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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. WII LIAMS. 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.

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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

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per thousand stumpage. That was $3,500. Two mills, logs, timber, and so forth, in process of operation, $500.

Mr. WILLIAMS. I do not care for the details.

Mr. BULLOCK. We offered them the mills and the equipment, totaling in sound value $8,000.

I was not satisfied. I came to Washington and asked for a hearing. I got it. They came back and stated that, due to an adverse local bank report—this was given to me over the telephone and not confirmed—that had interfered with my loan being passed or approved. I went up in the air about that and said, "Well, all I ask is an investigation. I ask you to make an investigation, and if such and such a bank has made this adverse report, let them tell the true story, the entire story, and I am not afraid of the outcome.

They sent an investigator at least they said they did—and wrote me a letter and said that the report was not founded. That is all I heard. Then they came back and said that our loan would not be passed due to the fact that the Pennsylvania State law would prohibit them from taking a collateral mortgage or a chattel mortgage on the property that we offered in connection with this loan. That is going to be further discussed this afternoon at 2:30.

Mr. WILLIAMS. Is that your law? I do not know whether it is. Is it?

Mr. BULLOCK. We cannot give a chattel mortgage but we can give a bill of sale—which I offered them—a bill of sale accompanied by a judgment note properly put on record, which is as good as any first mortgage that you would want as a first lien on property. We offered that as collateral on this loan.

Mr. KOPPLEMAN. When did you offer that? Mr. BULLOCK. That was offered with the application. Mr. KOPPLEMANN. When did you make the application? Mr. BULLOCK. May 1 is when I applied. I made five trips to the Philadelphia loan agency.

Mr. KOPPLEMANN. How far are you from Philadelphia ?

Mr. BULLOCK. Two hundred miles. I made five trips. I was assured that they would favorably consider this $3,500 loan when I proved to them that it would keep from 25 to 50 men at work. We had the orders to continue that mill, and we had three or four outside mill connections. What I mean by that is this: We handle, and have handled for 15 years, the output of a good many small portable mills. Up until the first of 1928 I was in a position to finance their timber purchase and their pay rolls and could always give them sufficient business to keep them operating.

If we could be financed at the present time, we could operate five mills profitably. But we must first arrange for the financing.

I went to New York at the request of a friend and talked with an investment banker 2 weeks ago. They were very much interested in making these loans until I told them that we could only use profitably five or ten thousand dollars, that we could only support a five- or ten-thousand-dollar loan. He stated right away that they were not interested; their bank connections were only interested in making large loans. He said:

If you can go back to Williamsport and arrange with several other large plants for the use of a hundred thousand dollars, we will be interested in making you a loan.

You will notice, gentlemen, that the chamber of commerce and all business organizations are supporting the housing program. What I have to say is not in criticism, but just by way of comparision, you understand. Everybody is cooperating on this better-housing program, sponsored by the Federal Housing Administration. Everybody is pulling together, trying to assist in that housing proposition.

Have you heard of anybody—have you heard of anything except Congressman Kopplemann's bill--that proposes any assistance for the small man?

They asked me to go before our few men and find out if they could not make a few repairs to their houses. Some of them would even build a new house. Well, I did, and I am going to give you their reaction. Two or three said:

Well, we need a new floor, we need a new roof, we need a new porch. But if you will tell us that you will give us a job for 1935 all through the year, we will go ahead and make these improvements. First, we must have a job.

Give the men work in private industry and support the little business man, and he will repair his house, and he will make that part of industry boom.

Now, commenting on other projects which are being financed with Government funds, of which only about 45 percent are expected to be repaid

Mr. WILLIAMS. What was that statement?

Mr. BULLOCK. Commenting on other projects that can be and are being financed, of which I understand only 45 percent repayment is expected

Mr. WILLIAMS. Will you name some of those where only 45 percent repayment is expected?

