Mr. CROSS. And you rebuilt?

Mr. MARTIN. And we rebuilt in 1926; and then was when we issued the bonds.

Mr. FORD. What was that bond issue for; how much?

Mr. MARTIN. The bond issue was originally for $40,000 for a period of 5 years, and $20,000 came due July 1, 1933. Current with that the $13,000 came due with the Page Trust Co., which was at that particular time in liquidation.

Mr. CROSS. I am asking you just like I was going to loan you money. What accessibility have you to raw material, to lumber? Has that all been sold out and cut out?

Mr. MARTIN. Well, we are in as good position as the other factories in our community.

Mr. BROWN of Georgia. What is your capital stock now?

Mr. MARTIN. $140,400. $30,400 preferred stock, $110,000 com

mon.

Mr. WILLIAMS. As I understood you, you were not able to get this loan from the R. F. C. because you were going to make arrangements with your other creditors, mortgage holders?

Mr. MARTIN. I had not advanced quite far enough on that. I will go a little farther. That was immediately after the adjournment of Congress last year.

Mr. WILLIAMS. Of course, they would not take this loan without their lien was a first lien on the property.

Mr. MARTIN. Yes, sir.

Mr. WILLIAMS. And they wanted to subject these other mortgage holders to their plan?

Mr. MARTIN. Yes.

Mr. WILLIAMS. You would not expect to get that loan anywhere without that, would you?

Mr. MARTIN. No. I just submitted the matter to Mr. Campbell and that was the position he took on it. I am not criticizing Mr. Campbell.

Mr. WILLIAMSs. You would not expect to get that kind of a loan from this institution if it was set up, would you? That is, you would not expect them to take a second or even a third mortgage?

Mr. MARTIN. I was asking then and I am asking now for a loan giving first mortgage to liquidate both the first and second mortgages. Mr. WILLIAMS. Then what was the objection of the R. F. C. to your loan?

Mr. MARTIN. I am not objecting to that.

Mr. WILLIAMS. No; I say what was their objection to the loan? Mr. MARTIN, They took the position that they would not loan it unless I could get a stand-by agreement until they were out of the picture; that their set-up was only for operating expense and could not take care of past due bills. That was their position at that time. Now, since the amendment in January and you have got a 10-year set-up, their is a different phase to it, and I have followed the matter up, since the amendment was adopted giving them 10-year. Under their set-up I could agree with Mr. Campbell that we were not entitled to a loan, with a 3- to 5-year. That is the reason I was advocating a 10-year, and with the present 10-year set-up they are considering a $40,000 loan.

Mr. WILLIAMS. They have not definitely turned you down on that?

Mr. MARTIN. No; they have not turned us down. I have reason to believe that they will pass it. I feel pretty confident at present. I had a conference with Mr. Campbell and his secretary last Thursday. Mr. KOPPLEMANN. When did you first make an effort to get a loan? Mr. MARTIN. I reckon it was July of last year.

Mr. KOPPLEMANN. July of last year?

Mr. MARTIN. Yes.

Mr. KOPPLEMANN. And up to the present time you still have hopes of getting a loan but you have not gotten any

Mr. MARTIN. I had no hopes until the amendment extending it and giving them the privilege of making loans over a period of 10 years, and I can see where I can make a set-up and can handle it, and they are considering it now.

Mr. FARLEY. Let me ask you another question before you get away from that, please. In the meantime what is the attitude of your bank toward creditors now?

Mr. MARTIN. Our bank is a branch bank of the Chatham Bank, which I believe only had about $25,000 capital stock and $4,000 was the maximum they could give us.

Mr. FARLEY. Did you have any other banking facilities besides that one?

Mr. MARTIN. Well, we have done business with the others.
Mr. FARLEY. The bank is a State bank

Mr. MARTIN. Yes, sir; State bank.

Mr. FARLEY. I want to find out whether the general banking situation was easing and they were actually taking care of you. I have had a feeling that the word has gone down the line somewhere in these banks to take care of worthy claims as far as possible. I am just wondering if that was a case of it.

Mr. MARTIN. With their set-up and on account of their capital stock, $4,000 would be the maximum that they could loan to any one party.

Mr. FARLEY. Have you tried to get other banking accommodations in larger places?

