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The CHAIRMAN. We understood that.

Mr. KARR. We ask that the bill be corrected so as to include those. The CHAIRMAN. I think that is agreeable. I think there is no question about that.

Mr. SCHMIDT. I would be pleased to come back the first thing tomorrow, Senator. I understand you have planned to devote a day largely to building associations.

The CHAIRMAN. The building-and-loan associations are to be heard tomorrow. Mr. Bodfish is to be here.

Mr. SCHMIDT. Or I would be glad to wait until Wednesday. I understood that arrangements had been made for me to be heard if I would come on from Cincinnati.

The CHAIRMAN. Could you limit your time? How long would it take?

Mr. SCHMIDT. As long as you wish. Of course, we initiated this whole activity of the home-loan bank, and have been sticking with it for years, and have a good deal of interesting information about it.

The CHAIRMAN. We will go on tomorrow morning, and try to put you on.

Mr. SCHMIDT. I will wait until Wednesday if you prefer.

The CHAIRMAN. We have agreed to hear these building and loan people tomorrow.

Mr. SCHMIDT. Mr. Macdougall, from New York, who also was to testify, has to go back tomorrow.

The CHAIRMAN. Could you not go on now, Mr. Macdougall?

Mr. MACDOUGALL. I would rather follow Mr. Schmidt, because, as he says, we have been with this problem for 3 or 4 years. We think we have something to contribute to the discussion. I would rather follow Mr. Schmidt tomorrow morning, if that is possible.

The CHAIRMAN. I would like to accommodate the witnesses if I can, but our time is limited. Everybody's time is limited. There is nobody here to listen to you now.

Mr. SCHMIDT. Suppose we come in the first thing in the morning. The CHAIRMAN. We will see what we can do. The committee will adjourn until 10 o'clock tomorrow morning.

(Whereupon, at 12:35 p.m., Monday, May 21, 1934, the committee adjourned until tomorrow, Tuesday, May 22, 1934, at 10 a.m.)

NATIONAL HOUSING ACT

TUESDAY. MAY 22, 1934

UNITED STATES SENATE,

COMMITTEE ON BANKING AND CURRENCY,

Washington, D.C.

The committee met at 10 a.m., pursuant to adjournment on yesterday, in room 301 of the Senate Office Building, Senator Duncan U. Fletcher presiding.

Present: Senators Fletcher (chairman), Wagner, Barkley, Bulkley, Gore, Costigan, Bankhead, Adams, Goldsborough, Townsend, Couzens, and Steiwer.

The CHAIRMAN. The committee will come to order, please. Is Mr. Fleming present?

Mr. FLEMING. Yes, Mr. Chairman.

The CHAIRMAN. Mr. Fleming, will you take a seat at the table and opposite the committee reporter. Please state your name, residence, and occupation.

STATEMENT OF ROBERT V. FLEMING, PRESIDENT RIGGS NATIONAL BANK, WASHINGTON, D.C.

Mr. Fleming, have you examined this bill (S. 3603) we are now considering?

Mr. FLEMING. I have Mr. Chairman, with respect to modernization and repair. I have been in touch with that subject through being invited into some of the conferences held by Mr. Walker and members of the Emergency Council.

The CHAIRMAN. We will be very glad to have you state what you think the attitude of the banks would be, and about the possibilities of working out results under the bill, particularly as to that provision of the bill.

Mr. FLEMING. With respect to the attitude of the banks in regard to this bill, I believe, first of all, that the plan outlined is workable as far as the machinery of credit is concerned. I have discussed this matter with members of the executive council of the American Bankers' Association, though, of course, only informally, because the plan was then only in the formative stage and had not been completed as it was afterward presented to Congress. I found no opposition to it at all, and, on the contrary, a desire to cooperate with respect to extending credit.

There was the feeling expressed that it would be necessary for a campaign to be put on to encourage people to come in and use that credit. The general feeling was that unless such campaign was very strongly and strenuously carried on to get people encouraged to take advantage of it, a great many people would not apply for credit. At least that has been the experience in some places

where such a thing has been tried without a very strong national campaign.

As far as extension of credit is concerned, the plan is workable, and there should be no difficulty in regard to the credit situation. The CHAIRMAN. Do you think there is any real need for it? In other words, is there a possibility of its being helpful in the unemployment situation?

Mr. FLEMING. If people can be encouraged, people who have been out of work for some little time and whose houses have run down, and who are now employed and would like to bring their houses back to proper condition, I think it would be very helpful to that type of person.

