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$30,000 first-mortgage loan, and yet he cannot get any consideration, or has not, up to this time.

Now, I do not care to extend this, except just to say this, by way of conclusion, that I think the "forgotten man is not the owner, because you have already set up the machinery to help him, and it has been splendidly administered. Oh, there may have been a few exceptions, perhaps, but it has done a splendid work in our particular community. You set up the Farm Loan, and that has helped. Now, this particular realm represents a gap which has not yet been filled, and it does seem to me that in fairness to bondholders—and I appear here primarily for them, but also for the bondmaker, secondarilyand I feel like our destiny is linked with him; that some method that liberality in the way of appraisal, some method of higher percentage than 50 percent in the way of a loan, is absolutely essential, in order that you do not kill the spirit of these men, who are the bone and sinew and the real asset of America. I realize that the money, in gold and silver that we have in our vaults, and all the other material wealth that we tabulate, is of great value, but the biggest asset of America to day are its boys and its girls coming on, and these men and these women in middle life, the man that I think I feel the greatest sympathy for is the young fellow that has started out about 8 or 10 years ago, and who got out on a limb, who was heading a business, and who has got real character and real ability and the factors that entitle him to credit, and they are the most important of the factors, after all, and yet he cannot get a thing unless he can lay down a certificate or a thing, and become a pawn broker; and even then he cannot get anything on his real estate.

Of course, there are certain securities that he can take and borrow on, and you have plenty of facilities and machinery to lend on them, but when it comes to that big asset, we do not want to kill these young men, many of whom I have had men to come to my office sometimes, several—who have just said to me, “Well, I walked and paced the floor." One, not long ago, said, “Why, Mr. Johnson, I might just as well commit suicide. I might just as well jump from this window, leaving $60,000 in a policy on my life. My wife would get it. Now, what in the world can I offer? No mortgage companies are making loans. No banks are loaning any money on long-term loans”; yet there is a man of character and integrity, with a long record of achievement. People believe he is honest. He is straight. He has got real estate that is static. Suppose it is not in esse, producing income. One of these rigid requirements that these present agencies are requiring is that property should at the moment bring income.

Well, anything that is able to bring in income at the moment would probably not need a loan, but the business is sick. Business, at the moment, is more or less needing hospitalization. They need some nursing. They need some nurture. They need a little care. They need a little friendly interest. They need somebody who will not say, "Well, things are so rigid you will have to come and do all this and do all that." We rather feel that somebody and some agency should say to them, “Well, now, here you have got a wonderful record here, you have had a record of achievement during the years, you have made money, you have got a good business, you got good character, you have got brains, you have got integrity. We would like to lend you something. You have got a good asset here and we will lend you 80 percent of your asset," and some little liberality like that, gentlemen of the committee, will put heart in folks.

Now, we represent, we are a big Anglo-Saxon body of folks down in our section. You remember the Anglo-Saxons came over into Virginia and crossed into Tennessee and into Kentucky, and we are thoroughly Americanized. We have very little of what you might term a foreign population. We are a wonderful body of people, and we will stand everything; and I think the marvel is that our people have stood, with their abiding faith and hope, all of this time, in this depression. I think there is a branch, there, that has been overlooked, and I think your committee has a marvelous opportunity to include them in the help and the succor that you have already extended some other branches.

I thank you very much for giving me this little opportunity to have appeared here, as I have done voluntarily, to present this little plea for the benefit of these bondholders and bond makers, who are sitting in the same boat, and are in practically the same plight.

The CHAIRMAN. We thank you very much. Mr. KOPPLEMANN. Mr. Fred A. Berlin, secretary National Board of Trade.

STATEMENT OF FRED A. BERLIN, SECRETARY, NATIONAL BOARD

OF TRADE Mr. BERLIN. We are located in Washington, an organization of independent merchants throughout the United States, and the civic bc dies in the smaller communities up to 10,000.

Mr. KOPPLEMANN. Would you care to state, Mr. Berlin, how many organizations you represent, and how many people?

Mr. Berlin. There are 1,700 organizations, different trade bodies, in towns of less than 10,000, representing a total membership of about 500,000 independent merchants. Our constitution provides that we cannot take in a bank, chain store, or public utility, consequently we are free to say what we please on constructive banking legislation.

