Mr. BRADWAY. Yes. Of course we suffered from the inflation in the selling price of homes. Somebody, somewhere-the Government or the State or somebody-should have stopped that, because in my opinion the greatest crime that has been committed in the United States economically and in my life time was the cost of financing that went into the single home. There did not seem to be any way to prevent it. People wanted homes, and money was not available unless you paid 15 or 20 or 25 per cent to get it.

Senator WATSON. How do you expect the Government to go in to stop anything of that kind?

Mr. BRADWAY. I do not know. I did not come here to talk on that. Senator WATSON. I see.

Senator COUZENS. I thought you were the proponent of rugged individualism? I thought you were a strong individualist, and wanted each individual to be free to do as he chose without Governmen interference?

Mr. BRADWAY. I think I can answer "Yes" to that question, Senator.

Senator COUZENS. Now you say you want some curb on these speculators and promoters.

Mr. BRADWAY. I think by providing some means of furnishing a sufficient amount of first mortgage money, and possibly the Federal Home Loan Bank Board would set up certain standards, and being located at the National Capital, and looking at these various centers of the United States from a distance, would be able to observe any heavy inflation and call the public attention to it, and possibly through publicity have a considerable effect upon the slowing down of building where this second-or junior financing cost-had gone too high.

Senator COUZENS. The previous witness said that the national real estate body, as I understood it, has made a survey of certain matters interesting them. I wondered if the Detroit Real Estate Board has made any survey of the vacant land that has been subdivided and the vacant lots that are within a distance of 20 to 25 miles of Detroit. Have they done that?

Mr. BRADWAY. Yes; they have, Senator.

Senator CouZENS. And what does it show?

Mr. BRADWAY. I haven't the figures, but it shows, of course, a very large number of lots. And that number of lots, of course, is constantly being reduced by these subdivisions going back into farms. That process is going on rapidly. And in another two or three years we may not be so much oversubdivided.

Senator COUZENS. Just what is that secret that we had better not discuss because you and I come from Detroit?

Mr. BRADWAY. Because we have so many acres of subdivisions lying unused.

The CHAIRMAN. I do not believe that will ever be brought to light.

Mr. BRADWAY. I think it has been mentioned by some opponent to this bill that it might cause inflation. Now I do not see how that is possible. I think that inflation in the number of homes that there might be in existence will be something like an inflation in virtue, if you can possibly consider that that might be objectionable. I do not think it would be objectionable if we did have an inflation in

homes. But as a matter of fact it is not conceivable how a surplus of first mortgage money could cause inflation.

Senator COUZENS. Just at that point. You said that you did not see any evil from an inflation in homes. Does that not depreciate the property on which first mortgages already exist?

Mr. BRADWAY. Well, if we had a great many more homes than there are people to occupy them.

Senator CoUZENS. Yes.

Mr. BRADWAY. But it has been my experience, Senator, that it is never possible for any community to build a large number of homes in excess of the demand, because the builders stop before that period is reached.

Senator COUZENS. As I understand it you say that there are now in Detroit 3 per cent, approximately, of single homes that are vacant. Mr. BRADWAY. Yes.

Senator COUZENS. Suppose you increased that to 10 per cent, would that not have a depressing effect upon the home owners who bought at the peak in 1928 and 1929?

Mr. BRADWAY. It would have a depressing effect.

Senator CoUZENS. And also would it not affect the first mortgages on that property?

Mr. BRADWAY. Yes; it would. But I can not conceive a 10 per cent surplus of single homes in any community.

Senator COUZENS. How far would you increase it above the three and a fraction per cent that you enumerated before?

Mr. BRADWAY. I do not think it should be increased at all, necessarily. I am not advocating that.

Senator COUZENS. I thought your statement was rather inconsistent. I thought you said you did not see a disadvantage in an increase of inflation of homes?

Mr. BRADWAY. Well, when I say "home" I assume that it is being occupied by some person. It is a house until it is occupied, and then it is a home. That is what I had in inind.

