C

1901.

CHAPTER XII

Charles G. Dawes

HARLES G. DAWES, of Illinois, the tenth Comptroller of the Currency, was appointed to succeed Mr. Eckels January 1, 1898, and continued in office until September 30,

Mr. Dawes was born at Marietta, Ohio, August 27, 1865. He attended the public schools of his native city and was graduated at Marietta College with honors in 1884. He was only thirtythree years of age at the time of his appointment as Comptroller, and, like his immediate predecessor, never had had any banking experience, although he was a student of finance and in 1884 wrote and published a book entitled "The Banking System of the United States." His appointment as Comptroller and his successful administration of the office was a further demonstration of the fact that a man of good business judgment and discretion is as well qualified and capable of filling the position satisfactorily as a trained banker.

After leaving college, he attended the Cincinnati Law School, from which he was graduated in 1886. After graduation he was engaged for a time in civil engineering and became Chief Engineer of a railroad which now constitutes a portion of the Toledo and Ohio Line.

In 1887 he removed from Marietta, Ohio, to Lincoln, Neb., where for seven years he practiced law and successfully engaged in business under the firm name of Dawes, Cunningham & Coffroth. While living in Nebraska he took an active part in public affairs, and about the time of the enactment of the Interstate Commerce Law was a recognized leader in the discussions of the freight rate schedules of Nebraska.

Mr. Dawes was a very close friend of President McKinley, socially and politically, and was the executive head of the McKinley movement which resulted in the Illinois delegation being instructed for McKinley at the Springfield Convention in 1896.

He was the representative from Illinois on the Executive Committee of the Republican National Committee in the campaign of that year, and took an active part in the election of Mr. McKinley to the Presidency.

After several years' residence in Nebraska, Mr. Dawes returned to Illinois and became interested in the gas business at Evanston, where he has since resided, with the exception of the time that he lived in Washington. He resigned the office of Comptroller on September 30, 1901, for the purpose of making an active canvass for the position of United States Senator from Illinois, but the untimely death of President McKinley interfered with his plans in this respect and led to the abandonment of his aspirations in that direction.

In 1892 he organized the Central Trust Company of Illinois at Chicago, of which he was the first president. This company started with a capital stock of $2,000,000, which was subsequently increased by the absorption of other banking institutions to $4,500,000, with surplus and profits of nearly $2,000,000, and deposits of all kinds of over $43,000,000. It has been a very successful banking institution from the time it commenced business.

When the United States became involved in the World War with Germany, Mr. Dawes promptly volunteered his services and was commissioned a lieutenant-colonel of engineers, leaving immediately for France to join the forces of General Pershing. He was shortly thereafter promoted to the rank of brigadier-general of engineers and was made Chief of the United States Purchasing Board in charge of the procurement of supplies for the American Army in Europe and a representative of the American Army on the Military Co-ordinating Board for supply activities of the Allied Armies. He rendered invaluable services to his country and to the allied armies in this connection, in recognition of which the French War Cross was personally conferred upon him by General Foch.

When the Act of June 10, 1922, was approved, providing for a budget and an independent audit of Government accounts, President Harding selected Mr. Dawes to inaugurate the budget system and appointed him "Director of the Bureau of the Budget".

Mr. Dawes assumed office on June 23, 1921, and under his immediate and energetic supervision the new bureau was established and the system successfully and promptly put into operation.

After establishing the bureau on a proper basis and placing everything in satisfactory working order, Mr. Dawes resigned and on July 1, 1922, returned to Chicago to resume the banking business in which he was engaged at the time he entered the military service of the Government for the war in Europe.

Mr. Dawes is the son of General Rufus R. Dawes, of Marietta, Ohio, a veteran of the Civil War, and one of the commanders of the famous old Iron Brigade of Wisconsin. At one time he served as a Representative in Congress from Ohio.

Charles G. Dawes inherited great regard for old soldiers and no man in public life in Washington had a greater respect for an old veteran of the Civil War or was ever more ready to extend to him sympathy and a helping hand than Charles G. Dawes.