And, furthermore, I think it would be of very material benefit to people who would be employed in the work, that it would be very helpful at this time, particularly during the summer months when it would be carried on.

I might say in addition that we are quite willing to cooperate. that is, that the American Bankers' Association is quite willing to cooperate with the National Emergency Council if this bill becomes a law by way of making contacts with every one of our State associations in this respect, by having some person to present this plan and to explain it before their State meetings, which will be held over the next 60 days; and also we will request that they appoint someone, a member of their organization, as a liaison officer to cooperate with the National Emergency Council.

I might say that I have talked with Mr. Law, the president of the American Bankers' Association, and he is sure that they will cooperate fully in an educational campaign in regard to this subject, to the end that there may be no misunderstanding on the part of any bank as to what can be done.

Senator BULKLEY. Do you think that commercial banks would be interested in these loans, which contemplate a longer term of credit than is normal with them?

Mr. FLEMING. Do you mean making them up to 5 years?

Senator BULKLEY. Yes.

Mr. FLEMING. I believe on the average they would run for less than 5 years. I believe that the volume of these loans would not be such as to cause any banker to shy off, because there won't be enough volume, taking the situation all over the country. Of course, if every bank made every loan for which an application was presented to it, and for a period of 5 years, they might become in a frozen condition. But on the average I think the term would be for less than 5 years.

Then you have another situation, as to people not applying for credit. The popular opinion is that banks do not want to make loans. My observation is that they wish people would come to the banks to borrow. In other words, the earning situation of the banks is very bad, and they would very much like to have people use their credit. The trouble is that everybody wants to get out of debt. The CHAIRMAN. Well, that isn't a bad tendency.

Mr. FLEMING. From the individual standpoint that is sound. On the other hand, the use of credit would stimulate the employment of people in the building trades and in the manufacture of goods.

Senator WAGNER. I remember reading a statement made by some public officials connected with the banking situation, who stated that

banks were unwilling to loan money, that that was one of the difficulties of the present situation. You say, Mr. Fleming, that your experience is to the contrary.

Mr. FLEMING. I think it is the contrary. Of course, there have been applications for credit where a bank has been asked to take an equity position, the same as a common-stock holder, and that could not be done. You hear a good deal of talk about credits being denied because the applications run for a longer time than the banks want to lend money. I do not believe that credit is being denied in any proper case. There may be some isolated cases, there may be some people who have not cooperated as others thought they should, but in the main where credit has been denied it has been where there are encumbered assets, or where the earning position of the person applying was not such that the loan would be secure. loans are not proper and should be declined.

Such

I think the check made by the Federal Reserve Board will showand I might explain that they made a check-up over the country about 2 months ago I think their records will show, and I think I can assure you gentlemen of the committee, that the banks of the country will cooperate on this matter. Certainly the American Bankers' Association will do all in its power from an educational standpoint to make it clear that this machinery is workable. I think we all realize that.

The CHAIRMAN. We are very glad to have that attitude on the part of the bankers, to know that you sympathize with this movement and are ready to cooperate. It will be very helpful.

Mr. FLEMING. That is correct.

The CHAIRMAN. Is there anything else that you wish to say?
Mr. FLEMING. No; I believe not.

The CHAIRMAN. Then we thank you very much.

Mr. FLEMING. I thank you for hearing me.

The CHAIRMAN. We will now hear Mr. Friedlander.

Mr. Friedlander, have you examined this bill, S. 3603?

STATEMENT OF I. FRIEDLANDER, PRESIDENT OF THE GIBRALTAR SAVINGS & BUILDING ASSOCIATION, HOUSTON, TEX., AND VICE PRESIDENT OF THE UNITED STATES BUILDING & LOAN LEAGUE

Mr. FRIEDLANDER. Yes.

The CHAIRMAN. And are you familiar with its terms?
Mr. FRIEDLANDER. Yes, sir; I think so.

The CHAIRMAN. Can you speak with reference to the whole bill, or do you want to confine yourself to title III of the bill?

Mr. FRIEDLANDER. I should like to discuss in general the attitude of the building and loan business toward the entire legislation proposed here.

The CHAIRMAN. Very well. You may proceed to do so.

Mr. FRIEDLANDER. Inasmuch as this bill very vitally concerns the building and loan business, including the proposal to guarantee the shares of building and loan associations as investments, it might be well to call the attention of the committee, and to say for the purpose of the record, that these institutions have been operating in the United States for about 103 years. They operate on a cooperative basis, accumulating funds into a common fund of savers and investors for the purpose of lending on homes.

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