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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 beliove 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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INTERMEDIATE CREDIT CORPORATION

MONDAY, JUNE 3, 1935

HOUSE OF REPRESENTATIVES,
COMMITTEE ON BANKING AND CURRENCY,

Washington, D. C. The committee met at 10:30 a. m., Hon. Clyde Williams presiding. Mr. WILLIAMS. The committee will come to order. We will resume the hearing on H. R. 5918, introduced by Mr. Kopplemann.

The first witness this morning is Mr. Bloome. Will you give the reporter your full name, your address, and state what your business is?

STATEMENT OF CHARLES P. BLOOME, PHILADELPHIA, PA., EX

ECUTIVE VICE PRESIDENT PHILADELPHIA WHOLESALE DRY GOODS AND APPAREL MANUFACTURERS' BOARD OF TRADE

Mr. BLOOME. Mr. Chairman, my name is Charles P. Bloome; my address is 712 Spruce Street, Philadelphia; I am executive vice president of the Philadelphia Wholesale Dry Goods and Apparel Manufacturers' Board of Trade.

Mr. Chairman and Members of Congress, needless to say, I feel thrilled this morning to stand up before you and plead the cause of people who very rarely have an opportunity of coming before Members of Congress and opening their hearts to you, to show you their pain and their suffering.

I am a practical merchant, and I also am the head of an organization in Philadelphia that combines the wholesale dry-goods merchants and manufacturers in wearing-apparel lines, taking in everything worn by men and women.

I stand here this morning and say to you, Members of Congress, that this bill that has been introduced by Congressman Kopplemann, known as “H. R. 5918.”, is in my humble opinion, the most concrete and the most practical piece of legislation in line for recovery. I do not know of any piece of legislation that has been proposed and passed by the Congress of the United States within the last 3 years that has had or will have the important practical, and concrete reaction in favor of recovery as this piece of legislation.

There is a great tragedy, Members of Congress, in the lives of small- and medium-sized merchants and manufacturers that has been brought about during the last 2 years.

A ray of sunshine came into our lives when the Congress of the United States allocated $580,000,000 to be loaned direct to industry, and when we read in the papers about it we felt that a new day had come into our lives.

But lo and behold, when we came to those sources of loans, the R. F. C. and the Federal Reserve Bank, and knocked at their doors, we found that we were out.

Members of Congress, I think that I am equipped to discuss the situation from the banking angle, although I am not a banker. The only connection I have had with banks is that three banks took away my money. But I have had the honor of being the chairman of the national depositors' committee, who have been battling for the enactment of a bank pay-off bill. But that question is not before you here

now.

But I bring that out here now, Members of Congress, because of the fact that I think I am thus qualified to say before you Members of Congress that of all the banks that closed in our great United States of America, between Maine and California, not one bank closed because they had loaned money to the little fellow.

I have discussed that with Mr. Merriam, of the Reconstruction Finance Corporation, in a number of conferences. I have sat in conference with 15 secretaries of banks in 15 cities. I was concerned to find out whether any one bank had been forced to close because their losses were distributed in amounts of small loans to merchants and manufacturers; and those authorities, the Comptroller of the Currency, the R. F. C., the Federal Reserve Board, and the secretaries of banks, told me that no bank had closed because they made loans to the little fellow.

Then we came to the R. F. C., after you Members of this great Congress of this great country shed a little sunshine into our lives. Members of Congress, here are the application forms we have to make out when we apply for a loan from the R. F. C. [showing application forms].

Undoubtedly, you are familiar with these blanks. I will say to you that when one of our little fellows took courage and hired an accountant he paid his $250 to make out his life's history. And 6 months later he was notified that they could not entertain his application.

They also require a preliminary application. This is the preliminary application blank [indicating blank form]. I suppose that application requires the history of his antecedents, and the other one requires the history of his business.

However, the Federal Reserve bank has been a little more merciful, and they only require three sets of these. They have possibly more of the human heart.

This little fellow—and when I say little fellow, Members of Congress, I stand before you and say that the little, intermediate class of merchants and manufacturers throughout our great country are, after all, the backbone of our great country.

I said to the Governor of our Federal Reserve bank and to the president of the Philadelphia National Bank not long ago, “If you will pump a million dollars into the Philadelphia market and distribute it in loans of 2, 3, 5, and 10 thousand dollars, you will see that 20 or 30 thousand people will get employment immediately. I know what I am talking about."

Mr. Merriam said to me, “Sure, Mr. Bloome, we are making loans; of course we are.” I said, “ Mr. Merriam, what are the sizes

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of the loans?” He said, “$100,000, $75,000, and half a million." I said “Mr. Merriam, I do not feel thrilled at all. Have you made a loan of $1,500 to somebody? Has the Federal Reserve bank made a loan like that out of its $580,000,000 ? "

Forgive me, Mr. Chairman and gentlemen, if I get confused or puzzled in talking about these large figures of many millions of dollars, because now I can only count up to $300. So when I say $580,000,000, then I get dazed.

I discussed the situation with the president of the Philadelphia National Bank, and he said, “Mr. Bloome, we are ready to loan inoney to the little fellow, but we cannot loan him if he does not deserve it, if he has not the necessary financial stability.”

I said, “How is it that the big fellow gets a loan from the R. F. C.? If you are judging them by certain standards, if you are judging them by a certain status of financial stability, why was the fellow who got $100,000 from the R. F. C. or the Federal Reserve bank in a position to get it from his own bank? Why did he have to apply there?

I stand here and say, Members of Congress, that the little fellow who shows a financial stability of $5,000 is entitled to a loan of $500, which will be a godsend to him, just as much as the fellow who shows a financial stability of $200,000 is entitled to a loan of $100,000.

From a practical standpoint, I would rather loan out my money in a wide sphere than to put all my money in one basket. I

say that a loan of $1,000,000 to one concern is more risky, both morally and financially, than if you take that amount and distribute it among 500 merchants and manufacturers.

Here is the situation today, as I see it, Members of Congress. The other day a manufacturer who has an honest business, amounting to $10,000, went to one bank and wanted to borrow $500. The banker asked him for a statement, certified by a public accountant, and a public accountant certified to that statement. He spent $75 to get the statement certified and took it in to the bank. The bank, after making a thorough investigation, found that he had a brotherin-law. The banker said, “Will your brother-in-law endorse the note?” He said, “Surely'; I will call him.”

He called his brother-in-law, and the brother-in-law said, “Of course, I will do it.” Then they asked the brother-in-law to submit a financial statement. So he submitted a financial statement showing that he had $18,000. In his statement he listed some Otis Steel Co. stock, paid up.

After a considerable discussion the bank said, “We will take your note, plus your brother-in-law's endorsement, plus the collateral of his Otis Steel Co. stock."

Members of Congress, I am not standing here to relate to you some mythical stories, but these are facts.

Today, if a middle-class merchant or manufacturer needs $5,000, $1,000, or $2,000, the doors are closed to him. I will say there are two sources where he can get money today, but when he gets it from one source he pays as much as 42 percent annually. To another one, which will discount his bills receivable, he will have to pay 30 percent.

Talk about the condition involved in chiseling in trade today, Members of Congress, I say to you that the chiseling, the cutting

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