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Mr. MEEKS. I wanted to add right here in the record also that cases of that kind have been called to my attention over in our country in Illinois. Where the concern cannot show a record of profit in the last 4 or 5 years, no matter what they have in the way of assets, they cannot secure loans.

Mr. OsBahr. For instance, Mr. Chairman, in 1934 an investigation will disclose that there was quite a serious price war in the gasoline market in New Jersey. After charging off in round figures approximately $26,000 depreciation, the company showed a loss of $14,000. In other words, it made an operating profit of $12,000. Now, that $12,000 was not, of course, enough to enable it to liquidate its previous obligation, because of the fact that we are paying $1,000 a month on the mortgage, plus interest, which in round figures is $1,500. We are in no position to pay off an obligation which we owe the Standard Oil Co.

Mr. CavicchIA. Where are you located now?
Mr. OSBAHR. At 369 to 407 Riverside Avenue in Newark.
Mr. Cavicchia. In the same neighborhood where you were before?

Mr. Osbahr. Yes. They condemned 75 feet of our property for the new highway there, and it put us out into the river where we had to put everything on piles, also had to build a bulkhead and fill and all of that.“We cannot make loans to an oil company under those conditions," is the answer of the bank, the R. F. C., and the Federal Reserve. They even want that property as security, but it could only be used to store oil or molasses or something else maybe before prohibition.

Mr. Cavicchia. The mortgage is paid down from $160,000 to $90,000?

Mr. OsBahr. It will be down to $90,000 on January 1st, when the balance is recast, but we are not concerned with that.

Mr. Cavicchia. And you want money for working capital; is that it?

Mr. OsBahr. Well, if the Reconstruction Finance would classify for such we would probably qualify for such a loan, but on account of the fact that it would be necessary to pay off the mortgage and also to put ourselves in a substantial current position, it would then fall into the class of paying off past due obligations.

Mr. Cavicchia. How much did you ask for?
Mr. OsBAHR. We asked for $135,000.

Mr. Farley. Have you been approached for the sale of your business?

Mr. Osbahr. Oh, in the oil business there is always lots of people running around making offers, a lot of real-estate agents.

Mr. Farley. I thought you might be between the devil and the deep sea and maybe someone wanted to buy you.

Mr. CAVICCHIA. If you bought these millions of gallons of oil on which you would save something, you could have a good showing soon?

Mr. OsBahr. One-eighth of a cent.

Mr. Cavicchia. And you would not have to store it yourself, would you?

Mr. Cavicchia. Would it be subject to your order?

Mr. OsBahr. We very deliberately, so as to show the Standard Oil Co., who have been controlling our financial position, making it

your mistake.

difficult for us to ever liquidate our obligation to them, bought from one broker at an eighth of a cent a gallon saving on this particular grade which we handle in very large volume. While they will not admit that it is possible, we have the evidence in invoice and everything.

Mr. CAVICCHIA. How recently did you have correspondence with the R. F. C.?

Mr. OSBAHR. Not since July 1934.

Mr. FORD. Did you ever come down to headquarters to try to get it?

Mr. OSBAHR. No; because, as I read the Reconstruction Finance Act, or whatever this Circular No. 13 is, it appeared to me that it would be rather useless to go over the head of the district office up there in New York.

Mr. FORD. I think that is where you have made

Mr. Sisson. That is where you made your mistake. I don't know that you could get your loan, but there have been a great many loans that have been in the first instance turned down by the New York agent of the R. F. C. where the applicant has come afterwards perhaps informally down here and succeeded in getting the loan through. I happen to know of two or three personally, and I have heard of a great many more.

Mr. KOPPELMANN. I would like to ask just a few questions. How many employees have you?

Mr. OsBAHR. We have at the present time approximately 75.

Mr. KOPPELMANN. What difference will it make to you if you can secure the loan, in the matter of employment?

Mr. OsBahr. That is peak. That was another reason why the Reconstruction Finance Corporation did not look on the application so favorably, because it did not provide any relief of unemployment; but the failure of the company would create further unemployment.

Mr. KOPPELMANN. One more question: What will happen to your company if you are unsuccessful in securing the loan?

