and show you thousands of homes where American white folks should not live. That is, of course, the altruistic side.

Senator Couzens, you have asked for a prophecy as to when this depression will end. I am not a prophet or the son of a prophet, but I will tell you how long it will last. I can not prove it, but I think events will prove it. It will last until banks and others are no longer obliged to say, "No, Mr. So and So, we can loan you no money on real estate." It will last that long.

Senator COUZENS. Vacant or improved?

Mr. EMERY. Improved. And now they say, "No; we are not loaning any money on real estate."

Senator MORRISON. Well, Mr. Emery, the purpose of building or buying a home are not the only purposes for which people mortgage their homes.

Mr. EMERY. Absolutely not.

Senator MORRISON. Various vicissitudes of life necessitate home owners, or they think they are necessitated, to mortgage their homes. Mr. EMERY. Yes, sir.

Senator MORRISON. And, generally speaking, under present conditions, because of the lack of any discount resort to which they can go with these mortgages, every mortgaged home is more imperiled than it would be without this bill, is it not?

Mr. EMERY. Absolutely. The depreciation in the value of the property, or the sale price, has been caused more, not by the loss of wages, but by the inability to buy the homes themselves, and the things that go into the home; and that is what has made the financial depreciation in the value of property.

Senator COUZENS. And the inability to borrow money.

Mr. EMERY. And the inability to borrow money. I know of nothing more pathetic, Senator, than a business man who has kept his home in abeyance as a thing on which he would depend in an hour of need. He has done that under the circumstances, but he is now willing to borrow on his home to carry him through. I know three of them where $3,000 would carry them over, and they can not get the $3,000.

Senator WATSON. Suppose we run along just as we are now and not pass this law, or one similar in character, what will be the effect. on business?

Mr. EMERY. We are going to have these recurring eras of depression and eras of inflation, and those eras are what causes inflation when the time comes to build. There is going to be a building era, for the reason that building has slackened. Improvements on property have slackened. People are going along with an old furnace that they, if conditions were otherwise, would throw out and put in a new one, and other conditions are the same, other changes as important as building.

Senator MORRISON. A great many homes are now being sold, more than under normal conditions and in normal times.

Mr. EMERY. Yes, sir.

Senator MORRISON. A man who has saved up could buy advantageously at this time, cheaply, but is there not fear in the minds of people in carrying real estate mortgages at this time?

Mr. EMERY. There is fear in their minds, and also on the part of the vendor that he may not be able to carry through the deal advantageously.

Senator MORRISON. There is fear on both sides.

Mr. EMERY. There is fear on both sides, absolutely.

Senator MORRISON. And there is a tendency to diminish the amount paid for a home that is sold now.

Mr. EMERY. Yes; absolutely.

Senator WATSON. I am very sorry to disturb you in your statement, but we are obliged to go to the Senate now. We are much obliged to you for your statement.

The committee will rise until 2:30 o'clock this afternoon.

(Whereupon, at 12 o'clock noon, the committee stood in recess until 2:30 o'clock p. m.)

AFTERNOON SESSION

The committee reconvened at 2.30 o'clock p. m., Tuesday, February 16, 1932, at the expiration of the noon recess.

Senator WATSON. The committee will be in order. We will first call Mr. Mylander.

STATEMENT OF CHARLES H. MYLANDER, VICE PRESIDENT FIRST NATIONAL BANK, CINCINNATI, OHIO, REPRESENTING THE COUNCIL OF ADMINISTRATION OF THE OHIO BANKERS' ASSOCIATION

Mr. MYLANDER. My name is Charles H. Mylander. I am a vice president of the First National Bank of Cincinnati, I am not here representing that bank. I am here as a representative specially appointed by the council of administration of the Ohio Bankers' Association to present the views of that association on this proposed legislation.

I want first to supplement just a trifle, if I may, one of the things pointed out by Mr. Monks this morning, namely, that we feel there is an objection to calling the institution proposed to be set up by this bill a " Federal Home Loan Bank."

