"Now that we have returned we shall do our utmost to incorporate the things that we have learned in your country into our exchanges and thus make for better stock exchanges. We will try our best to live up to your ideals and thus make for a better investment public."
- February 27, 1951 Letter from Japanese Securities Mission to SEC Chairman Harry A. McDonald
By the 1950s, the Cold War was raging. One important element in the U.S. fight against communism involved the provision of financial aid to developing countries. President Truman's 1949 Four Point Program provided a variety of types of assistance to countries which the United States considered important allies. The SEC participated in drafting the Four Point Program, especially its provisions related to U.S. technical assistance.(43)
Although much of the aid that the U.S. provided took the form of money, it also involved technical assistance programs, especially in regard to developing market-based economies, including legal frameworks and institutions, which would pave the ground for U.S. private investments. One government report stated, "We accept as basic our national economic, political, and humanitarian interests in helping less developed countries in their efforts to achieve economic development; our national interest in meeting the politically motivated challenge of Soviet economic offensive; and our national interest in achieving expansion of the world's economy generally by facilitating the international movement of goods and capital."(44)
As one historian writes, "Technical assistance became an integral part of the government's policies to promote America's economic and cultural influence…. Such programs had substantial impact on the general direction of economic development."(45) At the same time, these technical programs served American economic interests and sought to integrate the rest of the world into a U.S.-dominated Pax Americana.
The SEC eagerly participated as official and unofficial technical assistants. By the late 1940s, the SEC perceived itself as having implemented model securities regulations. As foreign countries received economic and military aid from the United States, at times they also sought or were provided with the SEC's help. A mere 15 years after the SEC was founded, it held itself as the preferred model for other countries to follow. As early as 1948, the SEC agreed to provide technical assistance to Latin American countries in an effort to create U.S.-style disclosure and accounting rules.(46) In 1951, members of the Japanese Securities Mission, which included officials from the Japanese SEC and the Tokyo securities exchanges, spent three months in the United States, at least part of it with the SEC.
In many of these missions, the intent was to create mini-SECs throughout the world. A joint Brazil-U.S. Technical Commission issued a report in 1949 which suggested the "establishment of a body somewhat like those of the United States Securities and Exchange Commission."(47) In 1954, the Commission hosted missions from Mexico and Germany whose purpose was to "study the organizations, institutions, methods and regulation" of the U.S. capital markets.(48)
Some of the SEC's technical assistance projects were coordinated with the State Department. The State Department recognized that providing technical assistance fostered relationships with allies. In 1948, the State Department asked the SEC's General Counsel to comment and make suggestions regarding Liberia's newly revised corporate law. SEC staff member Alexander Lipkin was loaned to the State Department to work on the project full time. Mr. Lipkin not only traveled to Liberia but also deeply impressed Liberia's President Tubman.(49)
(43) 1950 U.S. Securities and Exchange Commission Annual Report
(44) Richard I. Strauss, Expanding Private Investment for Free World Economic Growth: A Report and Recommendations Prepared Pursuant to Section 413 of the Mutual Security Act of 1954 (Washington D.C. 1959).
(45) Emily S. Rosenberg, Spreading the American Dream: American Economic and Cultural Expansion, 1890-1945 (New York: Hill and Wang, 1982)
(46) 1948 U.S. Securities and Exchange Commission Annual Report
(47) April 28, 1949 Memo from Walter C. Louchheim, Jr., Adviser on Foreign Investment, to the SEC Commission on recommendation for a Brazilian SEC (courtesy of the National Archives and Records Administration) [1940/1949_0428_LouchheimBrazilian.pdf]
(48) June 15, 1954 Letter from Praxedes Reina Hermosillo, Comision Nacional de Valores, to SEC Chairman Ralph H. Demmler (courtesy of the National Archives and Records Administration); 1954 U.S. Securities and Exchange Commission Annual Report
(49) July 1, 1949 Letter from the Department of State to SEC Chairman Edmond M. Hanrahan, thanking the SEC for the services of Alexander Lipkin (courtesy of the National Archives and Records Administration)
(Government Records)
