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has been due to conditions and the fact that a great many home owners realize now that the burden they assumed was too heavy. They were induced to go into these home purchases without making a proper study of their own ability to carry them through.

Senator WATSON. How many defaults have taken place, would you say, in the payment of interest?

Mr. ROBINS. The sheriff's sales of homes have been running about a thousand or twelve hundred a month.

Senator WATSON. A thousand or twelve hundred a month?
Mr. ROBINS. Yes; in Philadelphia.

Senator WATSON. Of homes?

Mr. ROBINS. Yes. The total number of sales have amounted to about 20,000 a year and about 12,000 of those are homes. That condition has arisen, I fully believe, by reason of there having been too much money loaned to cursbstone builders.

Senator WATSON. Was that the fault of the appraisers?

Mr. ROBINS. It is not altogether their fault. When the values were inflated and people were paying ridiculous prices for houses, new houses particularly, every curbstone builder in the vicinity would go into the business of building houses, whether he knew anything about it or not. By paying big commissions he was able to get mortgages that he should not have obtained, and then he sold the houses subject to those mortgages to home owners, who were unable to carry them. Now, then, when values have come down about 20 to 40 per cent, those mortgages really represent the value of the houses. So people have let them go. They will not carry them.

Senator WATSON. How are you going to help those people, if they are going to be helped at all?

Mr. ROBINS. For any legitimate mortgage of the proper value there is plenty of money.

Senator WATSON. But where there are from twelve to twenty thousand foreclosed in a year, how are you going to help those fellows? Mr. ROBINS. I can not see how you can help a man who is borrowing more than the security that he puts up.

Senator WATSON. I am asking you a question, whether there is any chance for those people.

Mr. ROBINS. Those people who are in the stew?

Senator WATSON. Yes. Would this bill help that class of people? Mr. ROBBINS. I can not see that it would be of any help at all, because these mortgages are for 50 to 60 per cent of the value of the property when created, and these people need from 80 to 90 per cent of the value of the property when bought.

Senator WATSON. When foreclosures are had, to whom do the properties go?

Mr. ROBINS. To the people who hold the mortgages.

Senator WATSON. What do they do with them?

Mr. ROBINS. Fix them up, rent them, and sell them for what they can get for them.

Senator WATSON. Do they take a loss?

Mr. ROBINS. They certainly do.

Senator WATSON. They really take a loss?

Mr. ROBINS. They really take a loss. There will be this situation: There will be three mortgages in a block, on all equally valued property. One mortgage may be for $3,000 on a house, another one for $4,000

and another one for $5,000, on houses that sold originally for $7,500, which are cut down in value now to $4,500. All three of those mortgages go to a sheriff's sale. The holders of the mortgages buy the properties in. This man who holds the $3,000 mortgage on the first property wants to get his money. Somebody comes along and says, "I will give you $2,500 for it." He replies "make it $2,750." And the deal is closed on that basis. That fixes the value for the whole row, and these people who have the higher mortgages have to take a terrible loss, but they take it to get rid of it. That has happened over and over again.

Senator WATSON. Are these people actually living in the homes? Mr. ROBINS. Until the sheriff puts them out.

Senator WATSON. Where do they go then? What happens to them? Mr. ROBINS. They double up: For example, I can tell you of an instance right now. I am treasurer of an institution that held a mortgage and we had to buy the property in last July. We found a widow woman in there with children. We are a charitable organization. We do not want to put any widow and here children out on the street in order to get possession of the house. They had no money to pay. The Jewish Welfare Association was paying a little money for their food. They appealed to us and asked us to let her stay in until the first of the year. We said we would let her stay there until the first of the year free of rent. The first of the year came around and we went down to see her and asked her what she could do. She replied, "Well, I haven't a thing, but my daughter is going to get married about the middle of January and she and her husband have promised to take me in and let me live with them for the present." The daughter hasn't been married yet, but she will get married this month and that woman will move out of our house. We will then have that property on our hands, with a lot of repairs to put on it, and then we will sell it for nowhere near what we have in it.

Senator WATSON. Then you take an actual loss?