The National Board of Trade goes on record as in favor of this bill, endorsing it 100 percent. There are many good features about the bill. Had this bill been in effect during the last banking crisis, there is one section, there, that would have been very beneficial, and there would have been probably a different story; that is, that a bank could rediscount their own time paper, and had this bill been in effect at that time, in 1933, a great many of our financial institutions would not have gone under.

The independent merchant-as we know, the farmer comes first. He is the backbone of the Nation, and next to him is the independent merchant; that is, in my opinion. I may stand corrected on that. The independent merchant is always a credit to his community. He tries to educate his family. He usually owns real estate, and he owns, throughout the United States, nearly 3,000,000 automotive vehicles; that is, trucks and automobiles. The annual upkeep of those is over $300,000,000 annually.

Now, let us take the chain stores. We hear much about the chain stores. . Somebody will say, "Why, they employ a million people, the chain stores here in the United States.” That is true, but the

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independent merchants employ nearly 6 million people, and they pay 25 percent more in wages than the chain stores. That is given here in one of our Federal Trade Commission documents.

Mr. KOPPLEMANN. According to information you have, the independent merchant pays a rate 25 percent higher than the chain stores?

Mr. Berlin. Yes, sir. That is taken from the Federal Trade Commission Document No. 82. The title of that is "Chain Store Wages.” The table is found on page 19. That is an official document of the Federal Trade Commission, and these other figures that I gave you are all compiled from the Bureau of the Census, and the Department of Commerce.

As I can see it, this is a very safe bill, so far as Government funds are concerned, for this reason, that you will have a large number of small loans. During the last financial crisis, and all of the subsequent panics or "hard times” that we have had, the building and loan associations have come through better than any other institutions. There were a few failures this last time, and they were very small and insignificant.

Although a bank shies very much, most of them will not loan on a home, because they say it is not income producing, the building and loan associations for the most part make loans which are limited to the home owner, which, by the way, is the very foundation of the Nation.

As near as I can see, from careful analysis, the reason that the building and loan associations have weathered all the storms and are so sound, is because they do not get too many eggs in one basket. They have that large number of small loans.

Now, this bill creates the same thing in relation to industry. It is true you are going to have some bad loans, and the Reconstruction Finance Corporation, when the history of it is written, Mr. Dawes' $90,000,000 that he borrowed, there, and the Missouri Pacific, will not be the only loans that are defaulted, but in this bill you will have some; but under the law of averages, as I can see it, it is going to come out like the building and loan association-it is going to come out on

Now, let us take the poor, independent, retail merchants. Of course, we have manufacturers and wholesalers, and quite everyone connected with the independent distribution of goods. "We also have some farm organizations. If he could get $5,000 to, say, $25,000, and that is about the average loan that a retailer would want-in many cases, $2,500. He has plenty of equipment and fixtures, and generally owns his own building. He has ample collateral, from the standpoint of banking as we used to know it a few years ago—well, say, 25 years ago, but not banking as we know it today. He would immediately replace some of his obsolete equipment. He would probably buy himself a new truck, trade in his old one. He would maybe put a new front on his building. He would make many improvements, creating labor. He would probably put on another employee or two, because his business would expand, if he could get the proper loan, and could do advertising and other things that he needs.

As I can see this bill and the whole financial situation, if the durable goods—that is, the heavy industries—are ever brought up, that is what you gentlemen and Congress in general have been fighting:

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for, it is going to be through the independent. We hear so much about these chain stores, but let us take the filling stations, for example. You see it every place, chain filling stations, although they represent just about 25 percent of the total of the filling-station business in the United States. Perhaps I should not say it here, but we endorse this bill 100 percent, and it is a step in the right direction. I feel that it does not go far enough, and as I say, perhaps I should not say this, but I feel that our banking system is as obsolete as an ox cart would be on our city streets. I think that it is through, it is finished.

This idea of credits being controlled by Wall Street, I think that day is passed, and inside of 10 years I do not believe that we will see a bank, as we know them today. That is a pretty broad assertion, but I cannot see it any other way.

