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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

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?

your

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?

Mr. HUNT. There has been none.

Senator Watson. I mean before this, when you rediscounted your paper ?

Mr. HUNT. We never have rediscounted any paper prior to now. I have borrowed some money in Omaha through personal friends.

Senator WATSON. What is the difference between your condition now, then, and your condition three years ago?

Mr. HÚNT. So far as we are concerned, there is practically no difference. We have always, ever since we have been organized, had a demand for reasonable loans on home properties that we have been unable to meet within our territory.

Senator Watson. Do you think the provisions of this bill, if enacted into law, would enable you to meet a situation of that character ?

Mr. Hunt. Yes, sir; I do.
Senator Watson. Do you favor this bill?
Mr. HUNT. Yes, sir.

Senator COUzens. Do you want to build some more homes in Rapid City right now?

Mr. Hunt. Not necessarily right now, but we would like to be able to when there is a demand for them. We are not overbuilt, how

ever.

Senator TOWNSEND. You favor the bill as to a permanent organization ?

Mr. Hunt. Yes, sir; certainly. The very nature of our loans would almost make it necessary for it to be somewhat permanent.

Senator CouZENS. Would you you subscribe to the capital stock if this were privately organized ?

Mr. Hunt. If it were privately organized ?
Senator COUZENS. Yes.
Mr. Hunt. Not as quickly as I would through this medium.
Senator COUZENS. I thought not.

Senator Watson. But you think the Government ought to be paid its money, do you not? Have it returned and paid back?

Mr. Hunt. Certainly.

Senator Watson. Do you think it ought to have any interest on the money?

Mr. Hunt. Under the conditions I would say no. Others have been financed without a return of interest.

Senator COUZENS. What others?

Mr. Hunt. That is my understanding, that there have been instances of that kind.

Senator TOWNSEND. By the Government?
Mr. HUNT. Yes.
Senator WATSON. Do you know what they are, Mr. Hunt?
Mr. Hunt. No; I am not in a position to state that.

Senator WATSON. You do not think, then, that interest ought to be paid on the Government's money before dividends are paid to the private properties?

Mr. HUNT. No; I do not. One reason for that would be, in my opinion, that if that should be done, and the Government is finally paid out, as the plan of the bill is, that the present stockholders in the mutual associations and they are the ones that would most take advantage of this—would be somewhat penalized as compared

with the stockholders that would be members after the Government was paid out. We will have used present holders' funds, in other words, to pay the indebtedness.

Senator Watson. How many building and loan associations are there in South Dakota altogether?

Mr. Hunt. I believe 24 at the present time.
Senator WATSON. What is their general condition?
Mr. Hunt. Generally good.
Senator Watson. It is good now?

Mr. Hunt. Yes, sir. With the exception that they do not have an opportunity to discount any mortgages, because you see many of them are not in a position to meet the reasonable community demands.

Senator WATSON. Are there many homes being built now in your country?

Mr. HUNT. Not very many:

Senator Watson. Do you think there would be more homes under the provisions of this bill?

Mr. Hunt. Not necessarily more, except as a reasonable demand. I do not think it would create an inflation at all.

Senator COCZENS. Do you believe in Federal aid for the unemployed ?

Mr. Hunt. Through what medium do you mean, Senator!

Senator COUZENS. Well, through some such medium as you are asking us now. You are asking us for Federal aid in this particular proposition. Do you believe in Federal aid for the unemployed!

Mr. Hunt. Not in the form of a dole. I would prefer it in the form of public improvement or road building. I am in favor of it under present conditions. Otherwise we have to feed them, anyway, in the counties, and so forth.

Senator Watson. Do you have any other questions, Senator Couzens?

Senator CODZENS. No.

Senator Watson. Do you have any further remarks you want to make, Mr. Hunt?

Mr. Hunt. No.

Senator WATSON. All right, that is all, Mr. Hunt. We will next hear Mr. C. A. Sterling.

STATEMENT OF C. A. STERLING, SECRETARY BUILDING AND

LOAN ASSOCIATION, TOPEKA, KANS.

Senator WATSON. Will you state your name?
Mr. STERLING. C. A. Sterling.
Senator Watson. Mr. Sterling, where do you live?
Mr. STERLING. Topeka, Kans.
Senator WATSON. What is your business?
Mr. STERLING. Building and loan.
Senator Watson. How long have you been in the business?
Mr. STERLING. Twelve years.

Senator Watson. What is your relation to the building and loan association !

Mr. STERLING. I am secretary.
Senator Watson. What is the size of your association ?

Mr. STERLING. Eleven and one-half million dollars.
Senator Watson. How old is it?
Mr. STERLING. Thirty-seven years old.

Senator Watson. What is its present financial condition with reference to mortgages on homes and defaults where they are not capable of paying their monthly payments ?

Mr. STERLING. Our survey on December 30 showed that about 27 per cent were delinquent three months or more.

Senator Watson. Twenty-seven per cent of all your borrowers were delinquent three months or more?

Mr. STERLING. Yes, sir.
Senator WATSON. When did that condition begin?
Mr. STERLING. About a year and a half ago.
Senator Watson. What was the cause of it, Mr. Sterling?

Mr. STERLING. I would say unemployment principally. We have large shops. The Santa Fe Railway has its general offices there, and large shops, and they began to lay their people off about that time.

Senator Watson. And those men had been borrowers in your association to build homes?

Mr. STERLING. Yes, sir.

Senator WATSON. Had there been any large corporations building many homes, or were these individual home builders?

Mr. STERLING. Principally individual homes. Very few investment companies building any homes, and none on a large scale.

Senator WATSON. You say 27 per cent?
Mr. STERLING. Yes, sir.

Senator WATSON. Twenty-seven per cent were behind in their payments three months or more?

Mr. STERLING. Yes, sir.
Senator WATSON. What do you do with them?

Mr. STERLING. We just do all sorts of things. We have to carry some of them along. We carry them just as long as we can. When our appraisal of the property shows that they can not be carried any longer there is only thing to do, and that is to take the property.

Senator WATSON. How many foreclosures have you had ?
Mr. STERLING. We had 34 in 1931.
Senator TOWNSEND. What per cent is that of your total ?

Mr. STERLING. Well, that is a very small per cent. We have about 9,000 loans.

Senator WATSON. Is that a higher per cent than usual?
Mr. STERLING. Yes, sir.

Senator WATSON. What is the average loan on a home in your association ?

Mr. STERLING. Well, they run close to $3,000, I think.

Senator COUZENS. Are there any second-mortgage loans in that 27 per cent ?

Mr. STERLING. None through our association.
Senator COUZENS. I am not asking that.

Mr. STERLING. Individuals have second mortgages on a great many of them.

Senator COUZENS. What percentage of the 27 per cent have a second mortgage on them?

Mr. STERLING. A very high per cent.
Senator COUZENS. Yes. This bill does not help them, does it?

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