agement of individual institutions throughout the country, we are very fearful that it will have a very decided effect, first, upon collections of loans which we have in our note case; secondly, that it will retard the getting back into normal functioning of private capital. As long as there is an opportunity for borrowers to file applications with the Home Owners' Loan Corporation and get the benefit of Government credit, just that long they are going to look to the Government for their funds rather than to private institutions.

The House amendment is perhaps about as satisfactory as could have been gotten through the House of Representatives, where there were several different proposals made to increase the amount up to many more billions and to open it wide to new applications. Yet we would prefer that the Senate bill be adopted.

This original Home Owners' Loan Act was passed in June 1933, and the Board ceased taking applications for loans in November of last year. Applicants in distress had a period of nearly 18 months in which to file their applications. Certainly no restraint was upon them in not filing them, and we feel that if the Home Owners' Loan Corporation can clean up its job with the applications on file, private capital will have an opportunity to take from the shoulders of the Board and of Congress the functions which it naturally should assume. There has been a considerable betterment of conditions that justifies the belief that they will be enabled to do that.

Section 11 is a new section, which does not concern the building and loan interests. The question seems to be one of patronage, with which we are not concerned.

Senator TOWNSEND. You would not care to give an expression of opinion on that?

Mr. FRIEDLANDER. As an individual citizen and not speaking for our organization I would not object at all. I think it would very seriously hamper the orderly operation of the Home Owners' Loan Corporation if it should become effective. I think it would disrupt the personnel of the Home Owners' Loan Corporation.

Senator MCADOO. You mean if this section 11 should be enacted? Mr. FRIEDLANDER. Yes.

Senator BULKLEY. Mr. Friedlander, Senator Reynolds is here, and wishes to make a brief comment on sections 10 and 11. Would you mind if he does that at this time?

Mr. FRIEDLANDER. I shall be very glad.

Senator REYNOLDS. Mr. Chairman, the very paragraphs he has been discussing are the ones that are of interest to me.

Section 10, subsection (c), reads as follows:

In order to provide for applications heretofore filed; and for applicants who in good faith prior to the date this amendment takes effect, sought relief by formal application, letter, or otherwise, who file their application within 60 days after this amendment takes effect.

I think that the following wording should be eliminated from that paragraph. As it reads now it says:

In order to provide for applications heretofore filed; and for applicantsI suggest the elimination of the words:

who in good faith prior to the date this amendment takes effect, sought relief by formal application, letter, or otherwise

And leave in there:

who file their applications within 60 days after this amendment takes effect. I believe it was generally understood, Mr. Chairman, that a great many people filed applications prior to the acceptance of this amendment. Those applications were passed upon, and a great many very worthy people, knowing that the applications were no longer being received, or at least no longer being passed upon by the officers of the Home Owners' Loan Corporation, were honest in their intentions and did not want to annoy those officers of the Home Owners' Loan Corporation. There are just as many people who are worthy of relief now as there were who filed their applications prior to the exhaustion of the money, and, therefore, I respectfully recommend to this committee that that portion reading as follows:

who in good faith prior to the date this amendment takes effect, sought relief by formal application, letter, or otherwise

be eliminated, and thereby provide an opportunity for those who hereafter, within a limited period of time, make application, to give them an opportunity for relief.

Senator McADOO. You want to make it apply merely to applicants who file their applications within 60 days after this amendment takes effect?

Senator REYNOLDS. That is right, because thousands of applications sent in to the offices were turned down because of the fact that the applicants could not qualify under the act.

Senator BULKLEY. They would be qualified without that language. They would be qualified under the first clause:

In order to provide for applications heretofore filed

Senator REYNOLDS [reading]:

and for applicants who in good faith prior to the date this amendment takes effect, sought relief by formal application, letter, or otherwise.

Senator BULKLEY. Any application that has heretofore been filed can be considered without regard to this subsequent language.

Senator REYNOLDS. But I think the language of the section now eliminates others who would wish, in good faith, to make application for loans.

Senator BULKLEY. Yes, sir, it does; but your argument on that was directed to those who had filed.

