There was a run on a bank, and a friend of mine, a customs house broker, came to me to ask me about it. I said, No; leave your money there. There is no sense in making runs on banks."

He said, "But my next door neighbor had money in that bank, but he took it out of there."

I said, "You leave your money there." Governor Norris, of the Federal Reserve Bank, broadcast a speech at that time. They asked me to do the same thing. They asked me to go on the platform and make a speech, broadcast a speech, telling the people to stand by the bank.

Governor Norris broadcast a speech and advised the people to be calm. They did remain calm, until the bank closed.

Then this broker friend of mine came to me and said, "Practically, who is the smartest patriot, the man who took his money out of the bank before it closed, or the man who left it there?"

That is the situation today. That is the story, and I know it is true, because of my experience as chairman of the National Depositors' Committee, and I know the tragedy that has come to many people of the country who did that.

I traveled over 7,000 miles last fall in many States, speaking on the question of the closed banks. They tell me I am "nuts on that subject. But I feel it, I see it, I mingle on the highways and byways of life, and I see what is going on. I see how we are getting choked and stifled.

You have been very kind to me, and I appreciate it most profoundly. I am not going to take advantage of you Members of Congress.

But I want to leave this thought with you.

I know the machinery of legislation and how it works. Please speed this machinery. You do not know what this bill of Congressman Kopplemann's means in everyday life to millions of merchants and manufacturers.

Talk about increasing employment! If you will take $1,000,000 and put it in the Philadelphia area and loan it to the small merchants and manufacturers in loans of a thousand dollars, and give me 3 months' time, you will have 20,000 men and women working at decent wages, with or without the N. R. A. There is no need for any statistics on that; those are the facts.

You will see stores reopened; you will see new life and light and hope created among millions and millions of men and women who have become great factors in this country from one end of the country to the other, in little communities and in large cities. And they are the safety valve between the "soapbox" orators and the other extreme. That is the middle-class fellow who has brought up his family and become attached to the community. It is not the owner of the chain store, the head of the concern who stays in Paris. But I am not talking against him; if God provided him with that, let him have it. But you must provide something for us, and if you Members of Congress will do that for us, let us see who will benefit from it. I tell you the people will benefit most from your generosity. We are not asking you to take chances with us.

I came across a bill known as "Senate bill 2367 "—and I am becoming quite proficient in distinguishing what is a Senate bill and what is a House bill-and Senate bill 2367 provides for loans to

farmers, and that is very fine. And I see that House bill 7042 provides that the R. F. C. may loan money to small fishermen and take as collateral the small fishing boats. That is all right. The small fisherman has to be helped.

Everyone in this great country has become a part and parcel of the great system of the United States, and we should let him go out and get assistance in his business, so he can go out and make a living.

I am not so struck on giving them a meal ticket; I am not so struck on the proposition of giving them charity. Whether a man is a naturalized citizen or a native, it is not a charity proposition; give him a chance to go out and work, and he is the happiest human being on the face of the earth, and I have seen them everywhere.

I am about finished. I hope that if God inspired me to stand up here and tell you a story that emanates from the recesses of my heart, and from the recesses of the hearts of those millions of men and women who are engaged in small industry and small business, from one end of the country to the other, I pray that my appearance here will have the proper result.

I thank you most profoundly for the attention you have given to me, and I most profoundly hope and pray that in a short time I will read in the newspapers that Congress has done something for this class of American citizens.

Mr. WILLIAMS. We are very glad to have had your statement. Mr. FORD. May I make a comment, Mr. Chairman?

Mr. WILLIAMS. Yes.

Mr. FORD. Out in Los Angeles there happens to be a man who was probably the largest wheat grower in America. We all know who he is. He is the man who financed the big wheat project during the war. He is known in Los Angeles as a very successful business man even prior to his entering the wheat business.

The other day he went to one of the banks with a letter from Mr. Wallace, saying that in 10 or 15 days-whatever the period of time was-they would be sending him a check for $22,000 for wheat that he did not raise. He wanted to get $1,500 on his note, on the assurance of that payment. The answer was that they could not give it to him because they did not know whether the United States Government would keep its word and send that money. If that is not sabotage on the part of the banking fraternity of the United States, then I do not know what the word means.