Senator COUZENS. What do you say with respect to a workman, a foreman, or a bank cashier or a teller or a bookkeeper or an auditor or an accountant who bought a $12,000 or $15,000 home in 1928 or 1929 and placed a $6,000 or $7,000 mortgage on it and now, according to the testimony submitted to this committee, these places have gone down from 30 to 40 per cent-what do you say about him if he is now out of a job?

Mr. BRADWAY. Well, of course, all the trouble that we are in and all the necessity for this bill and everything that is wrong in the world is due probably to the fact that people were buying homes and everything else far beyond their means.

Senator COUZENS. Yes.

Mr. BRADWAY. And not only did the home cost a lot more than it should, but people were buying homes at prices that they had no business to buy them; and their income, even at the peak, was not sufficient to maintain their homes and pay off the first and second mortgages.

Senator WATSON. How is governmental supervision going to prevent that?

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Mr. BRADWAY. Well, I do not know that governmental supervision will. Maybe I should not have mentioned that.

Senator WATSON. Well, you made a statement a while ago that was new to me, and almost startling, that there should be some sort of supervisory board set up here, and if you began an inflationary construction of homes in Detroit far beyond the reasonable demand, that this board should warn you people in Detroit to desist from such an unholy proposition?

Mr. BRADWAY. I said it would be desirable, Senator.

Senator WATSON. I do not think we should at all. I do not agree with you at all, and I do not think that is the object of this bill. How could a board be set up here and stop the Florida land boom, issuing one edict after another and stopping them from going wild and stampeding?

Mr. BRADWAY. Probably not.

Senator WATSON. Probably not. And people would not be stopped.

Senator COUZENS. Suppose you had had an economic board here, do you suppose that you could have stopped the motor-car business in Detroit?

Mr. BRADWAY. No. I mentioned that as something that would be desirable, because all of our trouble was due to that overinflation. Senator WATSON. But Government supervision can not stop men from being fools if they want to be. There is no law against a man being a fool.

Senator CoUZENS. I do not like the Chairman to use that word. Senator WATSON. You think I am speaking now with reference to the people of Detroit?

Senator COUZENS. No, no. I think

Senator WATSON. I mean by that that when men go wild and go into a period of speculation, like they did in the stock market along in 1928 and 1929, you can not by law stop them. You can not by law stop a thing like that. A man loses his head and gets off his feet.

Senator COUZENS. But is it not more desirable to call him an optimist instead of a fool?

Senator WATSON. An optimist?

Senator COUZENS. Yes.

Senator WATSON. Well, when they get in that kind of a state I do not think there is any difference, Senator.

Mr. BRADWAY. We have another situation in Detroit that I do not think has been touched on, and that is with reference to the man who has had a home nearly paid for. A specific example is that of a man who purchased a house at $12,000, had it paid down to $700, lost his job a little over a year ago, a job which enabled him to pay this house down to the $700. He has been out of work for a year and has accumulated debts of a thousand dollars in living expenses and taxes. He is now trying to borrow $1,700; in other words, the $1,000 and the $700 to pay off the balance that he owes on his house. The house is about 10 or 12 years old. He has been absolutely unable to borrow that $1,700 anywhere in Detroit. He has no standing at any bank where he can go and get it, and there is no place to go and get that money.

Senator COUZENS. What is that house worth now?

Mr. BRADWAY. Of course what it is worth now is a thing that is hard to say. Substantially less. Maybe $8,000 or $9,000.

Senator COUZENS. Well, that is all right; I am glad to have that. Now supposing for instance that he had a $6,000 mortgage on that, and had not been able to reduce it any, and lost his job, what then? Mr. BRADWAY. Well, the mortgagee would probably get it ultimately.

Senator COUZENS. Yes. So he would not be protected by this bill at all under those circumstances, because he could not get a $6,000 mortgage on an $8,000 valuation.

Mr. BRADWAY. Well, if he owed $6,000 he would have to suffer, possibly.

Senator CouZENS. Yes.

Mr. BRADWAY. But if the banks had more money to loan they would take care of a man of this kind. And there are thousands of instances of that kind in Detroit.

