Mr. FRIEDLANDER. Either out of jobs, or their salaries have been reduced.

Senator COUZENS. Have you found it difficult in the past to secure adequate money for the building of homes?

Mr. FRIEDLANDER. Do you mean prior to this depression period? Senator CoUZENS. Yes.

Mr. FRIEDLANDER. No; and there have been times when our institution turned down money. But if real estate is permitted to go its way, the way it is going at this time, whereby it is not being used and is not recognized as worth anything for credit, it is my judgment it will be a long, long time before that condition will again obtain. I do not see any inducement for anybody to put money into a home if they can not have some plan whereby they can get something out of that home, or get a loan on that home when they need it. In times like these the banks are unable to make any loans. They have to maintain their own liquidity, and no one blames them for it. Building and loan associations are unable to go to the banks and borrow any considerable amounts of money to take care of their customers, and unless we do have some relief these and other lending agencies are going to break down under the strain, and then there will be many years before they can assume the same usefulness as in the past.

Senator COUZENS. Have you made any estimates or do you know of anybody else who has made any estimates of the cost of running these banks, the probable gross income, and the probable amount of paper to be rediscounted?

Mr. FRIEDLANDER. No; I do not. I want, however, to leave with the subcommittee a statement of the Land Bank of the State of New York, which is a building and loan rediscount institution that has been operating for a period of about 16 years, the expenses of which are very nominal in the conduct of its business, showing the expense might be nominal in the conduct of a bank of this character. Of course this bank only serves in New York State, and this statement happens to be for January 1, 1930, but is the last one I have, and it shows that the total annual expense for the year 1929 was $22,000.

Senator COUZENS. You do not mean to say that they ran for a whole year and paid all their office expenses, rents, taxes, and so on for $22,000, do you?

Mr. FRIEDLANDER. Yes, sir.

(The statement referred to is here made a part of the record, as follows :)

Statements of conditions of the Land Bank of the State of New York as of December 31, 1929, and for the calendar year of 1929

INCOME AND EXPENSE STATEMENT FOR THE YEAR ENDING DECEMBER 31, 1929

UNDIVIDED EARNINGS STATEMENT FOR THE YEAR ENDING DECEMBER 31, 1929

Balance Net increase in undivided earnings for the year.

Balance undivided earnings, Dec. 31, 1929

5,881.37 23, 782, 14

CASH STATEMENT FOR THE YEAR ENDING DECEMBER 31, 1929, RECEIPTS

In accordance with the by-laws, we have examined the affairs of the land bank of the State of New York as of the close of business, December 31, 1929. We hereby certify that we have audited the accounts and examined the securities and have compared the same with the books and records of the bank and find the same correct and herein truly reflected.

WILLIAM J. CONSIDINE,
JOHN R. B. BYERS,
WILLARD K. DENTON,
Supervisory Committee.

Senator WATSON. What more could you do by way of lending money for the building of homes if you had more money right now? Mr. FRIEDLANDER. Senator, I do not think in our immediate section there is any need for money to build homes; not at this time.

There may be some isolated cases where that is not true, but I think that is generally the situation. However, there is a need

Senator WATSON (interposing). You are able to meet all demands made on you at this time?

Mr. FRIEDLANDER. Do you mean for loans?

Senator WATSON. Yes; for loans.

Mr. FRIEDLANDER. No; we are not able to meet any demands at all. The demands being made now are for refinancing of loans that have been made in the past by term-mortgage institutions. There is no money for that purpose. Those people who have built homes and whose notes are maturing-and they are not building and loan association loans because those loans do not mature, being on an amortized basis-but in the case of straight mortgage loans made for definite terms three, four, or five years ago, these loans are coming due, and these home owners are facing foreclosure, are having their homes foreclosed because there is no fund at this time to meet that demand.

