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people, and, of course, the resources of the banks in that region are very limited. Hitherto they did not need so very much money, and they could carry themselves.

Mr. JONES. I wonder why they do now, because oil is at a good price?

Mr. DRISCOLL. They need it to operate their plants.

Mr. Jones. I mean, if they did not need it before-oil is one of the things that is up.

Mr. DRISCOLL. That is why they want to refine it now. They need it, so they tell me, to get working capital to employ their men and take advantage of the high market. I am only giving you the substance of several letters that I have had in the last 10 or 12 days. I suppose I might properly come down and interview your agency without taking up the time of this committee.

Mr. Jones. I will be glad to see one of your applications.

Mr. SPENCE. And you consider the unemployment situation in making loans?

Mr. JONES. Yes.
Mr. SPENCE. That is one of the primary factors in making a loan?

Mr. Jones. Yes; whether or not somebody is going to be thrown out of employment if the loan is not made, or will probably be given employment if the loan is made; and whether or not, if he is, will it displace somebody else.

Mr. SPENCE. Do you consider the general unemployment situation in a community when a loan is made?

Mr. Jones. Yes; we know if you lend money to one man to make a pair of shoes, somebody else is not going to make that pair of shoes; it is better for our whole social program not to tear it down.

For instance, if you have got a community built around an industry that is not as efficient as these new modern industries, with big production, mass production, I think that that community is entitled to consideration and we give it consideration, knowing that the fellow probably cannot make his shoes as cheaply as the fellow with mass production, because if you throw that community out of employment, they have got to move somewhere else, and the whole operation would be more expensive to the Government than if you make that little loan.

Mr. SPENCE. So you consider generally the situation of the community, do you? Mr. JONES. Yes. Mr. KOPPLEMANN. What is your attitude on this bill, Mr. Jones?

Mr. Jones. Will you ask me a specific question, Mr. Kopplemann, about the bill?

Mr. KOPPLEMANN. In the first place, I would like to know whether you are for or against the bill?

Mr. JoNEs. Whether I am for or against the bill? I do not believe there is any need for the bill.

Mr. KOPPLEMANN. All right, now, on the question of the need for the bill, you had allocated to you $300,000,000 ?

Mr. JONES. Yes, sir.

Mr. KOPPLEMANN. At the time the committee decided in favor of it and Congress passed the measure and the President signed it-under the provisions of that act, it was anticipated that the $300,000,000 should be used up by the 1st of January of this year; and according to your own statemnt, up to the present time, but $24,000,000 has been used, which is less than 10 percent of the money, although it has been running almost 7 months after the time at which it was expected the entire amount would be used up. What have you to say on that?

Mr. Jones. I have to say that you do not need, that you did not need to put the limit at $300,000,000. We have not loaned every dollar that the Government has authorized us to loan in any direction. We have not had applications for the amount that you mentioned. The requirements of the law are your responsibility and not ours. You write the law and then you expect us to stretch the law, to break the law or to go without the law.

Mr. KOPPLEMANX. Mr. Jones, you just made a significant statement a few minutes ago when you said that under the law you had power to make loans to small businesses?

Mr. JONES. We have.
Mr. KOPPLEMANN. And you refuse to do it?
Mr. JONES. Yes.

Mr. KOPPLEMANN. So you cannot assail Congress or this committee for not having passed a law or laws that are adequate; and in connection with your statement that the law is not adequate, and in connection with your further statement that there is no need for this bill, I want to call your attention to the fact that under this bill I believe we have written an adequate law so as to cover all sorts or kinds of loans to small businesses and small industries, with due regard for the repayment of every loan.

Mr. Jones. I will take this association that I speak of with 30,000 retail members. I wager you that not 1 percent of them have gone out of business. There was not a case of any of them creating more employment or continuing employment.

Now, you tell us we can lend to a grocery store only if he cannot get credit some place else and if it will maintain or create employment.

Mr. KOPPLEMANN. You say that not over 1 percent of that 30,000 retailers that requested loans—not 1 percent of them went out of business?

Mr. Jones. I doubt if they did. That is my guess. Therefore no unemployment was created.

