Evening star., 1932-01-17
Confidence in America.

The reconstruction bill, now awaiting
6nal approval by House and Senate
of changes inserted by each, has been
OF the Federal relief program. The
metaphor can be broadened, and the
keystone, in turn, can be conceived as
being cemented in place by confidence
In America. Without such confidence,
the keystone, and with 1t the whole
structure that it supports will crum-
BILE. And nobody car s>y who will
escape unharmed from the ruins.
The Reconstruction Finance Corpo-
ration, to be created under this bill,
Is referred to as a two-billion- dollar
corporation. Two billion dollars is a
large sum. But it would be rela-
lively small price to pay for the res
toration of confidence or for the cure
OF even a few Of die fundamental Ills
begotten by this depression.
Nobody believes. however, that the
Federal Government is to raise and
spend two billion dollars through this
corporation, kiss it goodbye and never
see 1t again. What the Federal Gov
eminent is doing is gambling this sum,
or part of it. on bet that the
Nations assets are basically sound;
that, if a good many of them are
frozen now, the warmth Of confidence
is all that is necessary to melt them.
1t is humanly impossible to ascribe
any one cause for the depression. 1t
may be humanly impossible to muster
In any one place all the contributing
causes Of this, or any other of the
periodic depresslons. And If it had
been possible t~ select any one remedy
for this depression, it stands to reason
that it would have been applied long
ago.
The theory behind this measure, that
within q few days should be signed by
the President, IS that financial relief ex-
tended by the Government should per-
form two principal functions. First, it
should furnish the hard cash that is
necessary If good many great enter
prises are ts continue in business and
meet their obligations in cash. Secondly,
1t should In some tangible manner SYM
bolize the faith in the basic soundness
of this country, the lack Of which might
be considered as the real cause of the
stagnation of business and the resulting
depression the evils of which have ex-
pressed themselves in so many ways.
The extension of the cash will take
the form o. loans from the corporation
10 those enterprises whose funds are now
tied up in sound securities, representing
sound values, demand for which has
been curtailed by reasoned or unrea-
soned fear for the future-the choice Of
adjectives depending upon point Of
view. The renewal Of confidence will
spring from the fact that the Federal
Government, with its vast resources, is
willing to hold the bag" 1t is willing
10 take the risk because of its belief that
the securities to be accepted as collat-
eral are sound, that defation Of
their value is primarily due to lack
of confidence which temporarily has
destroyed their marketability.
The Federal Government is willing to
bet two billion dollars that the Nation
will come out of the slump. Is it safe
bet? The few peSsimists who do not
believe it is can at least take comfort in
the philosophic thought that should the
Government "lose," its forfeit Of two
billion dollars will be relatively of such
small importance that it will probably
be overlooked entirely.