Evening star., 1932-04-21
DAWES CONDEMNS
DEMAGOGUE RULE,
ATTACKING BONUS
Optimism Growing, He Says,
Branding Wall Street
"a Peanut Stand"
CITES FINANCE BOARD
LOANS OF 243 MILLION
Currency Imitation Would Be Dis
astrous, He Warns House
Committee.
BY the Associated Press.

BY the Associated Press
In characteristically forceful Ian
guage, Charles G.. Dawes condemned
demagoguery today before the House
Ways and Means Committee to pre-
sent a powerful plea against full pay
ment of the bonus.
He called Wall Street "a peanut
stand" and said too much stress was
laid upon its activities while the mass
of the people were becoming more
optimistic.
Withdrawals from banks have
ceased, Dawes said in outlining the
operations of the Reconstruction
Finance Corporation, which he heads
He warned that imitation of the cur
rency would have a disastrous effect
upon the Nations monetary and credit
system. The two-billion-dollar- bonus
would be paid in new currency under
the Patman bill, which he opposed.
Withdrawals Curtailed.
The head of the Reconstruction
Finance Corporation related that his
organization had loaned S243 ,248,000 to
1870 banks up to April 19, and said
the general withdrawal of bank deposits
in the United States had stopped.
Dawes said the purposes of the
finance corporation was the relief of
the people of the United States. He
read rapidly from prepared statement.
THE method Congress chose was loans
to 13 types of institutions"
Dawes rapidly reviewed loans by his
corporation, streSsing that Of the total
loaned to banks, % per cent was to
banks located In towns with less than
10000 and 68 per cent in towns Of less
than 100000
Reading with dispatch mass of
figures, Dawes raised his voice to say:
There has been some comment to
the effect that the Reconstruction FL
nance Corporation favors large banks as
opposed to small banks. The important
thing to the Reconstruction Finance
Corporation is the number of depositors
affected"
Discusses Rail Loan.
He discussed the Missouri Pacific
S5,850,00 went to New York banks, in
cluding J. P. Morgan & Co.
Pounding the table in characteristic
manner, Dawes said:
Payment of this loan, held by New
York Banks, had been demanded and
an extension refused. The loan to the
Missouri Pacific Co. was approved by
the Interstate Commerce Commission
and in the judgment of the Reconstruc-
ton Finance Corporation is adequately
secured
1T was made upon what Is regarded
as safe and reasonable business basis,
not primarily for the benefit of the
railroad company or the banks as such,
but for the benefit of the thousands
Of investors in the bonds and securities
OF the railroad and in the general pub
lie interest"
Questioned by Rainey.
When he concluded reading prepared
statement on the status of the corpor-
alton, Representative Rainey, the Demo-
cratic leader, asked whether the corpor-
alton would come out with a loss or
profit"
That depends on whether the United
States is coming out and, of course,
the United States is coming out" Dawes
shot back In the long run, this cor
poration will not incur losses and the
principal will be paid back and posi-
bly, more"
Rainey then asked about the Patman
bonus bill. Dawes reached into his
pocket, pulled out another mimeo-
graphed statement and read rapidly:
Funds for this would be provided by
the issuance of legal tender, non-inter-
est bearing, unsecured Treasury notes
amounting to over S2.000,000 900. No
provision is made for the redemption of
notes or the maintenance of gold re-
serves. 1t would be in effect an issue
OF fiat currency.
Such an issue of currency, in my
Judgment, would have a disastrous ef-
feet upon the countrys currency sys-
TEN, upon the credit of the Federal
Government and upon the entire credit
structure OF our country.
The claim is made that the issue OF
this currency would so augment oul
money supply as to relieve the exist
ing pressure upon debtors, expand credit
and add to the purchasing power of the
people.
In my Judgment, the important anc
! real effect would be the contrary.
THE relief Of the debtor class, the
increase of purchasing power of the
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