Mr. KOPPLEMANN. That question, then, divides itself into two sections. The first is that the safety of the loans is out of the question. They are safe because they continued in business.

Mr. Jones. Not necessarily so.

Mr. KOPPLEMANN. It is fair to presume that if they continued in business the loans would be safe. That is natural to presume-not

1,000 percent, but about 950 percent. Now, as to the question of employment, I intend to go into that in a few minutes, Mr. Jones, but we take some other matters and discuss them. You said you had already_ 4,600 applications?

Mr. JONES. Approximately; yes.

Mr. KOPPLEMANN. And 2,800 of them were sent into Washington. Out of that 4,600, 2,800 is a pretty large percentage to be sent into Washington, is it not? Is it not true also that most of those were sent into Washington because of their inability to get loans from your various agencies because of complaints against the various agencies throughout the country, and it was necessary to send them to Washington for further review?

Mr. JONES. No.

Mr. KOPPLEMANN. Speaking from my own experience, I know that no application was sent to Washington, except that it was done by request either of the borrower or somebody who had influence, like a Congressman, for instance—otherwise the fellow was more or less out of luck, and he was bewildered to the extent that he did not have the resources or could go to any

other resourcesMr. JONES. Is that the Boston territory?

Mr. KOPPLEMANN. Yes; Boston is what I have the most knowledge about. I have some knowledge of New York as well. Now, you say that out of 2,800 sent in a little over one-half were given loans ? As a matter of fact, you know, Mr. Jones, that the entire number of loans by your department, including those that were made in the various agencies, as well as those that were approved in Washingtonthe total number was about 1,300 ?

Mr. JONES. No; I do not know that.

Mr. KOPPLEMANN. Well, those were the figures given me by your own people.

Mr. JONES. Mr. Kopplemann, no loan is made by our agency; it must be made here in Washington.

Mr. KOPPLEMANN. I understand that.
Mr. Jones. You did not say that.

Mr. KOPPLEMANN. Perhaps I did not make myself clear to you. Twenty-eight hundred were sent into Washington?

Mr. JONES. Yes.

Mr. KOPPLEMANN. And, as you stated, over one-half of them were made; but the figures given me by your office yesterday were that the entire number of loans throughout the Nation was about 1,300. Now

Mr. JONES. We made some of these loans prior to your law through community mortgage companies. The number is about what I have given you, despite the information you have gotten. Mr. KOPPLEMANN. I got that from your office.

I Mr. Jones. In spite of that, I am giving you the correct information.

Mr. KOPPLEMANN. You say the Federal Reserve is more stringent than you?

Mr. Jones. I do not know whether they are or not.
Mr. KOPPLEMANN. You said that.
Mr. Jones. I do not know whether I did or not.

Mr. KOPPLEMANN. Anyway, that is beside the question as to them, except I wanted to bring to your attention the fact that, to my personal amazement, the Federal Reserve banks made larger loans; and according to the statements of bankers in my own city, they are more liberal in making their loans. In fact, a larger number, and that bears it out.

Mr. CAVICCHIA. That bears out what Mr. Jones said, because the Government assumes 50 percent of the loans, and they are in position to be a little more liberal.

Mr. KOPPLEMANN. Well, that should have absolutely no effect. upon the R. F. C. making loans or upon the Federal Reserves, be

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cause neither one of them want to lose anything. Now, you said the only consideration is of employment, and I intend to take that up in a few minutes, but one statement I want to make, and I hope the members of this committee will bear with me on it is this, you have complaints, particularly in New England, from textile manufacturers against making loans. Now, let us go into that. I had a man come into my office, and he said, “ Kopplemann, I am running a large factory and employing a great many men. Why should the Government loan to my competitor?” That is the same kind of industry, undoubtedly, as you have had complaints from in New England.

Mr. JoNEs. Probably.
Mr. KOPPLEMANN. That is why the oil people are in difficulties?
Mr. Jones. They tell us we are socializing industry.

Mr. KOPPLEMANN. Yes. Now, the industry is—I feel that you are in sympathy with the little fellow; therefore, I am taking up this line of questioning.

Mr. JONES. Yes.