This fact brings to mind an incident in the lives of two old veterans who were employed as messengers in the Currency Bureau while Mr. Dawes was Comptroller. One had served in the Union Army and the other in the Confederate service. On one occasion during the Civil War a dance was being held in a house in Virginia near where a force of Union soldiers were encamped. Information was received at the Union camp that a number of Confederate soldiers were attending this dance and a non-commissioned officer with a squad of men was detailed to capture them. They proceeded to the place, surrounded the house and demanded the surrender of the soldiers present. One of them was one of the messengers referred to, who attempted to escape by way of a window on the second floor, but was captured by the other messenger, who was in command of the squad, and marched to camp as a prisoner. After separating they did not meet again until chance brought them together in the civil service of the Government as employees of the Comptroller's office. In discussing the incidents of the war with each other, the ex-Confederate related the story of his capture at the dance and then learned for the first time that his fellow-messenger was his captor. These

two men became fast friends from that time and any day they could be seen during the lunch hour smoking their pipes of peace and relating incidents and their experiences during war days. Both have passed away and have joined the great army of their comrades who preceded them, having died within a few months of each other. One of them was absolutely worthless and unreliable, and several attempts were made to have him transferred out of the bureau, but Mr. Dawes would not permit this to be done while he was Comptroller.

A similar instance may be related of another old veteran of the Civil War who was employed as a messenger in the Currency Bureau when Mr. Dawes was Comptroller. He had been a brave soldier and bore the evidence of several wounds received in battle.

This man was a college graduate, highly educated, and a lawyer. He had seen better days, and at one time represented the United States Government in an important consular position abroad. He was a good conversationalist, well informed, and a fluent public speaker, but as he advanced in years he became reduced in circumstances until he was obliged to accept a position as messenger in the Treasury Department and was assigned to the Currency Bureau for duty. He was wholly unreliable, untrustworthy and perfectly useless as a messenger, or for any clerical service. Whenever the chief of his division complained to the Comptroller of his negligence or absence from duty he would invariably defend himself with such skill and plausibility as to be wholly exonerated from blame or any intentional wrongdoing, and escape reprimanding. He borrowed money from everybody who would lend him a dollar, with no ability or intention of paying the loan. On one occasion he borrowed ten dollars from the chief of his division and offered him as security for the loan two handsomely bound volumes of classic literature worth many times the amount of the loan. His chief took these volumes and put them away in the drawer of his office desk. Several days later, when the chief was absent from the office, this messenger stole the books and pawned them to secure another loan. He had a great fondness for books and subscribed for the latest and best publications, obtaining them by the payment of a small sum on the installment plan. He would then pawn the books for a

loan considerably in excess of the amount of the payment. Finally, the claims of his creditors in and out of the Treasury Department became so numerous and annoying that the chief clerk of the department sent for him one day to come to his office for the purpose of asking for his resignation, but instead of procuring the resignation, before the interview ended, the messenger succeeded in borrowing ten dollars from the chief clerk by working on his sympathies in his usual manner. The chief clerk frequently thereafter related this incident as a joke upon himself.

These were some of the unfortunate types of men whom Mr. Dawes in the kindness of his heart protected and befriended while he was in charge of the Currency Bureau.

Liquidation of Receiverships

At the date Mr. Dawes assumed charge of the Currency Bureau there were one hundred and twenty-one banks in the hands of receivers. All of these receiverships had progressed to a greater or less degree toward final liquidation. The cream of the assets of most of them had been skimmed off by Mr. Dawes' predecessor in his energetic efforts to finally close as many of them as possible before retiring from office. Every asset that could possibly be converted into cash had been collected, compromised or sold. In consequence, such of the receiverships as Mr. Dawes inherited from his predecessor contained mostly, if not wholly, assets of a slow, doubtful or worthless character, a considerable portion of which was involved in litigation.

Notwithstanding this fact, Mr. Dawes set vigorously to work to reduce the expenses of these receiverships and to hasten their final closing. Receivers' salaries, and the salaries of their attorneys and clerks, were reduced to correspond with the diminished assets consequent upon the progress made in liquidation, and also by the consolidation of the trusts in the hands of fewer receivers. As a result, a saving of at least one hundred thousand dollars was effected during the first ten months of Mr. Dawes' administration.

While the burden fell with full force upon Mr. Eckels to handle the unprecedented number of bank failures that occurred