Mr. MARTIN. In making our application Mr. Campbell required me to present it to four other banks and get their statements, and they all stated that they were not prepared to handle long-term notes, long-term paper. They could only handle short-term, but not prepared to handle long term.

Mr. FARLEY. I just came in and I don't know what you manufac◄ ture or where you are located.

Mr. MARTIN. At Liberty, N. C., near the center of the State of North Carolina, just out of Greensboro 20 miles. It is a small town of about a thousand people out 20 miles from Greensville, 20 from Ashboro and 20 from Greensboro.

Mr. HANCOCK. Let me ask him one question, Mr. Chairman. Mr. Martin, from your experience with the Charlotte agency and Mr. Campbell, is it your opinion that it is their disposition to make loans or not make loans?

Mr. MARTIN. It is their disposition to make loans. Under the old provisions, though, of 3- and 5-year, they seemed to have the impression that their primary object was to make seasonable loans, and therefore, it looked like, asked for standby agreements with creditors until they were out. Since this amendment they have

seemed to take an entirely different attitude, and it seems that they are willing to consider propositions over this term of 10 years.

Mr. HANCOCK. Do you know of any applicant that filed an application with the Charlotte agency who has secured a loan in less time than 6 months?

Mr. MARTIN. I don't know. I really don't know of but one party that secured a loan. He, like myself, applied and did apply under the old regulations; but he has succeded in getting a $17,000 loan under the new set-up.

Mr. HANCOCK. Isn't it a fact that most of the favorable decisions that have come through the Charlotte office have come from the Washington office?

Mr. MARTIN. I could not say about that. I am not familiar with that.

The CHAIRMAN. We have another gentleman that wants to catch a train at 12 o'clock, and we shall be glad to accommodate him if he will come around. Mr. Deaton, of the Deaton Lumber Co. of Liberty, N. C., manufacturers and wholesalers of lumber. We will be glad to hear you, Mr. Deaton.

STATEMENT OF J. F. DEATON, DEATON LUMBER CO., LIBERTY,

N. C.

Mr. DEATON. My name, Mr. Chairman, is J. F. Deaton, Deaton Lumber Co., Liberty, N. C.

It is very little I have to say, and it is practically on the line of what Mr. Martin has just said. It looks like the fellow that is in the class that I am in down there is in a channel that we have got to get out. We have got to get lower or we have got to get higher.

I went over to Charlotte in December and asked for an application and he said he could not give me one until I made a financial statement, and for me to get that up and bring that over there and he would look it over and he would tell me whether I could get a loan or could not. Which I did; I took it back some time in January and about the only answer I got, he said it didn't look so good. So I have not made anapplication for a loan yet.

But you see we are manufacturers and wholesalers there. We manufacture the lumber, you see, from the stump. The only way that we can get any money is to get it from some insurance company or from the bank on our invoices. Well, you see, we have got to get this lumber; we have got to sell it to somebody that they will pass on before we can get any money, you see, and that is only for a period of 30 days. We can take our invoices over after we sell to somebody like the Reynolds Tobacco Co. or some railroad, you see, and they are absolutely 100 percent good. We can get money on our invoices at the rate of $1 a hundred for a period of 30 days, and it is paid in a period from 10 to 30 days, but nothing will run over 30 days.

It looks like what we have got to have is a little money on, we will say, from 3 to 5 years, so that we can go out there and manufacture our lumber, without having to sell it at a sacrifice to raise a little money to meet our pay rolls or obligations or things like that..

You see now the railroads it looks like to me that the companies like that have taken an awful advantage of the money that they had, you see. They sent out a bulletin stating the price that we would

have to pay, you see. The fellows that are under the cost have had to pay, you see, the code price for our labor, then sell our lumber for the price that we can get for it. It looks like unless we can get some money from this Federal aid to kind of manufacture our lumber and hold it and sell it at a price we can make something out of it, we have got to get in the class where the Government will take care of us, or else get up higher and get like the railroads or somehting of the kind.

You see, down there one thing that we are up against, we go out now to buy horses, you see, or mules to work at our sawmills. They have advanced in the last 60 days 75 percent. You see, the Government-they call it that-buys up these mules and lets these fellows have it on a period of 3 years time, you see, at a low rate of interest. If we were in that class we would not ask for anything.

