Mr. KENNEDY. You know that the small merchant borrows money from the small bank on his note, unsecured note, in cases, but it is a case of moral risk, and that, of course, unfortunately, has been discontinued, and it is now a question of collateral. But I do not know how you are going to substitute or direct the thing, or order the R. F. C. to do something that the ordinarily prudent man would not do.

Mr. KOPPLEMANN. The answer to your statement and question is this: That under this bill we are trying to bring back the banking conditions to what they were before the 1929 debacle.

Mr. FARLEY. Mr. Chairman, there are some important matters on at the House, and it is 12 o'clock, and I move we adjourn.

Mr. REILLY. We will recess until tomorrow morning at 10:30. We are very much obliged to you, Mr. Jones.

(Thereupon a recess was taken in the hearing until 10:30 a. m. Friday, Aug. 2, 1935.)

Mr. KENNEDY. I agree with Mr. Jones, Mr. Kopplemann. After all, there must be some facilities down there, and to erect a building ordinarily would be a simple mortgage proposition in the neighborhood. If it is going to cost $50,000 and they want to borrow $40,000, is it not possible that they have offered this space at reduced rentals to bring these people in?

Mr. REILLY. Suppose somebody opened up a building next year, where would the Government come in?

Mr. KENNEDY. That is possible in that industry.

Mr. REILLY. I do not believe that Congress had any intention of loaning money for such purposes.

Mr. FORD. Suppose next year the apple crop of Vermont failed? Mr. REILLY. That supposition is not in the case at all. If the Government is going into the business of loaning everybody money that wants to start out building warehouses, it would never get anywhere.

Mr. FORD. I would not loan them the money, if I had the money to loan, personally.

(Here followed discussion off the record.)

Mr. REILLY. Now, here, just a question. How many years has the Finance Corporation been running, 2 years?

Mr. JONES. Three years and a half.

Mr. REILLY. I presume you have turned loans down that you would like to make, if the law permitted you?

Mr. JONES. Not so many.

Mr. REILLY. How?

Mr. JONES. Not so many; I mean that I would like to make.

Mr. REILLY. If the law was broad enough to permit the making of the loans

Mr. JONES. You have got it pretty broad now.

Mr. FARLEY. That leads up to a question that I would like to ask

Mr. JONES. We can make any loans now that we want to make. Mr. REILLY. A great many Congressmen-at least, it has been developed here today-that inasmuch as the Government is finding people employment, that it may not be a very bad practice on the part of the Reconstruction Finance Corporation to provide work through loaning money, even on doubtful cases, if the losses to the Corporation would be balanced by the savings to the Government in other ways. Should you not have that power, if you wanted to? Mr. CAVICCHIA. They would have to take out the word "reasonable."

Mr. JONES. You would have to take some of it out.

Mr. REILLY. I mean, could you not function better and more successfully in taking care of the unemployment situation-that is what your set-up is for, not so much to save only industry, but to take care of unemployment.

Mr. JONES. We have got $4,000,000,000 for that already in another field.

Mr. REILLY. Could we not keep people working-we are squandering that could not you people use some money in a loaning capacity, and take up some of the work of the $4,000,000,000?