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

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

Mr. DEATON. Yes, sir.

The CHAIRMAN. What is a good average mule selling fr open market?

Mr. DEATON. How is that?

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

Mr. DEATON.' About $200 or $225. A year ago bought them for $75.

Mr. Sisson. I am aware that there has been a h the value of mules, but I didn't know it was that Mr. DEATON. That is what it is, you see,

You is going to use that mule doesn't have to put but when we buy it we have got to pay cash fc amount of money more right there.

Mr. Cross. Has there been any change in in the manner in which you finance your bu

Mr. DEATON. You see, it used to be th: banks. That was before all the banks then we could get money from the insurar money from the insurance people. + insurance. If you do ti and says, “H to be burden walk in and

Mr. WII $. conditions

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Mr. FORD. You mean they are threatening you with foreclosure on the balance?

Mr. DEATON. Yes; that is what they are doing. You see, we were the worst hit in this section of the country than any others and especially the banks.

Mr. WILLIAMS. What kind of bank do you have there?
Mr. DEATON. We have a branch bank of the Page Trust Co.
Mr. WILLIAMS. Did the branch bank close?

Mr. DEATON. Yes, sir. The 14 banks closed, and they have only paid 20 percent in over 12 months, you see. But now they are calling everybody. You see, before it closed we could get up to $10,000. In other words, we had a line of $10,000.

The CHAIRMAN. It might be well enough to say to you—you are probably cognizant of it anyway: Congress in the Reconstruction Finance Corporation Act envisioned that they were authorizing loans on the assets of these closed banks to prevent sacrifice of securities just such as you have described in your case.

Mr. CavicchiA. Mr. Chairman, may I say this: I may be wrong in my construction, but my construction is this, that that provision is interpreted by the R. F. C. to hold onto the real estate so that the stockholders in each bank will not lose; but was not passed for the benefit of such a man as the witness here.

The CHAIRMAN. It was passed primarily for the relief of the creditors of those institutions. That is probably true. But it was intended to conserve the assets of those institutions and to prevent as far as possible distress due to losses on them.

Mr. FORD. Orderly liquidation was the object, over an extended period, so that such assets as they had would give the people who owned them an opportunity to pay out.

But it seems to me, just in connection with that, that was rather ineffective, for the reason that many of these people who owned the banks, being deprived of any further capital, were unable to operate in a way where they could take care of their obligations in the normal course of time, and they were left high and dry. That is the class there has been very little done with, although we attempted to do it by letting the R. F. C. loan these banks money in order to keep these assets alive, and let them be liquidated in an orderly way. But in doing that we failed to do something else, and that was to make some provision for those who owed the banks, so that they could continue to operate and from their operations get enough profit to pay the banks back and save a loan.

Mr. DEATON. That is it exactly. Now, suppose that I had $8,000 or $10,000, or suppose I had $10,000 back that I paid this insurance company and the $5,000 that I paid this closed bank, to operate on--you see, with the rise in the price of lumber and everything now, in a very short time we could have paid the whole thing back. But what I did, you see, I sacrificed my home and other things and paid the Jefferson Standard and paid this bank, and now I am left sitting out on the rocks with nothing to do. You see, there are the people that are working for me and their families, and I have got to go out and hunt a job or do something, unless I get some relief.

The CHAIRMAN. Do you think if we passed this legislation that you could go and ask the accommodation that you feel you ought to have?

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Mr. KOPPLEMANN. What do you mean by either you have got to have some money or you have got to close? Will you explain yourself?

Mr. DEATON. I beg pardon?

Mr. KOPPLEMANN. You have just said you have either got to have some money or you have got to close.

Mr. DEATON. Yes. We have got to stop. It means that about 40 people that I have been carrying for about 12 years, including their families and myself, have got to go out and get jobs some other place, and the machinery and stuff that we have have got to be sold for what we can get for it.

Mr. KOPPLEMANN. That is your condition?

Mr. DEATON. We have either got to close down or we have got to have some help. I can go down and borrow $10,000 on those invoices, but you see I can't

get those invoices now. We can't go down now and say, “Give us $5,000."

Mr. FORD. They have got to be acceptable invoices?

Mr. DEATON. Yes, sir; they have got to be passed on, and it is only somebody like the Reynolds Tobacco Co.--that they know by the time they look at it that it is worth a hundred cents on the dollarthat they will let have it.

Mr. KOPPLEMANN. And they charge you from 12 to 15 percent interest?

Mr. DEATON. They charge us a dollar a hundred.
The CHAIRMAN. As a matter of fact, they are not making loans?

Mr. DEATON. That is it. I used to get loans from the Jefferson Standard, but when the banks closed that closed the whole works, and when it looked like they were going to close up they said "The thing for you to do is to pay up what you owe.”

Mr. HANCOCK. What kind of security did you give the Jefferson Standard ?

Mr. DEATON. I gave a mortgage on real estate. I put up good security

Mr. HANCOCK. They didn't make you a straight commercial loan? Mr. DEATON. You could get it and do what you pleased with it. They have loaned as high as $10,000 or $12,000.

Mr. FORD. What is your plant worth, as a going concern?

Mr. DEATON. Well, it would be worth $10,000 or $12,000. :: Mr. FORD. And prior to the trouble you were able to get a loan; you had a line of credit that amounted to about $10,000? Mr. DEATON. Yes, sir.

... Mr. FORD. And you paid it off and renewed it and went on and always had plently of money to meet your obligations, and when you collected it you paid it?