Mr. KOPPLEMANN. The evidence happens to bring that out, that those fellows you said are able to take care of themselves—the big fellows are able to take care of themselves financially, who do not have to come to the Government for aid. But you turn around then and say the little fellow who does need this loan is looked upon by these big fellows as a competitor. Of course, they are competitors, but they want to drive the little fellow out and they appeal to you, sir, and to the various agencies, in the effort to stop these loans, in order to drive out the little fellow, who represents 48 percent of the number that work in business and industry throughout the Nation. But they would drive them out. I understand this administration is for the little fellow, but do you not see, sir, that by refusing these loans to the little fellows, it is simply acting—I do not say willfully on your part, but just the same as having the same effect of helping the big fellow to crush out the little fellow and force him out of business.

Mr. Jones. No, I cannot subscribe to that. We have had a number of industries—the textiles, for instance-tell us that we have closed their factories because we loaned to their competitors, and their competitors cut the prices and did this, that, and the other, and made it impossible for them to carry on.

Mr. KOPPLEMANN. I would like to know of a single instance of a big industry closing down, because the Government made a loan to a little fellow.

Mr. JONES. No; they are all more or less the same size. I am not thinking about the size on these textiles.

Mr. KOPPLEMANN. And they do not blame it on the processing tax, they blame it on you for making the loan?

Mr. JONES. Yes.

Mr. KOPPLEMANN. I would like to know, for the purpose of the record, the name, and I think it is important to have it.

Mr. JONES. I do not think it is necessary. I do not think it is desirable. If a man wants to make a complaint to us, that makes an issue between neighbors. I do not see that the name ought to be in it.

Mr. KOPPLEMANN. Except to show that it is a big fellow.

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Mr. JONES. I do not think it is a case of the big one. I think it is a case of two fellows having mills, and I do not know which one is the biggest.

Mr. KOPPLEMANN. The fellow that has the financial means steps into the picture and says, “Don't loan to the fellow that is up against it;” and mind you, the big fellows are not up against it, and the conditions of business throughout the country have definitely proven that.

Mr. Jones. Except that the textile industry has moved away from New England.

Mr. KOPPLEMANN. That is right, and they will continue to move away. Let us be frank about that. They will continue to move away, for economic reasons, and there is nothing in the world, in my opinion, that can stop it. I am sorry they are moving away from New England, and if I could help stop it, I would do so.

Mr. GIFFORD. I was going to challenge the statement because I, of course, know the textile mills in my district, and 2 or 3, or 1 or 2 have gotten loans, where others would criticize the loans, when the mills were about the same size. They think the Government is doing wrong in helping that mill. As actual competitors, of course, they support the idea that the Government is supporting the weak mill. That is the natural objection.

Mr. JONES. That does not influence us, gentlemen, at all. No matter how many people protest against a loan

Mr. KENNEDY. Mr. Jones, do you think, if you abolish all of these regional offices and have the applications to come down here, that you would be more sympathetic?

Mr. Jones. That would be impossible to do. Mr. KENNEDY. I understand you have an office in my city, in New York City. I do not know where it is or how big it is,

Mr. Jones. It is in the Federal Reserve Bank Building and has got about 100 employees.

Mr. KENNEDY. Out of that group, how many technical experts have you in that regional office who are qualified to pass upon the various loans submitted ?

Mr. JONES. Well, we have got enough to handle the applications; I do not know how many.

Mr. KENNEDY. But you have very few loans that go through the New York City office?

Mr. JONES. Yes. Mr. KENNEDY. Of course, generally, I say the people in New York City have got very little confidence in the administration; and the question may be whether there is the personnel, or not, which I do not know; or whether it is the feeling that the personnel is not qualified to pass on those matters, or not, in that office. But the various people I have talked to, who have had occasion to do business in that office, tell me it is a perfect waste of time. I have never been in the office and I am just suggesting that for what it is worth. When you consider the size of New York City and the amount of business and think of the very few loans that go through there, it might appear as if there is something wrong, either with the experts or the lack of sympathy of your employees there.

Mr. Jones. I do not think there is any lack of sympathy and certainly we are continuously after the managers to be most sympa

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