Mr. WILLIAMS. The next witness we have is Mr. E. S. Bullock, of Williamsport, Pa., a lumber manufacturer. Mr. Bullock, we shall be glad to hear you at this time.

STATEMENT OF E. S. BULLOCK, WILLIAMSPORT, PA.

Mr. BULLOCK. Mr. Chairman and gentlemen of the Banking and Currency Committee, it is a privilege and an honor to come before you here in support of

Mr. KOPPLEMANN (interposing). Mr. Bullock, before you start. will you tell us something about yourself and your business?

Mr. BULLOCK. I was just coming to that. I come here in support of Mr. Kopplemann's bill for an intermediate credit corporation to help small business.

I started in business in 1907, and I imagine you all know what year that was. I started with one small mill. A banker at that time agreed to lend me $2,500.

From that capital investment, in 7 years, I built up an individual organization operating seven mills, with a balance sheet of $100,000 liquid.

Unfortunately I became the victim of circumstances at the hands of banks and bankers. I was persuaded to finance a partnership. It was not known to me at that time that the bank, or a director of the bank, practically owned the plant. That is to say, a director of the bank owed the bank $105,000 and the bank sold this plant for $115,000.

The reason I let them get me into this deal was that they approved an appraisal showing that the plant was worth $150,000.

Mr. WILLIAMS. What period is this that you are talking about now?

Mr. BULLOCK. 1923. The bank agreed to take a first mortgage on that plant, and I figured that if the bank would take a first mortgage for $100,000 it was a good buy at $115.000, and I endorsed a collateral note for $100,000, individually.

Mr. WILLIAMS. Did you not investigate the property yourself? Mr. BULLOCK. I did.

Mr. WILLIAMS. You were satisfied with it on your own judgment? Mr. BULLOCK. I was satisfied, as far as I knew the business. That was the beginning of my downfall.

In 1927 I was forced out of business individually on account of this partnership business; it was not incorporated.

My thought in coming here today in support of this bill is to try and show you gentlemen as briefly as I possibly can that the little business man is fighting with his back to the wall for a small credit. accommodation. I say small even five or ten thousand dollars. I am going to tell you about my experience with the R. F. C. in the past 30 days.

Mr. WILLIAMS. You are still in the lumber business?

Mr. BULLOCK. Yes, sir.

Mr. WILLIAMS. In what form?

Mr. BULLOCK. I am a manufacturer and a wholesaler in hardwoods. That is, I wholesale lumber. I buy lumber from the South and from the West, and I sell it all over the country from Cleveland to Boston. I have an established trade, or have had, since 1921. Mr. WILLIAMS. And you are also in the manufacturing end of the business?

Mr. BULLOCK. Yes, sir.

Mr. WILLIAMS. Where are your mills?

Mr. BULLOCK. In Centre County, close to Bellefonte, Pa. Also, there are one or two mills that should be operating, and those are near Williamsport.

Mr. DRISCOLL. You manufacture lumber? I ask the question because I live in that vicinity.

Mr. BULLOCK. Lumber; yes, sir. I purchase the output of small mills. In other words, I am representing not only my small company but others with whom I have contacted and whom I have talked to in reference to Mr. Kopplemann's bill here.

We have never yet heard of any Federal assistance being given to small industry.

Mr. WILLIAMS. What assistance did you have back in 1927 and 1928? What line of credit did you have at that time?

Mr. BULLOCK. I did not need any-oh, 1927, I was forced out of business in the latter part of that year. I lost my credit and all my money.

Mr. WILLIAMS. If you lost it all, how did you get started again? Mr. BULLOCK. One week after I was adjudicated a bankrupt, in 1927, I personally borrowed from a Milton, Pa., bank-the president and the vice president of that bank knew me very well-and I paid it back in 4 months.

Mr. WILLIAMS. When you first began to need financial aid-when did you first begin to need aid or do you need it now?

Mr. BULLOCK. Largely since the banks closed.

Mr. WILLIAMS. Did the closing of the banks tie up your funds? Mr. BULLOCK. Tied up our funds and injured our credit. But we have operated from 1928 up until the present time without any working capital except what I could borrow or raise through my friends, to continue in my business.

Mr. WILLIAMS. In what shape are the banks in your neighborhood? That is, in the neighborhood where your mills are located.

Mr. BULLOCK. My banker tells me he told me when I went to him for a small line of credit-that he would be criticized if he were to make me a capital loan for any period of 1, 2, or 3 years. They would not consider it.