Mr. DEATON. Yes, sir. Another thing that is a little different: You see, in these closed banks we owed them a certain amount of money when they closed up. Well, now they are liquidating and they are calling on us and they were going to take our property for whatever we owed them, and that is going to be another loss. I owed this bank $8,000 when they closed and I paid it down to $3,000. They say they have got to close this thing up and got to have their $5,000. Well, what they have is worth a hundred cents on the dollar, but it cost me three or four time that.

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Mr. FORD. You mean they are threatening you with foreclosure on the balance?

Mr. DEATON. Yes; that is what they are doing. You see, we were the worst hit in this section of the country than any others and especially the banks.

Mr. WILLIAMS. What kind of bank do you have there?
Mr. DEATON. We have a branch bank of the Page Trust Co.
Mr. WILLIAMS. Did the branch bank close?

Mr. DEATON. Yes, sir. The 14 banks closed, and they have only paid 20 percent in over 12 months, you see. But now they are calling everybody. You see, before it closed we could get up to $10,000. In other words, we had a line of $10,000.

The CHAIRMAN. It might be well enough to say to you-you are probably cognizant of it anyway: Congress in the Reconstruction Finance Corporation Act envisioned that they were authorizing loans on the assets of these closed banks to prevent sacrifice of securities just such as you have described in your case.

Mr. CAVICCHIA. Mr. Chairman, may I say this: I may be wrong in my construction, but my construction is this, that that provision is interpreted by the R. F. C. to hold onto the real estate so that the stockholders in each bank will not lose; but was not passed for the benefit of such a man as the witness here.

The CHAIRMAN. It was passed primarily for the relief of the creditors of those institutions. That is probably true. But it was intended to conserve the assets of those institutions and to prevent as far as possible distress due to losses on them.

Mr. FORD. Orderly liquidation was the object, over an extended period, so that such assets as they had would give the people who owned them an opportunity to pay out.

But it seems to me, just in connection with that, that was rather ineffective, for the reason that many of these people who owned the banks, being deprived of any further capital, were unable to operate in a way where they could take care of their obligations in the normal course of time, and they were left high and dry. That is the class there has been very little done with, although we attempted to do it by letting the R. F. C. loan these banks money in order to keep these assets alive, and let them be liquidated in an orderly way. But in doing that we failed to do something else, and that was to make some provision for those who owed the banks, so that they could continue to operate and from their operations get enough profit to pay the banks back and save a loan.

Mr. DEATON. That is it exactly. Now, suppose that I had $8,000 or $10,000, or suppose I had $10,000 back that I paid this insurance company and the $5,000 that I paid this closed bank, to operate on-you see, with the rise in the price of lumber and everything now, in a very short time we could have paid the whole thing back. But what I did, you see, I sacrificed my home and other things and paid the Jefferson Standard and paid this bank, and now I am left sitting out on the rocks with nothing to do. You see, there are the people that are working for me and their families, and I have got to go out and hunt a job or do something, unless I get some relief.

The CHAIRMAN. Do you think if we passed this legislation that you could go and ask the accommodation that you feel you ought to have?

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Mr. DEATON. I just didn't get that. I am just a little hard of hearing.

The CHAIRMAN. Do you have an idea that if this legislation is passed it would enable you to secure the accommodation that you need?

Mr. DEATON. Yes; I think so. I don't see why.

Mr. FARLEY. Let me ask a question right there, please. They have withdrawn your open line of credit?

Mr. DEATON. That is it.

Mr. FARLEY. Have they done likewise with all other institutions down there?

Mr. DEATON. Yes; so far as I know.
Mr. FARLEY. No open line at all through the bank?
Mr. DEATON. No.

The CHAIRMAN. Of course, they are not making you a loan now in any true sense of the word; they are just simply acting as a collection agency?

Mr. DEATON. And charging about 15 percent interest for it. Suppose I go out here and sell a bill of lumber to some fellow that this

I bank don't know about, you see. If I take the invoice down there he would say, "No; you can't get a penny on it.” That is what we are up against down there.

Mr. FARLEY. That has been a policy of banking for years, as far as that is concerned, discounting your bills of lading and invoices. That has been the policy for years.

Mr. Cavicchia. Mr. Farley, it has not been the policy to pay 12 or 15 percent.

Mr. FORD. He does not know very much about little country banks.

The CHAIRMAN. Yes; that is what is the matter with this man right now; he hasn't got a little country bank; he has a branch that is owned outside and does not care a snap about the character of this man and does not know anything about it. The only thing he will accept is some kind of shipping document that he looks upon the same as money. He may get fooled some time, but it will be an honest mistake if he ever takes any risk whatsoever.

Mr. REILLY. What is the reason the Federal Reconstruction Finance Corporation would not loan you anything?

Mr. DEATON. It is just like I told you. I took my financial statement over there and he said it didn't look good to him. But I know it is good.

Mr. FARLEY. How much money would it take to cover your needs now?

Mr. DEATON. It would take from $8,000 to $10,000.
Mr. KOPPLEMANN. How much did you ask for?

Mr. DEATON. I told him it would take something like $8,000 or $10,000.

Mr. Cross. They just don't want to make small loans like that anyway.

Mr. DEATON. Under the rules I suppose I could not get it. I am not criticizing that. But the railroads got it, and the railroad is just simply choking us fellows to death. The Norfolk & Western Railroad when they commenced buying timber, after this whole thing started, issued a bulletin “We pay so much.” That was the only source we had of getting any money, was selling it at whatever price we could. We sold it to them. Well, the railroad company couldn't use all the

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