Evening star., 1932-01-23
DAWES AND MEYER
HELD CAP ABLE TEAM
Experience Enables Them to
Cope With All Problems
of Credit.
BY DAVID LAWRENCE.


Dawes as administrative head Of the
Reconstruction Finance Corporation and
Eugene Never as chairman OF the
Board of Directors has significance
which will be more apparent as the
operations of the new Government
agency are unfolded.
Ever since the plan was advanced to
have an emergency corporation 1t has
been assumed that Mr.. Meyer, because
of his experience as head OF the War
Finance Corporation, would head up
the new institution. Whlie Mr., Meyers
own ability was conceded, there has
been some sentiment on Capitol Hill to
the effect the governor of the Federal
Reserve Board should not be in charge
of the two credit agencies of the Gov
ernment. for fear the public might get
the impression the Federal Reserve
policies are intertwined in reconstruc-
ton finance operations.
President Hoover felt there should be
the closest cooperation, of course, be-
tween the Federal Reserve Board and
the new corporation, but he determined
finally that with Gen. Dawes, COM
mercial banker, and Mr.. Meyer, an in
vestment banker, the country would
have the assurance of team that
would be able to cope with all problems
of credit that might arise.
Dawes to Be Administrator.
Nv making Gen. Dawes the president
of the corporation ne becomes respon-
sihle for actual administration, while
Mr. Never becomes an adviser, along
with the Secretary OF the Treasury and
the farm loan commissioner. The
other three members of the new cor
norations directorate will be Democrats,
and II is understood they, together with
Ger Dawes, will constitute the actual
working machinery of the corporation.
policies will be formulated at the meet
ings of the directorate OF seven, over
which Mr. Meyer will preside.
Mr.. Meyer will be of inestimable help
To Cen Dawes, for while the latter was
in France during the war Mr.. Meyer
wrestled with some of the very ques-
tions that are bound to come up in the
handling of the credits. Mr.. Meyer has
an uncanny knowledge of market con-
ditions and interest rates, and in any
financing done by the corporation or
anv underwriting of bonds he Will
doubtless play a leading part.
Impressions from New York and else
where conveyed here indicate there Is
still much uufamiliarity with the way
the Reconstruction Finance Corpora
ton will operate. In the first place, 1t
has been assumed that two billion dol
lars worth of securities, guaranteed by
the Treasury, would be f1oated all at
once. and that this would depress exist
ing Government securities. The plan Is
to finance the S1,500,000,000 of deben-
lures gradually over the next year, and
it is really believed 1t will not be neces-
sary to float them at all, any more than
in the past the existence of such a
credit has resulted in It's actual use.
Principle Declared Sound.
1t is felt the s5O0,0oO,o00 of capital,
which are, of course, to be Government
bonds. will be the equivalent of s5,000,-
100000 of credit. Thus the corpora
tion will permit financial institutions
that syndicate loans to say publicly that
the loans have been examined by the
and are eligible for redis-
count. Only loans of real worth will
have that privilege but it is tanta-
mount to a guarantee by the Treasury
of interest and principal on sthe bonds
to be f1oated by the railroads. utilities
or industrials which may make appli-
cation to their banks or investment In
stitutions in the regular way.
While the Reconstruction Finance
Corporation is new in the sense that
1t is to be applied to new conditions. the
principle has been declared sound by
the banking world and there is real
support for the plan in contrast with
the doubts and skepticism which pri-
vately were expressed by bankers when
the National Credit Corporation was
launched. 1t is believed this will be an
important factor in contributing to the
success of the corporation.
Oversubscription Seen.
Already there are evidences that Eu-
ropean spectators are trying to distort
the corporations plan into form of
imitation. Actually no new currency
will be issued, as would be the case If
an infiationary policy were adopted.
Instead bonds and debentrlres will be
sold and paid for by the American
people with cash derived from the sale
OF their own assets or from savings.
These debentures will have back of
them not only the collateral of the
original borrower, but the Endorsement
of bank or investment house and then
the assets of the Reconstruction Cor
poration and finally the resources Of
the United States Treasury itself.
The general feeling here is that the
debentures will be sold by Nation
wide syndicate through the usual chan
nels OF investment, and that when the
interest rate and term are fixed the
investors Of the country will oversub-
scribe them, particularly as they are
likely to be short-term debentures which
will be liquidated as the loans made by
the corporation are liquidated in the
next two or three years.
(CopyriRht. 1872