Mr. OSBAHR. Well, we have worried along for 5 years, and I guess the only thing, if the Standard Oil Co. did not step in and take it over, we would just try to worry along for another 5.

Mr. KOPPLEMANN. Are there any possibilities of your being forced out of business if you do not get the money?

Mr. OSBAHR. That I could not say, Mr. Kopplemann, because that would impugn the intentions of the Standard Oil Co., whether or not it is an effort in the oil industry to absorb small independents like ourselves who have built up a tremendous business, through the methods that they pursue. I would not be prepared to say, but of course the business is a very valuable one. It results in a million dollars worth of business a year and approximately $800,000 a year purchases from the Standard Oil Co.

So that, no matter what happens, Standard Oil Co. would certainly absorb the thing. Whether or not it would be worth anything to them afterwards is another question.

Mr. KOPPLEMANN. Your purpose in coming here before this committee urging the enactment of this legislation is so that it will protect, you against being driven out of business by people who are financially stronger than you?

Mr. OSBAHR. Exactly so.

Mr. CAVICCHIA. What I want to get on the record is, besides the $90,000 that you owe on this mortgage, what other liabilities have you?

Mr. Osbair. We owe Standard Oil Co. approximately $85,000. Whether or not it would be called a current liability or an accumulated liability would depend on the opinion of the person looking it over, because we have owed them that much practically continuously.

Mr. Cavicchia. If you had gotten that $135,000 from the R. F. C. to pay off the mortgage, you would now be in a satisfactory condition to do business independently?

Mr. OSBAHR. And it would put us on a current basis with the Standard Oil Co., where we would be in a position to go out and invite quotations from their competitors.

The CHAIRMAN. All right, gentlemen.

Mr. Sisson. Just one question: If you were applying for a loan, how much would you apply for?

Mr. OsBahr. $135,000 would put us on a current position.
Mr. Sisson. And that $135,000 includes the $80,000 mortgage?

Mr. OsBAHR. Yes; and we owe Standard Oil Co. in all about $85,000. About $50,000 or $55,000 of that is past due.

Mr. Sisson. You have $85,000 to pay off to the Standard Oil Co.? Mr. OSBAHR. Yes.

Mr. Sisson. Have you made any effort to find out who holds this $80,000 mortgage?

Mr. Osbahr. The Jersey City Title & Trust Co. in Jersey City.

Mr. Sisson. Then if you got a loan of say $85,000 and you could get the bank to-would the bank subordinate its lien with the R. F. C.?

Mr. OSBAHR. I doubt whether the laws of the State of New Jersey would permit them to do that. I think they are in New Jersey a mortgage company or a bank. That is why we have had to apply for the full amount, so that we could liquidate the first mortgage obligation and then in turn obligate ourselves to the Government on a strictly first-mortgage basis.

Mr. CAVICCHIA. How long would you want the loan for?
Mr. OsBahr. Not over a period of 5 years.
Mr. Cavicchia. You could liquidate it in that time?
Mr. OsBahr. Yes, amply.

The Chairman. All right. Thank you very much, gentlemen. we will adjourn until 3 o'clock.

(Accordingly, at 12:25 p. m., a recess was taken until 3 p. m.)


(The recess having expired, the committee reconvened at 3:30 p. m., and proceeded further with the consideration of H. R. 5918, as follows:)



Mr. BRAIDA. Mr. Chairman, I wish to submit to you the plight of a very large number of small businesses and industries, and in particular that of the baking industry, in the State of New York, The credit conditions in the last few years have become so difficult that practically no small employer is able to secure any credit of any amount.

During the past 5 or 6 years, I have been particularly active with the baking industry, but the same thing applies to many other of the industries, where the employers have businesses which range between $20,000 and $100,000 capitalization. It has become apparent that people who used to be able to secure from banks sufficient credit, either for seasonal purposes or for carry-over conditions, are now absolutely unable, in spite of the fact that these business people have been in their own business for 10 or 20 years, to do so, although they are honest, well known, and have a balance-sheet condition which is not bad.

