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The Johnson Act of 1934 ( Foreign Securities Act, ch. 112, , , 1934-04-13) prohibited foreign nations in debt from marketing their bond issues in the United States. The law was enacted on April 13, 1934, and although it was impacted by the Bretton-Woods Agreement, it was not repealed and continues to have the force of law.
Senator Hiram Johnson sponsored the Act, which included a passage that forbade loans to nations in default on their debts, unless those nations joined the World Bank and International Monetary Fund. The act was a response to nonpayment of war debts from World War I. As it also banned token payments, payments from debtor countries stopped entirely following its passage, with the exception of Finland, which still continued to pay its debt.
On May 5, 1934, Attorney General Homer Stille Cummings rendered an opinion on the meaning of the terms "default" and "partial default" used in the Act. He held that Czechoslovakia, Italy, Latvia, Lithuania, Great Britain and Canada were not in default, despite the fact only Canada had paid its debts, and Soviet Russia was in default.
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