Evening star., 1932-04-21
DAWES OPPOSES
BONUS PAYMENT
Condemns Demagoguery at
Session of House Ways
and Means Group.
Continued From First Page.)

the return of prosperity ali depend
upon maintenance of confidence in the
soundness of our currency and in tht
credit of our banks and OF our Gov
ernment.
In my judgment, the devastating
effects of a consequent loss OF genera
confidence through the initiation of oul
currency would negative the possibility
of real relief by any experiment with
fat money.
"One need but recall what happened
to Germany through the imitation OF
the German mark currency in the few
years ending in 1924.
All the arguments which are now
made for this proposed issue Of fiat
money were made by those VINO at first
advocated the increase in German
mark currency which finally prostrated
the credit and business of that country
by 1924 with untold suffering, privation
and want on the part OF all classes
of the German people.
Always, in such experiments, the
idea at first is that we can go safely a
little way in defiance Of right economic
principle and avoid disasterous penal
ties by stopping in time. This was
proved a delusion. Imitation Of cur
rency once started in a country seldom
stops short of its complete economic
ruin.
Confidence in the credit structure OF
Cur country and in the banks of the
United States has now returned. In
general, bank deposits have ceased to
fall and bank failures have been reduced
to the minimum.
THE effect of a lack of public con-
fidence upon the money resources of the
people, however is illustrated by the
fact that on December 81, 1929, there
we're 24,630 banks in the United States
with aggregate deposits of $55. .289 900,
600, while on December 81, 1881, two
years later, there were only 1898 banks
with sE6.261 ,0o0, 900 Of deposits.
In other words, the then existing
lack of confidence has resulted in de-
crease in the purchasing power of the
people of the United States in these
two years of over $4,000, 100000; and it
is significant that in these two years
when deposits shrunk over $9,000,000,-
000 ther, had been an addition to the
amount of money in circulation in the
country of over S900,00o,0oo.
Confidence Lacking.
''It has been confidence and not cur
rency which we have lacked in this
country. The imitation of our currency
will destroy, in my judgment, the gen.
eral confidence in the country which
has now been re-established. We al
ready know what the consequences are
of the destruction of confidence"
Dawes repeatedly during examination
by committee members emphasized that
the important thing to business re-
coyery is change in mass attitude. 3"
He asSailed overemphasis on New York
Stock Exchange operations.
The mass attitude has changed from
a condition of pessinism to condition
of cheerfulness in the mass Of the peo-
pie" Dawes said.
Then he thrust his pipe into his
mouth and leaned forward with hand
pointed toward the committee members,
saying
Look out when you tamper with the
foundation Of your currency. 1t will
shake the confidence of the world in
American credit.
why, people talk about these plea
yunish operations on the New York Ex-
change Just compare them with the
aggregate business activities OF this
country and they are nothing.
They are magnified out of all re-
lations to the business of the country.
It is nothing but peanut stand. Yet
they talk about 1t more than all the
rest of the business in the country.
I'm not blaming anybody" he
added.
Explains Public Attitude.
He said the mass attitude of the
people was much like a man picking
up the paper at breakfast and saying
to his wife: MY God, the country's
gone to hell"
HE didn't say that, but that's what
he meant" Dawes added with smile.
Then two months later he picks up
the paper and says: My dear, condl,
tions are better, only 135 banks failed
yesterday"
Dawes, striking the table before him,
continued:
1T isn't what Wall Street thinks
down there at that peanut stand; It's
what the great mass of the people feel,
and they're feeling better, take II
from me.
Excuse me if I seem overcomph-
mentary to the Reconstruction Finance
Corporation. Great credit is due the
corporation, but I don't think 1t did
anything but help"
Dawes assailed what ne termeu
damned demagoguery."
I'VE could have political bunk and
political smut committees down there
at the corporation" he shouted, put
we're doing business job and, Damn IL.
we're going to continue.
Refers to Patman Bill.
In reply to questions, Dawes said his
bonus testimony referred to the Pat
man bill for cashing the certlncates
in treasury notes and not to the owen
plan for issuing bonds as the basis 1or
Federal Reserve notes.
We didn't have time Tor any put
our own work" he said.
II came up here because / was invited
and not because I wanted to"
Dawes was questioned particularly
about the Missouri Pacific loan. He said
the portion going to New York banks
was only part of the picture, but DID
release securities to give us adequate
collateral for the loan"
Dawes said he considered most OF the
congressional comment on the corpora
tion's activities was lust"
I'VE have to make big loans; these
are big corporations he said.
30 Minutes on Stand.
well. are you through now?" he
asked as questions ceased.
Rainey said there we're no more ques-
tons. and Dawes left after one ana
one-half hours on the stand.
The next witness was Prof. E. W.
Kemmerer of Princeton University. who
served as an expert on the Dawes
Preparations Commission.
Il feel this legislation involves the
welfare of the country for years to
come" he said 1T would probably do
great harm to the American people and
be detrimental to the great bulk Of ex-
service men"