We have in Ohio-and the same condition exists in a number of the other States-quite a misapprehension upon the part of a large number of citizens as to the difference in functions and in organization and in rights of various types of financial institutions. The result is that there is great confusion, for example, between the rights of the depositor in a bank and the rights of the same depositor in a building and loan association. It is for that reason that we feel that the creation of any organization which will give to the building and loan association the right to use the wordbank" in its advertising or in its signs or anything of that kind will increase that confusion. And we feel that a different nomenclature might be found for these organizations.

Senator MORRISON. You do not mean that you construe anything in this bill to give the building and loan associations the right to advertise as banks, do you?

Mr. MYLANDER. Senator, let me say this: Every bank which is a member of the Federal reserve system is very proud of that member

ship. It puts a sign on its windows or on its front door "Member of the Federal Reserve System." It is only to be supposed that the building and loan associations which become members of this institution would also be proud of that membership, and very rightfully so, and they would immediately advertise "Member of the Federal Home Loan Bank."

Now, there is nothing in the law-there probably would be nothing in the regulations of the board-which would limit the size of the letters in which the word "bank" should be printed. Consequently that confusion which has existed between banks and building and loan associations would be increased. And I believe the experiences of the last few months have demonstrated that the less confusion there is in the minds of the general public about the functions of and about.the rights of people with regard to all kinds of financial institutions, the better off we are going to be.

Now, that leads me very naturally into what I am here for, which is, to protest against the discrimination in this bill against certain types of financial institutions and the apparent favoritism shown by this measure to other types of financial institutions.

This bill allows building and loan associations, no matter what their character, and no matter what their method of operation, to become members of the Federal home loan system, while the same privilege is not extended to all types of banking institutions, unless they can pass through certain examinations.

Mr. Devine, the secretary of the Ohio Building & Loan Association League, and who, by the way, is a very good personal friend of mine-we have been on opposite sides of committee tables in Ohio for a good many years-made some statements to the committee a few weeks ago that I want to challenge. Mr. Devine said first that " our depositors were making their deposits without knowing what they are doing." I think Mr. Devine was right in that statement.

A little further along he said that the impression was abroad with a lot of people that all they had to do was to walk in and get their money just the same as they do in a bank.

Mr. Devine left the impression with the committee, I think, that that was an inadvertent impression gained by the people of the State of Ohio. But I think I can show by documentary evidence, if you will, that there was a deliberate impression, fostered by the building and loan associations in our State, that they were in the demand deposit business. I have a large number of advertisements here clipped from newspapers in Ohio at various times during the last few years.

Senator WATSON. Have the building and loan associations in your State been doing a banking business?

Mr. MYLANDER. They have been doing a banking business, Senator. with one solitary exception, and that is they have not accepted checking accounts.

Let me say-possibly I am ahead of myself a little that Ohio is the only State in the Union, Senator, where the building and loan association, organized and chartered as a building and loan association, may accept deposits as such, and where the person entrusting his money to the association becomes a creditor of the association and not a shareholder therein. That is our problem in Ohio. It is not anything that can be corrected by Federal legislation. It was started

way back in 1867, at a time when it did not look like it was going to be very serious.

Senator WATSON. Have you ever tried to overcome that by amendment?

Mr. MYLANDER. No; because, Senator, I think I should say that the development of the building and loan associations in Ohio, the large development of them, the development which has hurt industry and business in Ohio, has come during the last 10 to 15 years onlyor since the war.

Senator WATSON. You say a development which has hurt business? Mr. MYLANDER. I do, sir.

Senator WATSON. In what way?

Mr. MYLANDER. In that it has diverted a larger amount of money into buildings, into real estate operations, than it should have. In other words, we have had in Ohio this situation. The large city building and loan associations located in Columbus, in Dayton, in Youngstown, in Akron, and so forth, have reached out into the rural communities and into our smaller cities in Ohio-you know we have a large number of small manufacturing cities-and have advertised 6 per cent on deposits, 5 per cent on deposits, "put your money where it is safe in a building and loan association where you can get it on demand," " where it is always available," and all that sort of thing, and have pulled money in from the smaller communities to those institutions which, because they were large, looked like they were perfectly fine, safe places in which to put your money, and therefore have diverted those funds from the trade of those smaller communities.