The concentration of credit, as it is, with about 2 percent of the banks in New York, is what has brought about this condition, and until that is rectified through measures of this kind, I do not believe that the country is going to come back to prosperity. While we are speaking of credits, after all it is credit, it is not the actual cash, the actual gold and silver that we formerly looked for. That does not amount to anything, in normal times. In 1930, the business done in the United States was 1 trillion dollars. In normal times it takes 600 billions of exchange to move the wheels of industry, so after all it is credit, such as is provided for in this bill.

If it would be permissible, I have here a copy of the Hazzard Circular, which was circulated to private banks in the country, in 1862, and I would like to read it to you. Perhaps some of you are familiar with it, but it gives the whole key to the credit situation, which is locked up today. If there is no objection, I would like to read it. This was a circular or a letter that was sent out to all of the bankers, and Mr. Hazzard was the author of it. I got this from the Congressional Library.

Mr. KOPPLEMANN. When was that dated?
Mr. BERLIN. 1862. [Reading:]

Slavery is likely to be destroyed by the war power, and chattel slavery done away with. This, I and my European friends are in favor of, as slavery is but the owning of labor, and carries with it the care of the laborers, whereas the European plan, led on by England, is for capital to control labor by controlling wages. This can be done by controlling the volume of money. To accomplish this, Government bonds must be used as a banking basis. The great debt that capitalists will see to it is made out of the war must be used as a means to control the volume of money. We are waiting to get the Secretary of the Treasury to make this recommendation to Congress. It will not do to allow this greenback, as it is called, to circulate as money for any length of time, as we cannot control that.

Now, the London Times, this is in the same page, there, in the Congressional Library, comments as follows:

If this mischievous financial policy which had its origin in the North American Republic during the war (1860-65) should become endurated down to a fixture, then that Government will furnish its money without cost. It will have all the money necessary to carry on its commerce. It will become prosperous beyond precedent in history of civilized governments of the world. The brains and wealth of all countries will go to North America. That Government must be destroyed or it will destroy every monarchy on the globe.

In other words, if we had the right system of money, of exchange of credits, it would be too bad for the other nations. So this bill is a step in the right direction, but I think that you have got to go even beyond that, and I think that I am safe in stating, from the number of letters and telegrams that we got in response to sending out this bill, that I am speaking for the 1,250,000 independent merchants in the United States, and the wholesalers and the manufacturers, depending upon them, employing something like 20,000,000 people. At least, we have not got a dissenting vote in any of the letters.

Now, this concentration of wealth, and the little fellow going out of business and giving it over to big industry, is one of the very serious things that faces the country, and if there is no one else waiting to be heard, I would just like to give you some figures on the growth of the chain stores, the chain-store evil, which is, I think, one of the grave evils. This will only take just a minute, if you will bear with me. These figures are taken from the Bureau of the Census report. The first chain store was established by A. & P. in 1859. They had their second store in 1872. Now, there were no Government census figures between 1872 and 1900, but it did not matter much, because in 1900 there were only 5,000 chain stores throughout the United States.

By 1910, we had 14,000. By 1920, we had 50,000. By 1930, 160,000, and the best estimates for 1935 show between 200,000 and 250,000; so if that ratio keeps up---of course, we are sponsoring chainstore legislation to try to hold it-it means that we will have no independent merchants by 1950, and these credit conditions of which I know that you gentlemen are all striving to rectify--there will not be much need of it, by that time; but, next to the farmer, I still insist that the independent manufacturer, the independent merchant, the wholesaler, is the backbone of the Nation, because he is the man who keeps our mines and our farms, the very life of industry, the distributing system, and he is the one that needs the help today, and we are very much in favor of this bill, and I believe it is going to rectify a lot of our economic troubles, and I hope that the Committee can see its way clear to report unanimously in favor of it.

Mr. Chairman, there was just one thing I wanted to add. The National Board of Trade represents over 30 lines of retail business. You see, that takes in all lines, practically all retailers; so I am speaking for them. I thank you. The CHAIRMAN. Thank you very much for your statement.

(Whereupon, the hour of 4:15 p. m. having arrived, the committee adjourned the further hearings on H. R. 5918 to 10:30 a. m., Monday, June 3, 1935.)

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