Senator WATSON. Generally speaking, who holds those mortgages? Mr. FRIEDLANDER. A great many of them in our section have been floated through trust companies and mortgage companies and sold to private investors. And those private investors have had their minds so disturbed about mortgage loans as investments under present conditions that they are in the same mad race for liquidity that seems to be abroad generally in the United States, evidenced in the attempt to reduce everything to cash.

Senator WATSON. And they can not come to you and get money to refinance?

Mr. FRIEDLANDER. They can not come to us or to anyone else at this time and get money for refinancing.

Senator WATSON. And those private investors and trust companies are not willing to tide them over or help them along?

Mr. FRIEDLANDER. They would have to find new investors to take the paper, and they can not find new investors for that purpose at this time.

Senator WATSON. And all they can do is to foreclose?

Mr. FRIEDLANDER. Yes, sir.

Senator COUZENS. Of course they are not by any means foreclosing all that are past due, I take it.

Mr. FRIEDLANDER. Oh, no.

Senator WATSON. Of course not.

Senator COUZENS. What have you to say with respect to the clauses of the bill with respect to the advance not being an amount in excess of 60 per cent and 50 per cent of the unpaid principal of the home mortgage loan, nor 40 per cent of the appraised valuation of the real estate securing the home mortgage loan, referred to in the discussion that took place prior to your coming to the table? Mr. FRIEDLANDER. Well, I should be absolutely opposed, Senator, to any system proposed for the purpose of helping the institutions and indirectly home owners that would be set up on any unsound basis. I noticed that you had some testimony given before you on yesterday with reference to second mortgages. Of course, if the Government is going into the gift business that would be all right. Senator WATSON. Well, it would seem that we have been in that business all along.

Senator COUZENS. And we are going into it in this bill, because we are giving half of this capital without return.

Mr. FRIEDLANDER. That would be a small gift as compared to some that you have made. You should set the banks up on a sound. basis. The witness who appeared just before me spoke of selling houses on 5 and 10 per cent down payment. That is all right on a rising real-estate market, but we have not a rising real-estate market at this time and probably will not have one for some time to come. Where you sell a home on 5 per cent down, which represents the commission of the real-estate man, you have no margin as security for the money advanced. I think more and more investors in this country from now on are going to demand real security before they turn loose their money, no matter what it may be, foreign bonds or other things.

Senator COUZENS. What is your judgment as to the amount of money a man should have before he starts to secure a home?

Mr. FRIEDLANDER. My judgment concurs with the finding of the home-ownership conference held last month, that a man should have 25 per cent to pay down. He should show some evidence of selfdenial, some evidence of thrift, before he starts out on the long journey of home ownership. Otherwise he will get up against it before he goes very far.

Senator WATSON. Your average loan is $2,700?

Mr. FRIEDLANDER. Yes, sir.

Senator WATSON. On a home of what cost?

Mr. FRIEDLANDER. Between $4,500 and $6,000.

Senator WATSON. Does that include the house, or the house and lot?

Mr. FRIEDLANDER. Both the house and lot.

Senator COUZENS. What would have been their position if these something like six million or seven million men out of work now had started in on such a thrift plan two or three years ago? What condition would they be in at this time considering that they have been out of work for a year or two? How could they meet their payments at this time even if they had put 25 per cent in their homes?

Mr. FRIEDLANDER. Well, that is the point I made a few minutes ago, that they have been encouraged to do it and a great many have dont it, and to-day many of them find themselves with first mortgages coming due and no opportunity to rearrange or refinance their homes and therefore are facing foreclosure.

Senator COUZENS. What do you see in the future to assure you that they are going to be reemployed and be able to carry out their obligations on their homes?

Mr. FRIEDLANDER. Well, I am an optimist by nature.

Senator WATSON. And being from Texas maybe you hope for a Democratic administration.

Mr. FRIEDLANDER. Well, that might help. I think that by fall, if the Government balances its budget, and the States, cities, and counties do the same thing

Senator WATSON (interposing). What fall?

Mr. FRIEDLANDER. This coming fall; that we will have started toward putting our feet back on the ground. I think that is one of the important steps that must be taken.

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