Mr. WILLIAMS. What kind of a bank is it?

Mr. BULLOCK. The First National Bank.

Mr. WILLIAMS. It is a national bank?

Mr. BULLOCK. Yes. That bank did pass my company a small line of credit 30 days ago, a short-term loan, a 30-day loan. The limit was $1,500. That is for us to operate on a wholesale business where I would go out and sell a car of lumber today and have to pay a sight draft for 75 or 80 percent. But my money would be returned to me within 2 or 3 weeks.

Mr. WILLIAMS. What is the difference between that line of credit and the line of credit that you formerly secured?

Mr. BULLOCK. You mean in a capital loan?

Mr. WILLIAMS. Yes.

Mr. BULLOCK. What we can offer is only our mills and machinery, timber, and equipment.

Mr. WILLIAMS. Did you ever secure a loan on that?

Mr. BULLOCK. No; I did not.

Mr. WILLIAMS. You have never done that. Then you are securing now the same line of credit that you always had secured?

Mr. BULLOCK. Yes. Previous to the merger of the West Branch Bank and two or three other banks in Williamsport, I secured as high as 10 or 15 thousand dollars-well, I should say $10,000-if I would ask for it in the morning I could get it in the afternoor. That was for the purpose of going out and buying timber.

Mr. WILLIAMS. When was that?

Mr. BULLOCK. That was in 1922, 1923, 1924, and up until 1925. Mr. KOPPLEMANN. Now you say you are able to get only $1,500 for 30 days.

Mr. BULLOCK. I took up the matter of a $3,500 loan with a bank, to make a timber payment-the payment was for $2,500 due on January 1 of this year. I advised them that I could pay that off at a rate, if necessary, of $500 a month; that I would have to close the operation down on or before May 1 unless I could get that money, $2,500.

In the meantime, I applied to the Reconstruction Finance Corporation, through the Philadelphia Loan Agency, for a loan, after they had told me from Washington through circular no. 13, revised, section 5 (d) with reference to security requirements-I felt sure from that that every small operator or concern could qualify. In my application I asked for a loan. I applied for a loan of $3,500 to $5,000. That was a preliminary application. They replied stating that they would not favor a $5,000 loan, but they would consider favorably a $3,500 loan if that amount would enable us to continue this one mill profitably, and keep 25 men in employment.

I immediately filed my application-I say mine-our application on March 1, for a $3,500 loan. These are the papers here in which we offer them liquid collateral up to $8,000; copies of orders amounting to $20,000 from railroads, steel companies, the largest industrial plants, to which we cater. We submitted an application of a kind that I do not believe they ever received anything equal to it for the good that it would do all concerned. A $3,500 loan would enable us to continue 1 mill and possibly resume the operation of our second mill; a $5,000 loan would enable us to operate 2 mills employing 50 men, and a $10,000 loan would enable us to operate and employ 100 men profitably. We backed that up with an auditor's report.

On March 29 I received a letter from the loan agency stating:

We regret to inform you that your application was not approved for reasons which include the following

I believe you would like to hear that?

Mr. WILLIAMS. Yes; I would like to hear what their reasons were; you need not read the whole letter but just give us the substance of it.

Mr. BULLOCK. I am going to give you just two paragraphs which include the reasons, but before I do that, I should like to offer you a profit and loss statement of myself operating as an individual, showing that in 1929 we had a net return of $8,000; in 1930, $5,000 plus; in 1931, $5,000 plus; in 1932 a little over $4,000; in 1933, a little over $4,000; and in 1934, a little over $4,000. That was accomplished without any working capital, up until the 1st of March of this year. Now, I will read you the answer that I got. [Reading:]

Your operating and business record does not give satisfactory assurance that your operations can be conducted with a degree of profit offering reasonable assurance of the repayment of the loan, and the committee does not feel that the credit risk warrants granting of a loan.

Second. The collateral offered is one of a type which the committee is unable to accept for the requested loan, and the loan value which could be assigned thereto is not of sufficient amount.

That was $8,000.

Mr. WILLIAMS. Right in that connection, what was the collateral that you offered?

Mr. BULLOCK. Seven hundred thousand feet of standing timber in Pennsylvania, which is considered real estate, for which we paid $5