Senator MORRISON. Where have the depositors suffered most in this depression which we have had? Have they lost most with the building and loan associations or with the banks?

Mr. MYLANDER. That is a very fair question, Senator. I hear a lot of chuckles behind me. They are wondering how I am going to answer that. I don't know where they have lost most. And no one can tell; the reason being that the building and loan associations which advertised that they could accept deposits which were payable on demand, now have taken their notice, as they have in other States, and they are going through an internal liquidation in which they are still open for business.

Senator MORRISON. But scarcely any of them have been found insolvent yet, up to date?

Mr. MYLANDER. Some of them have. But the point I am trying to make, Senator, is this, that they may be insolvent and still continue in business.

Senator MORRISON. Not up to date?

Mr. MYLANDER. Well, we have one of the very largest ones in our State that has just been declared insolvent by our inspecting department and the attorney general requested to ask for a receiver. Several others are in receivership now.

But the point I am trying to make is that in a bank with demand deposits, the minute that bank can not meet the demand it is closed. It goes into forced liquidation. Its assets are sold for whatever they will bring.

Here, however, is another institution right alongside that has been telling the people that it was a demand deposit institution, but when

it gets into trouble and the people want to get their money they are told, "No, you can not have it. We will take our time and liquidate our assets in an orderly manner."

So that I am perfectly willing to admit that past history has shown that there have probably been smaller losses to depositors or shareholders in building and loan associations than there have been in banks because of the fact, Senator, that there isn't any necessity for the forced liquidation of assets in the building and loan association that there is in the case of the bank.

Now, I am perfectly willing to say, and I think any banker in the State of Ohio will say, that the building and loan association which operates on the stock plan and which does not, as a matter of fact, pay its depositors on demand, and which says to those depositors that "You can not get your money on demand"-I am willing to say that there is no criticism of the operation of that kind of a building and loan association in Ohio. We think they have a fine place in the community, and we are glad to see them go along and prosper. But these other fellows, who have been taking demand deposits and telling the people that they will pay on demand, have been hurting both the building and loan industry and the banking industry in the State of Ohio.

Senator MORRISON. Well, now, without regard to reasons, it is a fact, is it not, that the people of Ohio have not, up to now, lost very largely in the deposits made in the building and loan associations, and have lost very heavily in deposits made in the banks?

Mr. MYLANDER. No; I would not say that. I would not admit that, because I do not believe that the depositors in the banks of Ohio have lost a great deal of money in bank failures. They have been inconvenienced; yes. Their deposits have been tied up over long periods. But the records of our State bank liquidation bureau and the records of the comptroller's office disclose-I have forgotten the exact percentages, but it is some place up between 80 to 90 per centam I not right in that, Senator?

Senator WATSON. Yes.

Mr. MYLANDER. Between 80 and 90 per cent of the bank depositors get their money. When a bank closes it is tough; yes. You can not get your money then. But the question of whether or not you lose it is another question entirely. You lose your interest on it, or the use of it, of course, but you are losing the interest and you are losing the use of the money that you have in the building and loan associations in Ohio to-day despite the fact that they are not closed and they are not in liquidation.

Senator WATSON. What is the sum of the demand deposits in the building and loan associations of Ohio; have you any idea?

Mr. MYLANDER. The building and loan associations of Ohio on December 31-I think these are 1930 figures; the 1931 figures are not available--the building and loan associations of Ohio on December 31, 1930, had deposits and accrued interest of $508,000,000. Senator WATSON. Demand deposits in building and loan associations?

Mr. MYLANDER. Those are deposits in building and loan assocciations, Senator. They are not demand deposits. They never were. But the building and loan associations continuously have advertised-not all of them, but the larger ones have advertised that those