As to the baking industry, I wish to point out to you that it is an industry with a prevalence of small people, in the State of New York there being 4,500 employers. These people have in the past 5 years suffered tremendously from the depression. The baking industry has a product which is very perishable. It is near to the consumer. The price of the product is usually affected by the condition and purchasing power of the individual consumer, and cannot command sufficient to meet all the conditions as they change.

In the past few years, first with the decreasing purchasing power of the individuals, and then with the increasing costs of the products, the bakers have depleted their circulating capital, and now they find that whenever they turn around for additional assistance they are unable to obtain either credit from friends or from banks. The condition is so serious that unless something is done along the lines of the bill which is before you now, most of these employers will go out of business, with consequent serious loss to the economy of the country.

I wish to point out specially the particular effect which this has. Small employers employ skilled laborers, who are well paid. The rate of payment in these industries is from 65 cents to $1.50 per hour, for skilled labor. When these small employers are wiped out by conditions as adverse as they are now, they are replaced by the mechanized industry, which uses one man out of every four to ten in the handcraft divisions. In other words, the fact that credit is denied to the small units is a contribution to the centralization of production and the control of commerce. In other words, also, it means that these people who have been for years independent operators, who have been sympathetic to the public, who have worked with the public, worked with their own employees, are driven out of a trade for which they have spent practically their whole life in the open market, and to no benefit at all. If credit were extended to these people, this money would be flowing right back into employment, and would be more beneficial than the relief money.

Relief money is given to people who cannot appreciate it. Money lent to business men of this type goes right back into the heavy industries. The bakers, for instance, very few of them have been able to replace any of their machinery or their equipment in the past 6 or 7 years. They need plenty of things, which they would be buying. These funds would go, then, into the heavy industries which in turn would reemploy people.

The stock which is carried over by this industry is very small at this time, and the facilities granted to them would permit them to

increase their stocks, and therefore to help the market for agricultural production.

We must not forget that these employers also have people who are well paid, and who have families, who are keeping the country together better than the heavy industry and then the industries which employ mechanized methods of production.

I will be glad to supply other information to you, Mr. Chairman, if you wish to ask any questions.

Mr. Cavicchia. You mentioned, a little while ago, that a lot of these small bakers would go out of business, and that that business goes to the larger concerns.

Mr. BRAIDA. Yes, sir.

Mr. Cavicchia. And that tends to centralize the baking into a few hands. Does any good accrue to the consuming public by centralizing the baking business into a few hands?

Mr. BRAIDA. There may be room for difference of opinion.

Mr. Cavicchia. Well, I am asking you. I do not know. I am asking you whether it does.

Mr. BRAIDA. Yes, sir. The fact is today that those people who have the highest labor costs are selling at the lowest price.

Mr. KOPPLEMANN. Therefore, the consuming public benefits?

Mr. BRAIDA. The consuming public has the benefit, and it is having it in two ways.

Mr. KOPPLEMANN. At the present time?
Mr. BRAIDA. At the present time.

The CHAIRMAN. Well, the centralization of those operations inevitably tends toward monopoly, does it not

Mr. BRAIDA. Yes, sir.

Mr. KOPPLEMANN. What you are arguing for, as the representative of the small bankers, is just what, Mr. Braida?

Mr. BRAIDA. That the Congress should consider extending facilities to the small industry, which is now hampered in its development of its small industries, over such a large part of the country, and are so important to the economy of the United States, that they should not be ignored. At this time they are suffering tremendously, and you will find an expression of their demand in trade magazines.

For instance, here is one that I would like to submit which mentions credit for small industries, and is the voice of one of the divisions of the baking industry, representing those handcraft shops that use the old method of oven baking.

There is one, here, representing the Jewish bakers' voice, also mentioning the dire needs of that group. This division employs people who are paid $75 a week for 48 hours. Their assistants are paid $72, and their third man, the helper, is paid $68, under contracts to last 2 years. These people find that without circulating capital added to them, they are absolutely unable to stay in business.

Mr. CavicchiA. What kind of work do they do?
Mr. BRAIDA. Baking.
Mr. Cavicchia. I know, but what particular kind?

Mr. BRAIDA. Pumpernickle, rye bread. That is the particular division.

Mr. SPENCE. What do you call the small industry? What is the line of demarcation between the small industry and the large industry?

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