tion between the various public agencies which directly and indirectly influence a large portion of total construction is needed to avoid dangerous upturns in prices.

In addition to such new problems arising from recovery, there remains the fundamental task of improving-in the broadest sensethe market mechanism of construction and mortgage lending. In its 1938 report, the Federal Home Loan Bank Board called attention to the obstacles to housing resulting from the poor organization of the building industry, and from expensive, cumbersome, and antiquated real-estate laws. While during the past year some improvements have been made in the modernization of building operations, progress in the reform of foreclosure and title registration laws has been negligible. Under present methods of foreclosure, home building and mortgage lending are at a definite disadvantage as compared with other types of production and finance, where rapid, simple, and inexpensive legal methods are used. A reform along the lines of the uniform Real Estate Mortgage Act prepared by the Legal Department of the Federal Home Loan Bank Board for the Central Housing Committee is badly needed. The same is true for a modernized, uniform land title registration act. A suggested draft of such a law is being prepared by a subcommittee of the Central Housing Committee. The Legal Department of the Federal Home Loan Bank Board is cooperating in this work.13

For an analysis of present foreclosure costs and procedures, see the report of the Home Owners' Loan Corporation, pp. 134 and 135.

III

Federal Home Loan Bank System

1. OPERATIONS OF THE FEDERAL HOME LOAN BANKS

AFTER

Changes in Membership

FTER the rapid expansion in membership during the first six years of its existence, the Federal Home Loan Bank System has entered into a phase characterized by more normal growth. Consolidations and mergers of member institutions, which tended to strengthen the home-financing system, resulted in a net decrease in membership from 3,956 on June 30, 1938, to 3,946 on June 30, 1939. However, the combined resources of member institutions increased from approximately $4,308,000,000 at the close of June 1938 to approximately $4,600,000,000 on June 30, 1939, or by 6.8 percent. This growth of resources is all the more remarkable when it is taken into consideration that the assets of a number of member savings and loan associations have been revised downward as the result of consolidations and reorganizations and by the decrease in assets arising from the elimination of mortgage-pledged shares, attendant upon the more general adoption of the direct-reduction loan plan.

During the fiscal year ended June 30, 1939, there were 122 thriftand home-financing institutions admitted to membership, and withdrawals from membership numbered 132. These withdrawals represent 56 institutions which were merged or consolidated with other members, 58 member institutions which went into liquidation, 2 institutions which were removed from membership because of failure to comply with the Federal Home Loan Bank Act and/or the regulations of the Board, and 16 member institutions which withdrew voluntarily.

On June 30, 1939, there were 105 applications for membership in the Federal Home Loan Bank System on file. In the majority of these cases, final action had not been taken because the applicants had not been able to comply with the necessary requirements.

The following table presents the number and assets of members, by types of institutions, as of June 30, 1938, and June 30, 1939:

Includes savings and loan associations, building and loan associations, homestead associations, and cooperative banks.

Federal savings and loan associations are required by law to be members of the Federal Home Loan Bank System. Membership is also open to State-chartered savings and loan associations, savings banks, and insurance companies. Exhibit 12 shows the number and estimated assets of member institutions, by Federal Home Loan Bank Districts and by States, as of June 30, 1938, and June 30, 1939.

Savings and loan associations constitute the bulk of the present membership of the Federal Home Loan Bank System, and the great majority of eligible institutions of the savings and loan type are now included in the System's membership. Reports from the Presidents of the twelve Federal Home Loan Banks indicate that on June 30, 1939, member savings and loan associations represented more than 70 percent of the total number of potential members in the savings and loan industry. The assets of these member institutions comprised about 84 percent of the aggregate assets of all potential members of the savings and loan type.

Volume of Advances

The fiscal year 1939 was marked by a considerable increase in the liquidity of member institutions, caused by the large flow of private savings into share investments in home-financing institutions. As a result, the demand for Federal Home Loan Bank advances was reduced, and many borrowing members were in a position to make substantial repayments on their outstanding advances during the year. Advances made by the Federal Home Loan Banks during the fiscal year 1939 totaled $76,659,075. Repayments of advances aggregated $103,922,449. In consequence, the balance of advances outstanding was reduced from $196,224,937 at the end of the preceding fiscal year to $168,961,563 on June 30, 1939. Exhibit 13 shows the aggregate amount of advances and repayments and the balance of advances outstanding from the beginning of operations of the Bank System to June 30, 1939.

During the reporting period, the demand for advances varied greatly among the twelve Federal Home Loan Bank Districts (Chart XXII on page 59). On June 30, 1939, the Des Moines and Los Angeles Districts showed an increase in advances outstanding over the preceding fiscal year. Advances outstanding in the New York, Pittsburgh, and Topeka Districts were slightly lower. The Federal Home Loan Banks of Boston, Winston-Salem, Cincinnati, and Little Rock recorded a substantial decrease in outstanding advances ranging from about 20 to 30 percent. A summary of advances outstanding at the end of each fiscal year from 1934 to 1939, by Federal Home Loan Bank Districts, appears in Exhibit 14.

The generally reduced demand for advances was reflected in a decreasing number of members borrowing from the Federal Home Loan Banks. On June 30, 1938, borrowing members numbered 2,681, or 67.8 percent of the total number of member institutions. On June 30, 1939, the number of borrowing members was only 2,385, or 60.4 percent of the total number of member institutions at that

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