The CHAIRMAN. How many mules is the Government buying? Mr. DEATON. I don't know how many they are buying. They are all over the country now, there.

Mr. BROWN. Mules are always this season of the year about 50 percent higher.

Mr. DEATON. I know, but I have been buying some mules there, and you see they are buying them around the county and placing them on these farms for the other fellows.

Mr. HANCOCK. The mules are bought as a part of the relief program?

Mr. DEATON. Yes, you see, the relief.

The CHAIRMAN. They are not buying those mules up 75 percent, are they?

Mr. DEATON. Yes, sir.

The CHAIRMAN. What is a good average mule selling for in the open market?

Mr. DEATON. How is that?

The CHAIRMAN. What does a good Tennessee mule, 15- and 16-hand good farm mule, sell for in you county?

Mr. DEATON. About $200 or $225. A year ago you could have bought them for $75.

Mr. SISSON. I am aware that there has been a big enhancement in the value of mules, but I didn't know it was that much.

Mr. DEATON. That is what it is, you see, You see, this fellow that is going to use that mule doesn't have to put up any money at all, but when we buy it we have got to pay cash for it, pay a tremendous amount of money more right there.

Mr. CROSS. Has there been any change in recent years or months in the manner in which you finance your business?

Mr. DEATON. You see, it used to be that we got money from the banks. That was before all the banks closed up, you see. And then we could get money from the insurance people. We still can get money from the insurance people, but of course they want to sell insurance. If you do that the first thing you know he comes back and says, "How much insurance have you got?" If we have got to be burdened down with a lot of insurance it is not long before they walk in and take our property.

Mr. WILLIAMS. You would not expect to get a loan under present conditions, or under any conditions, without putting up some security?

Mr. DEATON. No; but you see they want you to take out a lot of extra life insurance. He will make you a loan and then it is not long until he comes back and sells you $25,000 or $30,000 worth of life insurance.

Mr. WILLIAMS. What are your banking facilities down there now? Mr. DEATON. We can get it, but it costs us 12 or 15 percent.

Mr. FARLEY. Do you mean to say that they charge you 12 to 15 percent?

Mr. DEATON. They charge you a dollar a hundred for 15 to 30 days. You see, it amounts to 12 or 15 percent interest.

Mr. WILLIAMS. There must be some reason for that, and I want to know whether or not there has been any change in that respect. Have they always been doing that?

Mr. DEATON. No; when we had good banking facilities, you see, every fellow could borrow at a good limit at the rate of 6 percent. That is all right, but you could carry it for 90 days and renew it on and on.

Mr. WILLIAMS. When did this change take place?

Mr. DEATON. It took place when these banks closed up. We can't go now and borrow but, say, $5,000 on 60 or 90 days and keep just carrying it. What little business I own myself. I haven't got a partner. Before the bank closed I had a limit of $10,000. I could keep $10,000 borrowed, you see, from this bank. When it closed the whole works closed up, and the only thing we can borrow on our invoice is from the insurance companies.

Mr. WILLIAMS. I cannot see the point myself. Of course, that is due to the difference in the bank's status.

Mr. DEATON. Yes, sir; that is it.

Mr. WILLIAMS. The bank is trying to liquidate and probably have plenty of money to loan, but they want good security on it.

Mr. DEATON. Why, yes; and the banks are bursting wide open with money, but we cannot get it.

Mr. REILLY. What sort of a bank is it; how large?

Mr. DEATON. It is Liberty Chatham Bank, $125,000.

The CHAIRMAN. You say Liberty Chatham Bank. What do you mean by that?

Mr. DEATON. You see, Chatham County-this bank closed up and they opened up a bank in this old bank building that closed.

The CHAIRMAN. You haven't got any then; you have just a branch? Mr. DEATON. A branch, that is all.

Mr. HANCOCK. What is the name of the bank?

Mr. DEATON. Chatham Bank.

Mr. HANCOCK. It is a branch of what?

Mr. DEATON. Branch of the Chatham Bank at Siler City, in Chatham County.

Mr. HANCOCK. What you really need is working capital?

Mr. DEATON. That is it. We have either got to have working capital or got to close. I have been operating there for about 12

years.

The CHAIRMAN. What size town is where this branch bank is?
Mr. DEATON. A town of about 1,500 people.

The CHAIRMAN. No other bank there?

Mr. DEATON. No.