A Prod from Truman

After President Truman nominated Harry A. McDonald, a Republican, to succeed W. Stuart Symington as RFC boss, the Senate banking committee refused to approve him. Reason: a House committee was investigating the Securities & Exchange Commission, which McDonald has headed since 1949. Senators were also worried about reports that three SEC officials, who had resigned, had later turned up as counsel in cases before the SEC.

Last week the President angrily said that if McDonald were not approved, he would not appoint anyone else; he would run the RFC himself. Thus prodded, the House committee quickly finished its probe. At week's end, as Symington resigned his post, the committee cleared McDonald. There was no credible evidence, it said, "reflecting adversely upon [his] honesty and integrity." With that out of the way, it looked as if the Senate committee would approve McDonald this week.

One of Symington's first jobs when he took over the scandal-ridden RFC last spring was to probe the RFC's $80 million loan to the Baltimore & Ohio Railroad. Earlier, New Hampshire's Senator Charles Tobey had charged that there was "fraud and collusion" between RFC and railroad officials in the granting of the 1944 loan. Last week Joseph J. Smith Jr., Symington's special investigator and onetime government attorney, turned in his report. Smith's conclusion: "There was no fraud, collusion or illegality involved . . . The RFC would probably have received more favorable treatment [in the repayment of the loan] if it had so insisted. If the RFC was in error in failing to demand more favorable treatment, however, its error was, at most, an error of judgment . . ." Snapped Senator Tobey: "I spoke the truth."

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