Mr. BULLOCK. That is up now. I cannot tell you. There are a half dozen or a dozen projects that I can name that expect to get 2 or 3 million dollars.

Mr. WILLIAMS. You are talking about projects under the workrelief program?

Mr. BULLOCK. Yes.
Mr. CLARK. You mean P. W. A.?
Mr. BULLOCK. P. W. A. or R. W. D.

Mr. WILLIAMS. You do not refer to direct loans. You refer to grants that the Government is making.

Mr. BULLOCK. I am referring to a municipality that can go down here and borrow a million dollars, and they are expected to pay back only 45 percent of it.

. Mr. KOPPLEMANN. They are expected to pay back 55 percent. It is a 55-45 proposition, for your information ; 45 percent of it is a grant.

Mr. WILLIAMS. You do not mean to say they borrow 100 cents and expect to have to pay back only 45 cents?

Mr. BULLOCK. Mr. Kopplemann says 55 cents.
Mr. WILLIAMS. Well, they do not borrow that.
Mr. BULLOCK. But they are financed.

Mr. WILLIAMS. That is a grant. The Government makes a grant of 45 cents.

Mr. BULLOCK. I am using that as a comparison only.
Mr. WILLIAMS. It is not borrowed money, you understand that.
Mr. KOPPLEMANN. He understands that 55 percent is borrowed.

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Mr. WILLIAMS. And that is done purely on the theory that it will put a certain number of men to work.

Mr. BULLOCK. That is just the point I am coming to.

Mr. WILLIAMS. I just want to keep the record clear. You do not mean to say here that the Government is lending money with the expectation of only getting back 45 cents on the dollar?

Mr. BULLOCK. I would not make that statement, that the Government is lending money or giving it away. It is my understanding that they are going to.

Mr. WILLIAMS. In what cases?
Mr. BULLOCK. On any project that will put men to work.
Mr. WILLIAMS. But that is not money that is loaned, is it?
Mr. BULLOCK. I cannot tell you

that. Mr. WILLIAMS. Well, I will tell you for your information that it is not.

Mr. BULLOCK. I am not criticizing at all. I am not criticizing any financing to put men back to work.

Mr. WILLIAMS. I do not want the statement to go by that the Government is making these loans with the expectation of getting back only 45 cents on the dollar.

Mr. FORD. Mr. Chairman, may I make an observation? In the case of the underpass to eliminate grade crossings, things of that kind, they expect to spend $500,000,000, and that is going to be a permanent improvement from which the Government does not expect any return of money.

Mr. WILLIAMS. Absolutely. They do not expect payment on that. That is in connection with the 45 percent grant that we are giving.

Mr. BULLOCK. I am not here criticizing anything only I want to tell you gentlemen this.

Mr. KOPPLEMANN. I wish you would not leave the point that you were about to discuss a moment ago. As I understood you, you were emphasizing these public projects, only 55 percent of which was to be repaid and 45 percent would be a public grant.

Mr. DRISCOLL. The loan to be at 3-percent interest.

Mr. KOPPLEMANN. Three percent interest; yes. You said you were going to discuss the question of reemployment. As Acting Chairman Williams has just said, that was done for the purpose of putting people to work. The question now is how would this bill, which you are discussing and which is before the committee, put people back to work!

Mr. BULLOCK. This bill giving credit to small industry would make it possible

Mr. WILLIAMS. I think it ought to be said, right in that same connection, that these grants are only being made on public or quasipublic enterprises.

Mr. BULLOCK. I believe that is true; yes, sir.
Mr. WILLIAMS. And not to any private business.

Mr. BULLOCK. I am bringing it up as a comparison with what the little fellow can do with a small capital loan. Not long ago there was a loan granted to a large company in a State close by here. The loan approved was for over a million dollars and they commented that it would put 300 men to work. I cut that out of the paper and I dictated a letter to the R. F. C. and made the suggestion--that was before the revised rules on loans—that while that million-dollar loan

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