Senator REYNOLDS. No; I do not think they should be eliminated. Senator MCADOO. This is restricted to applicants who in good faith, prior to the amendment taking effect, file their applications. Senator REYNOLDS. Yes.

Senator McADOO. He wants to leave it open to any applicants who file their applications within 60 days after the amendment takes effect. Senator TOWNSEND. Whether heretofore filed in good faith or not. Senator MCADOO. Whether heretofore filed in good faith or not. It seems to me that this is rather repetitious anyway. Take the first sentence there:

In order to provide for applications heretofore filed, and for applicants who in good faith

That means applications heretofore filed, whether in good faith or not. They all come within the purview of the act, so it seems to me

the Senator is right in saying that they may as well allow any applicant to get consideration within 60 days after this takes effect, as well as those who had formerly filed applications.

Senator REYNOLDS. That is the point.

Senator BULKLEY. It is a perfectly possible point of view. I do not think the language is repetitious. It provides for two different cases. Senator MCADOO. It does not strike me as providing for two different cases. It says:

In order to provide for applications heretofore filed; and for applicants who in good faith prior to the date this amendment takes effect, sought relief by formal application—

Senator BULKLEY. There is a distinction between whether an application was filed or not. The first clause refers only to those who have filed formal applications.

Senator McADOO. Yes.

Senator REYNOLDS. This, as I understand it, Mr. Chairman, only makes available applications to those who theretofore filed their applications, because the word "who " refers back to those who filed their applications prior to the exhaustion of the fund. That is my interpretation of it.

Senator BULKLEY. There are two classes, one, those who have their applications on file, and second, those who have made a bona fide effort to get relief, without having gone so far as to put their applications on file.

Senator REYNOLDS. Yes.

Senator BULKLEY. But in most cases it must have been done before this

Senator MCADOO. By formal application in each case.

Senator BULKLEY. Formal application, by letter or otherwiseany kind of a bona fide effort to get relief.

Senator REYNOLDS. Mr. Chairman, if you will pardon me, under. the interpretation of this section only those people who formerly put in their applications for money can now apply, because it says:

In order to provide for applications heretofore filed; and for applicants who in good faith prior to the date this amendment takes effect, sought relief by formal application, letter or otherwise, who file their applications within 60 days after this amendment takes effect.

If one who has never filed an application comes in and seeks relief at the present time, he cannot do it under the wording of this

section.

Senator BULKLEY. Unless he has made an effort.

Senator REYNOLDS. Unless he has theretofore written a letter or filed an application. The point I make is that there are many worthy people now who had heard that the funds were exhausted prior to the closing date, and they are deserving of help. They did not file their applications because they did not want to encumber the officers with the applications, so I am suggesting to your committee, Mr. Chairman

Senator TOWNSEND. You want to open the door.

Senator REYNOLDS. To open the door, because there are many people who never filed their applications, who are more worthy than those who did file their applications. It is merely a suggestion on my part which I hope the committee will consider.

The other paragraph upon which I should like to comment, and which the gentleman has just discussed, is section 11, which reads as follows [reading]:

No person shall be appointed or retained as an officer, employee, agent, or attorney in any regional or State office or congressional district of the Corporation, who was, at the date of the establishment of such office, not a resident of the region or State or congressional district, respectively, served by such office, or who is an officer or director of any firm, corporation, or association engaged in lending money on real estate. This amendatory provision shall go into effect within 90 days after the date of enactment thereof.

In regard to that, Mr. Chairman, I should like to read an extract to the committee in the form of a newspaper article that was penned by Mr. James T. Williams, Jr., for one of the newspapers here in Washington. I cut this out of the paper the other night. Incidentally, it contains a very good likeness of the chairman of the Home Loan Board, Mr. Fahey. It reads as follows [reading]:

OBNOXIOUS

The House of Representatives has recently passed a bill to increase the Home Owners' Loan Corporation fund by $1,750,000,000 with a rider to this effect:

"No person shall be appointed or retained in any State or regional office who was not at the time of his appointment a resident of the State within the region."

This limitation upon the efforts of the Home Owners' Loan Corporation to protect the public funds at its disposal from pork barrel politicians and political racketeers is just as obnoxious and indefensible as a similar limitation would be on the efforts of the Department of Justice to deal with criminals.

