Relief on the Rapidan

To the cool quiet of his camp on the Rapidan President Hoover took the directorate of Reconstruction Finance Corp. for a week-end talk about Relief. House Democrats had spurned the Hoover program, were in fact on the verge of passing their own bill for a big public works bond issue. The President and his R. F. C. conferees sat all day. Dusk melted into night but the discussion ran on. A little breeze riffled papers and reports on the conference table.

Early Sunday morning Theodore Joslin, Hoover secretary, got a telephone call in Washington ordering him immediately to the camp. A White House car sped him to the Rapidan where the President handed him another statement for the Press. He raced back to the Capital, started up the well-oiled White House mimeographs, summoned newsmen.

In last week's statement he hammered away at his well-known formula for Relief: 1) expansion of R. F. C.'s credit to $3,000.000,000 to help States finance self-amortizing public works and to aid the Farm Board with its export commodity loans; 2) a home loan discount Dank system "to stimulate from $500,000,000 to $1,000,000,000 of construction work"; 3) joint committees of industry and finance in every Federal Reserve district similar to the Young Committee in New York "for the organized application of the credit facilities now available" (see p. 43) ; 4) Government expenditures limited to tax receipts, with no bond-financed public works "which would at once create a deficit, again unbalance the Budget, and increase rather than decrease Unemployment."

President Hoover's remarks from the Rapidan were part of the White House offensive against the Democratic relief bill in the House. Above all the President wants R. F. C. to handle all relief loans. Therefore he prefaced last week's statement with a cheery estimate of what R. F. C. had accomplished in the 14 weeks of its existence. Loans authorized totalled about $670,000,000. Of this sum $500,000,000 went to 3,000 banks, mostly in tiny towns, and to 1,000 other financial institutions. Said the President:

"Bank failures [75 in May. 74 in April, 9 last week] are now down to about the casualties of normal times. . . . Altogether over ten million individual depositors and borrowers have been benefited by the Reconstruction Finance Corp."

The result of R. F. C. loans to 250 building and loan associations, according to President Hoover, "has been benefits to hundreds of thousands of individuals."

Of $68,000,000 in R. F. C. credits to Agriculture: "Altogether probably a million individual farmers have been directly or indirectly helped."

Of $170,000,000 to railroads: "The net result has been preventing receiverships and safeguarding the great investments of the trustee-institutions."*

On the heels of this announcement, Charles Gates Dawes tendered to President Hoover his resignation from R.F.C.'s presidency. It was known that President Dawes and Chairman Meyer had differed more than once over matters of R. F. C. policy. But Mr. Dawes emphatically denied that a rift with any of the Corporation's officers had influenced his resignation. He also brushed away any Presidential bees. "Now that the balancing of the national budget by Congress is assured," explained he, "the turning point toward eventual prosperity appears to have been reached. ... In taking my position with the Corporation. I interrupted my formerly announced plan to re-enter the banking business in Chicago [Central Republic Bank & Trust Co.]. . . . In accordance with our understanding when I became associated with the R. F. C. that I would be released when its work was properly established. I now ask that you accept my resignation." "Intensely regretful." President Hoover did so. In view of pending Relief legislation which would load vast fresh problems on R. F. C., Mr. Dawes' retirement amazed his friends and associates.

*Last week the Mobile & Ohio went into receivership (see p. 43). It was the first Class I carrier to collapse since R. F. C. began to operate.

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