Mr. ROBINS. We take an actual loss on the property; yes.
Senator WATSON. Have you done that in many instances?

Mr. ROBINS. We have not done that particularly, but I know of other trust companies and title companies and mortgage companies that have been doing that right along.

Senator WATSON. Do you refinance any building and loan securities of any kind?

Mr. ROBINS. No; we do not.

Senator WATSON. You do not?
Mr. ROBINS. No.

Senator WATSON. Do you know the condition of the building and loan associations in your city?

Mr. ROBINS. I certainly do.

Senator WATSON. Tell us about that.

Mr. ROBINS. At the time when the boom in real estate was on, properties were bringing about 30 to 40 per cent more than the equitable value. Every curbstone real-estate broker in town organized a building association in order to finance the sales that he wanted to put through at those prices. Those building associations that were organized for that purpose and were carried along, pretty near all of of them have been taken over by the banking commissioner of the State. The associations that are left are the ones that were properly

managed and were not carried away by these false values and were not organized for the purpose of financing the deals of those who wanted to speculate. But there were so many that were organized for that purpose that it has given a terrible black eye to the building and loan associations in Philadelphia.

Senator WATSON. Do you know how many there are in Philadelphia?

Mr. ROBINS. There were, before thay all closed up, about 2,500 or 3,000.

Senator WATSON. And how many are closed now?

Mr. ROBINS. I should say now about 1,500 of them were wiped out. Senator WATSON. What became of their assets, if any?

Mr. ROBINS. The banking commissioner is getting what he can for them.

Senator WATSON. Under the law of Pennsylvania the banking commissioner takes charge of them?

Mr. ROBINS. He takes charge, just the same as in the case of a bank.

Senator WATSON. Yes.

Mr. ROBINS. The commissioner spoke to me one day, when I was talking to him about some other matters, about the building association situation in Philadelphia, and started to blame the citizens of Philadelphia. I said, "We will take our share of the blame, but I think your office should bear some of the burden. When things were booming any Tom, Dick, and Harry could come up to you for a charter and you, of course, just approved the charter." He admitted that was true.

Senator WATSON. Have you any remedy for the existing situation, except just to let it go and let the deflation come?

Mr. ROBINS. I think the remedy for this situation, which is a temporary matter, will be all provided for under the reconstruction finance bill.

Senator WATSON. How far?

Mr. ROBINS. From the fact that those companies that have frozen assets at the present time that are available for rediscount can go there and get the temporary relief that is necessary, there may be some benefit; but to put permanently before the country this kind of an organization is going to saddle the whole population with more taxes to maintain it, because it will not, in my opinion, maintain itself. It is not like the Federal reserve, where the banks have to subscribe an amount of capital, have to keep an amount of reserve on hand which supplies the capital for the working of the Federal reserve system, in addition to the 40 per cent currency that can be issued against discounted paper. Here it is simply voluntary for those members who want to come in.

Senator WATSON. Do you think an institution of this kind would be self-sustaining?

Mr. ROBINS. Absolutely not.

Senator WATSON. After the emergency has passed?

Mr. ROBINS. I do not. I do not see how it can be.

Senator WATSON. Do you think 12 of them in the United States could be sustained?

Mr. ROBINS. Absolutely not. I do not think one in one district could be sustained without going into the United States Treasury.

That has been the whole trouble with the people of the United States, that instead of the men who are interested in a business going after the trouble and working out their own remedy when the first trouble comes on they run down to Washington and want to dip into the United States Treasury to help them out instead of wanting to help themselves. What inducement is there for any mortgage lending company to come in here, except for the discounting privileges? They won't make any money on the capital they put in. They won't get any dividend from that. Why should they put capital in?

Senator WATSON. You think they won't make any money on it? Mr. ROBINS. No; I do not see how they can. The profits that these 12 banks can make out of that will be so small, if they make any, that there won't be any money for dividends. The cost of running those 12 banks is going to be something, and where is the margin?

Senator WATSON. Suppose they are reduced to six banks; would that help the situation?