If the Senate should agree to this pork barrel rider it would mean the dismissal throughout the United States of some of the best trained heads and key men in the State and regional offices of the Corporation.

These trained and experienced officials would be replaced by the appointees of the pork-barrel politicians on the ground. The result would be that only home owners with political pull would be able to get any help from the Govérnment in retaining their homes.

When the Home Owners' Loan Corporation was organized, the pork-barrel politicians in Congress defeated the efforts of the President to provide for the organization of this agency on a merit basis.

In spite of this fact, however, the President has finally assembled a group of officials at Washington who, by process of selection, are slowly obtaining a competent force.

The Corporation began by training its employees at Washington, and those who showed the most qualifications were then transferred to regional offices for the purpose of organizing and supervising the servicing and collection of loans.

THOSE WITH "PULL"

One of the purposes of the Corporation in sending employees that were not residents of the region was to insure greater protection to the Corporation and the Government in the administration of the law.

It is that particular point to which I wish to direct the attention of this committee. [Continuing reading:]

By this method the Corporation has been developing an increasing freedom from the sinister interference of greedy politicians and sordid and sometimes crooked local interests.

If the Senate should agree to the House rider limiting the appointment or retention of State or regional officials to those who are residents of the State or the region at the time of their appointment the Home Owners' Loan Corporation will quickly lose these 200 of its most competent officials.

Their places would be filled by the appointees of 200 pork-barrel politicians selected solely on the basis of their pull with the pork-barrel gang.

The Home Owners' Loan Corporation is the largest lending institution in the world. The bill just passed by the House increases its capital and loaning power to $4,950,000,000.

Under the leadership of Mr. Fahey, the Corporation is doing everything in its power to eliminate dishonest and inefficient employees forced upon the Corporation by the political greed of the pork-barrel gang in both Houses of Congress and in the several States.

The point I make, Mr. Chairman, is this: If this paragraph is permitted to remain as it is, I am of the opinion that it is going to work a great detriment to the Home Owners' Loan Corporation and to those gentlemen who are developing the facilities of the Corporation for the benefit of the needy and the relief of those in distress in this country.

Let me give you a simple illustration. My home town of Asheville, N. C., is a city of some 50,000 inhabitants. We have there a Home Loan Corporation office, a branch office of our main State office, which main State office is located at Salisbury, N. C. We are very much pleased with the operation of the Home Owners' Loan Corporation in North Carolina. For the past several months, after they had an opportunity to get straightened out, they have done remarkably good work, and have brought about a great deal of help for innumerable citizens throughout our Commonwealth. The home office at Asheville, N. C., is considered to be about the best office in any of the States of that region. The home office there is managed by a young lawyer by the name of George Roberson.

Senator McADOO. Did you recommend him?

Senator REYNOLDS. Yes; I recommended him, together with Congressman Weaver, and I am delighted to have the opportunity of stating now that I believe that he has proven worthy of the recommendation which I was pleased to give him at that time. They are up with all their work. They have very few applications there. We are going to have many more applications in that State, Mr. Chairman, and there are going to be many more all over the United States. There may come a time when the national chairman will be desirous of picking men from offices where the work is not calling for all the men they have now. If this portion of the bill is left as it is, it will mean that when the chairman of the national corporation is desirous of choosing these men from various offices and sending them into other congressional districts or other zones or other States where he needs competent men and experienced men, he cannot do that. Senator STEIWER. Would you mind an interruption? Senator REYNOLDS. Not at all.

Senator STEIWER. You used the phrase "national chairman.” Whom did you mean by 66 national chairman "?

Senator REYNOLDS. Mr. Fahey, the head of the Home Owners' Loan Corporation. If he is desirous of picking choice men, experienced men, and excellent men who have done a good job, and sending them into regions where he has not such competent men, under this bill he cannot do it. Therefore I respectfully suggest to this committee, Mr. Chairman, the following: Reading on line 6, page 8, of H. R. 6021, where it says:

No person shall be appointed

I propose that you eliminate the words "or retained"; and then, in line 8 thereof, I propose that you eliminate the words "or congres