The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1932-04-21
HEAD OF FINANCE
CORPORATION Says
U. S. WOULD SUFFER
Asserts it Would Skater FL
nance and Credit Systems
OF Country
SEES IMPROVED BUSINESS
Says SO Per Cent of Loans to
Banks in Cities Of Less
Than 100000

washington. April 2l.-(R-Charles
e. Dawes Thursday warned the
mouse ways and means COMMITTEES
tnat payment of the soldiers bonus ia
new currency would have a disastrous
eject upon the country's monetary
and credit systems.
The head Of the reconstruction cor.
poration related that his orRanizatior
had loaned $24a,24s,ooo to 1,s2o bank.
up to April 10 and said the genera,
withdrawal Of bank deposits in the
United States had stopped.
He said % per cent Of the loans vas
10 banks IN towns OF less than 1oOn,
100000. ~ ''sS 't'an
The important thing to the recor.
struction finance corporation Il tha
number OF depoitors affected" he
he discussed the Missouri Pacific
railroad loan of $1,000 900 Of which
$5.85O.0O0 went to New York banks
including j. p. Morgan & comnsrv
VIII BE Paid Back
Wnen he concluded reading a nre.
pared statement on the status az
the corporation, Representative Raj
ney (Dem., 1ll), asked whether the
corporation would come out with .
loss or profit"
THAT depends on whether ~.
United States is coming out and az
course the United States Il com,nv
out" Dawes shot back. In the lonv
run this corporation will not incur
losses and the principal will be paii
back and probably more"
Rainey then asked about the Pat.
man 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
interest bearing. unsecured treasury
notes amounting to over $4,000. 600 :
UoO. NO provision Is made for the re-
demption Of notes or the maintenance
OF gold reserve. It would be in effect
an issue Of flat currency.
such an issue Of currency. In nv
judgment, would have a disastrous e.
feet upon the countrys currency sys-
tenn, upon the credit of the federal
government and upon the entiro
credit structure Of our country.
"The claim Is made that the iss,,a
Of this currency would so augment on.
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 and
real effect would be the contrary.
Sound Money Important
1he relief of the debtor class, the
Increase Of purchasing power OF the
people, the safe expansion OF credit
and the return Of prosperity all de-
pend upon maintenance Of confidence
IN the soundness Of our currency and
In the credit Of our banks and Of our
government.
I'm my judgment, the devastating
effects OF consequent loss Of general
confidence through the initiation Of
our currency will negative the posi-.
bility Of real relief by any experiment
with fiat money.
"One need but recall what happen
ed to Germany through the initiation
of the German mark currency In the
lew years ending In 1924.
Imitation Of currency once
started In q country seldom stops
short Of its complete economic ruin.
Confidence in the credit structure
81 our 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.
1T has been confidence and not
currency which we have lacked IN
this country. The initiation Of our
currency will destroy, in my tudg-
ment, the general confidence in the
country which has now been estab-
lished. We already know what the
are Of the destruction
II confidence"
Calling Wall Street a peanut
stand" when compared with the
rest Of the nations business, he said
depended upon the att
Jude Of the people and that the peo-
pie are feeling better"