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Mr. STEVENSON. Most assuredly; yes, sir.

Senator TOWNSEND. And not as an emergency measure?

Mr. STEVENSON. No, sir; it should not be.

Would you like to have this statement [indicating]?

Senator WATSON. Yes. Leave it with the reporter and we will put it in the record.

(The statement referred to faces this page.)

STATEMENT OF JOHN WARREN, DIRECTOR UNITED STATES BUILDING & LOAN LEAGUE, JERSEY CITY, N. J.

Senator WATSON. Will you please give us your name?

Mr. WARREN. John Warren.

Senator WATSON. Where do you live?

Mr. WARREN. Jersey City, N. J.

Senator WATSON. What is your business?

Mr. WARREN. I am a lawyer, sir.

Senator WATSON. Are you making foreclosures?

Mr. WARREN. Very few.

Senator WATSON. Whom do you represent?

Mr. WARREN. I am director of the United States Building and Loan League, representing the district of New Jersey. In New Jersey, we have 1,565 mutual building and loan associations. They have, roughly, $1,211,000,000 in assets.

Senator WATSON. What is the nature of those assets?

Mr. WARREN. As of December 31, a year ago, which is the latest printed commissioner's report, those assets are composed of $19,000,000 of cash in bank, composed partly of our commercial accounts and partly what is known as a liquid investment fund which is set aside for the purpose of endeavoring to do social justice to needy shareholders by paying promptly withdrawals to shareholders upon demand; mortgage loans, with pledge of shares, $1,061,000,000. Those are sinking fund mortgages, repayable in the matured shares of the association which are pledged thereon.

Senator WATSON. Then, how many matured shares have you? Mr. WARREN. When they mature, the shares will cancel that. At that time

Senator TOWNSEND. Do your companies take money on deposit? Mr. WARREN. No, sir; not at all, sir. We are a strictly mutua! building and loan association, averaging rather small, although some of our associations have attained rather great size.

Senator TOWNSEND. Are your loans made principally on small homes?

Mr. WARREN. Principally, sir.

Senator TOWNSEND. What is the number of loans on homes?

Mr. WARREN. It is not classified in the commissioner's report, but I know the practice very well. As of a year ago, we had 280,508 borrowing members, and 919,669 nonborrowing members, or a total of 1,198,177 members of our association.

Senator WATSON. The nonborrowing member is the member who just pays in so much a month?

Mr. WARREN. That is right, sir-not entirely so. That includes some of the children. We have endeavored to inculcate thrift in children, and we have what is known as a juvenile share, which

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mated.

Over a 4-year period there were 60 foreclosures, amounting to $200,000, 30 of which were home foreclosures

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does not amount to very much, because we are just developing it. As of that date, we had 20,499 outstanding, of a total value of $659,991, but we are endeavoring to develop that.

Senator WATSON. Then, you have paid-up stock, do you?

Mr. WARREN. Yes. We have paid-up shares, upon which the maturity value is paid in advance, and upon which a fixed rate of profit is paid.

Senator TOWNSEND. What is that return?

Mr. WARREN. Usually 5 per cent, and in some instances, where bank rates are higher than 5 per cent to associations, they have followed the bank rate to some extent and have run as high as 51⁄2 or 6, where bank rates have been that high, but that is an unusual situation.

Senator WATSON. Is that paid-up stock taxable in your State? Mr. WARREN. No, sir; it is not.

Senator WATSON. It is free from taxation?

Mr. WARREN. Yes, sir.

May I say this to you, Senator? Our paid-up shares are not a great factor in our set-up. At the end of 1931, we had $125,000,000. There had been a jump from $117,000,000 at the end of 1929, but that was largely occasioned by the fact that at that time the credit situation became strained. People were unable to further continue paying on their installment shares, and in many instances they switched to the paid-up share, because they were not obliged to further pay, although they did not want to withdraw their investment in the shares.

Our paid-up shares represent, to a very great extent, the matured installment shares where the people do not want to take their money out of the institution, where they have been accumulating their little "back-log" against trouble. It averages from 135 to 138 months of persistent saving.

Senator WATSON. How much have you been troubled by withdrawals?

Mr. WARREN. Withdrawals in our State, Senator, up until very recently, have been a problem of a comparatively few associations. We are, however, at the present time in a situation where we have got to use very great judgment and obtain a very great deal of credit in order to assist in the stabilizing of the financial institutions in our State, not only so far as associations are concerned, but our banks, because we are intertwined. In our State the associations owed the banks, at the close of business a year ago, $61,000,000, and I think they owed them, as of the close of business last year, something like $63,000,000. Of course, while in some cities that has been considerably reduced, in other places the loans have gone up, but the situation is that we are now suffering from a depreciated income for the reason that our withdrawals have suddenly increased due to the very large number, proportionately, in certain parts of our State, of bank failures in the last six months.

Our associations which, of course, do business with banks and deposit their liquid investment funds in their commercial accounts, have had those funds tied up. Most of our associations, sir, are serial associations.

98195-32--PT 2- -5

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