Mr. ROBINS. No; just take one in one district; where is the money coming from to make any profit? The bonds they issue against these mortgages will have to be put out at a rate of interst, not over 5 per If they get 6 per cent on a mortgage, that is only 1 per cent over, and you can not run any mortgage company or bank on a 1 per cent margin and make a profit.

cent.

Senator WATSON. Is there anything else, Mr. Robins, you want to say?

Mr. ROBINS. No, I don't think so.

Senator WATSON. You do not think this is a good proposition, then?

Mr. ROBINS. As a business proposition, I don't think it is, Senator. Senator WATSON. And it will not be self-sustaining, in your opinion?

Mr. ROBINS. I don't think it will be self-sustaining. Allow me to say that I think it will have another tendency. A mortgage company has a certain amount of money to lend on mortgages and they lend it all out. They have demands made on them. They say, "Well, we will take these mortgages and take them down to the discount bank and borrow 50 per cent of their face." They will get that 50 per cent and lend that out, and they will be just as frozen at the end of that as they were before. They will keep on borrowing— at least they can-until it gets down to 50 per cent of the second amount, and them borrow 25 per cent on that, and 122 per cent, and so on, for the sake of doing business. Their business is lending money and making money with it. Se we will just have the same frozen condition at the end.

Senator WATSON. If this bill passes, will it interfere with your business?

Mr. ROBINS. Not a bit.

Senator WATSON. Not in the slightest?

Mr. ROBINS. Not in the slightest.

Senator WATSON. One way or the other?

Mr. ROBINS. One way or the other, no. It is only that we do not want to see the real estate business affected as we think it will be. It might indirectly affect us, in this way: I think it will create more trouble in the real estate business, and, of course, our business in

the title insurance will be affected by that. So when I say I have no interest, I want to qualify it with that exception.

Senator WATSON. Do you want to ask him anything, Mr. O'Brien? Mr. O'BRIEN. No, Senator.

Senator WATSON. That is all.

Mr. ROBINS. I am much obliged, Senator, for this opportunity. Senator WATSON. Not at all.

(Mr. Robins left the table.)

Senator WATSON. Winston K. Ogden.

STATEMENT OF WINSTON K. OGDEN, SUMMIT, N .J.

Senator WATSON. What is your name?

Mr. OGDEN. Winston K. Ogden.

Senator WATSON. Where do you live?

Mr. OGDEN. Summit, N. J.

Senator WATSON. What is your business?

Mr. OGDEN. In the residential building business primarily; some development.

Senator WATSON. What do you mean by that? Are you a contractor?

Mr. OGDEN. That is right. I am a contractor. Primarily, again, I do mostly residential building work, and mostly on contracts. Senator WATSON. Yes.

Mr. OGDEN. Very little developing, although I do have one development that I use occasionally.

Senator WATSON. How long have you been in this business?
Mr. OGDEN. Since 1920.

Senator WATSON. Are you familiar with this bill?

Mr. OGDEN. Yes, sir; I am.

Senator WATSON. Will you go on and give your impressions about it? Mr. OGDEN. I do not feel competent to judge the financial structure of the bill. However, I get the reaction to the building business, as I might be interested. Through 1927, 1928 and 1929 we had this terrible building flurry that has left us with a very serious surplus of residences. I am referring to the metropolitan district of New York

now.

Senator WATSON. Where do you operate?

Mr. OGDEN. Principally in Summit, which is 20 miles from New York, and down through the Oranges and Maplewood, up as far as Morristown and down as far as Plainfield, in that section, I would say, roughly 15 to 25 miles of New York.

Senator WATSON. Building residences?

Mr. OGDEN. Building residences.

Senator WATSON. Nothing else?

Mr. OGDEN. Occasionally a store, or so on, that a person will get on a contract, but it is primarily residential work, and that work is, in most cases, for an owner, where I have to arrange the whole procedure for him. That is where my own developments come in occasionally. However, it is very frequently that I need to obtain other land for the owner. I also am an architect, so I design a great deal of the work for the owner, arrange all financing and carry the job through to completion.

Senator WATSON. Where do you get your money?

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