Senator WATSON. Is there anything further you want to say, Mr. Bradway?

Mr. BRADWAY. I do not think there is. Except I would like to say this. The Government has, through the Federal reserve bank, liquified commercial paper and certain kinds of securities, and through the farm loan banks liquified farm mortgages, and I think that it could well do something about the liquifying of first mortgages on residential real estate.

Senator COUZENS. Of course the Federal reserve has been very profitable to the Government, has it not?

Mr. BRADWAY. Yes, it has.

Senator COUZENS. But this only creates a loss to the Government, so far as I am able to read it.

Mr. BRADWAY. I do not see any particular objection to its having to pay its way.

Senator COUZENS. You believe in it issuing tax exempt securities? Mr. BRADWAY. I think they should be tax exempt. I think there is a difference between the point you brought about the railroads. Because it is supposed to be a very desirable thing for the Nation to have its people own their own homes, and this is encouraging to the people.

Senator COUZENS. Is it not desirable to maintain an adequate transportation system?

Mr. BRADWAY. Very.

Senator CouZENS. That is all.

Senator WATSON. Thank you, Mr. Bradway, that is all. We will call next on Mr. A. C. Hunt.

STATEMENT OF A. C. HUNT, BLACK HILLS BUILDING AND LOAN ASSOCIATION, RAPID CITY, S. DAK.

Senator WATSON. Will you state your name?

Mr. HUNT. A. C. Hunt.

Senator WATSON. Where do you live, Mr. Hunt?

Mr. HUNT. Rapid City, S. Dak.

Senator WATSON. Black Hills Building and Loan Association? Mr. HUNT. Yes, sir.

Senator COUZENS. That is the Coolidge home, is it not?

Mr. HUNT. In the summer; yes, sir.

Senator WATSON. When it was warm.
Mr. HUNT. It usually is in the summer.

Senator WATSON. Are you building any homes up there in the Black Hills?

Mr. HUNT. Not many for the last year or year and a half. Senator WATSON. How long have you had a building and loan association there, Mr. Hunt?

Mr. HUNT. This association was organized in 1910.

Senator WATSON. And has it been growing all the time?

Mr. HUNT. Yes, sir. It was the first association west of the Missouri River in the State.

Senator WATSON. And what is its present financial condition? Mr. HUNT. Well, fairly good. I would say better than in the East.

Senator WATSON. How many mortgages have you now on homes? Mr. HUNT. We have a comparatively small association.

Senator WATSON. Yes?

Mr. HUNT. But at the present time we have, I think, about 600 mortgages.

Senator WATSON. Just on homes alone?

Mr. HUNT. Almost entirely on homes.

Senator COUZENS. Are those homes on urban property or farm property?

Mr. HUNT. City properties.

Senator WATSON. And over how large a range of territory do you operate?

Mr. HUNT. Ninety-five per cent of our loans are within Rapid City.

Senator WATSON. How large is Rapid City?

Mr. HUNT. About 11,000.

Senator WATSON. Now, what is the present state of those loans? Are there many defaults?

Mr. HUNT. Not very many.

Senator WATSON. Not very many?

Mr. HUNT. We are, fortunately, in fairly good condition.
Senator WATSON. They keep up their monthly payments?

Mr. HUNT. Not quite as well as they did prior to a year ago, of course, but fairly good.

Senator WATSON. Do you have any trouble rediscounting your paper?

Mr. HUNT. Yes, sir. In fact we have no facilities for rediscounting.

Senator WATSON. None at all?

Mr. HUNT. Absolutely none.

Senator WATSON. Have you made many foreclosures?

Mr. HUNT. Not many. A few, of course.

Senator WATSON. How, then, will this bill help you?

Mr. HUNT. Well, it will help us particularly to have an outlet for first-mortgage loans.

Senator WATSON. You have not that outlet now?

Mr. HUNT. There are no insurance companies or brokerage agencies or loan companies doing business in our territory at all. Senator WATSON. Where has that outlet been hitherto?