendments to the Securities Exchange Act of 1934. This would be accomplished by, first, requiring the disclosure of the beneficial ownership of all equity securities of all publicly traded corporations, and thus assure effective monitoring of foreign investment in American business. Second, the bill would amend the tender offer provisions of current law-the so-called Williams Act-to require all foreign investors to notify the SEC and the President before acquiring 5 percent or more of the equity securities of any U.S. company. And third, the bill would establish a straight-forward and usable procedure by which the President may prohibit such a transaction if he deems it appropriate for the national security, to further the foreign policy, or to protect the domestic economy of the United States. The increase in foreign investment in the United States in recent years is a plain fact of international economic life. Unfortunately, we do not have completely accurate or reliable figures-a problem this bill is in part designed to cure. However, regardless of the specific dollar figures, there is no argument that foreign investment has been growing at an extraordinary rate. According to the best figures available, in the decade from 1962 to 1973, all foreign direct investment in the United States-investment amounting to control of a business enterprise-rose from $7.4 billion to $14.4 billion, an annual average growth rate of approximately 7 percent. In 1973 direct foreign investment rose to $17.7 billion—a rate of increase of 24 percent. (1) |