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any particular funds at the moment, but they were not turning down any distress applications, that is, applications for mortgages where they were being called. They were not doing that. The other bank had about $60,000 to $70,000 to loan out on mortgages. In our State, you must remember that mortgages are legal investments, and it is unfair to take that opportunity away from estates that are in the banks, as well as sums of money that get into the courts, for that purpose.

Senator WATSON. Are there not a great many mortgages on real estate in your country-on all kinds of real property?

Mr. BARBER. Yes; $50,000,000.

Senator Watson. Is the interest, and all that sort of thing, promptly paid !

Mr. BARBER. I found, from talking with the representatives of the banks, that they are getting better payments the last two years than they have been getting previously. The representative of one bank told me that they had $100,000 paid off last year.

Senator WATSON. How do you account for that?

Mr. BARBER. I think it is a usual thing, that in times like the present, people reduce their liabilities and stop their foolish spending. They come to the point where they see danger ahead, and they think the end of the world is coming, and, of course, then they begin to pay up. They begin to economize. It is a natural condition, Senator. It is self-preservation. People to-day are figuring out that the end of the world is coming. We feel that as long as the sky is in the heaven, and the ground is down here, we are still safe for democracy.

Senator WATSON. If the end of the world is here, we do not need to economize.

Mr. BARBER. That is right. That is a figurative term, Senator, when I use it that way. You understand what I mean.

I want to say this to you. I note that you have introduced in the Senate a bill relating to short selling. To my mind, Senator, that is a move in the right direction.

Senator Watson. No. One resolution was introduced by Senator Capper, and another by Senator Walsh.

Mr. BARBER. I thought you had introduced that.

Senator Watson. I preached the gospel, and they are carrying it into effect.

Mr. BARBER. Let me say this to you, Senator. I believe the biggest thing that can be done in this country is to change the mechanics of the stock exchange. The normal wants of 125,000,000 people should be sufficient, of themselves

Senator Watson. Let us not go into that. We can not go into that.

Mr. BARBER. As long as I was here, and had the opportunity

Senator Watson. Building and loan associations do not have anything to do with that.

Mr. BARBER. Here is another thing I wanted to bring out. The passage of this act will injure the business of the mortgage broker, who makes a business of placing loans on mortgages. I think it is unfair to the man who has spent many years in the business. Half a dozen of them in Wilkes-Barre have been in that business 20 or 25 years. It is their living and I think it is unfair to do something to injure somebody else's business, in order to profit mine.

Senator WATSON. Are you interested in that kind of business?
Mr. BARBER. No; not particularly.
Senator Watson. Not particularly?
Mr. BARBER. I do not do any of it at all.

Senator WATSON. Are you a stockholder in either an insurancecompany, or a bank that has been lending money to these people?

Mr. BARBER. Not at this time. I have been.

Senator Watson. Would the passage of this bill interfere with your own personal private business in any way?

Mr. BARBER. Not at all. My interests are secondary. I have no interest at all, except to be helpful, as a result of the experience I have had in the business, and to the extent of my capacity.

Senator Watson. Very well, sir. We are much obliged to you.

Senator WATSON. Mr. Deppe. STATEMENT OF CHARLES H. DEPPE, VICE PRESIDENT FIFTH

THIRD UNION TRUST CO., CINCINNATI, OHIO Senator WATSON. What is your name? Mr. DEPPE. Charles H. Deppe. Senator WATSON. Where do you live? Mr. DEPPE. Cincinnati. Senator WATSON. What is your business? Mr. DEPPE. Vice president of the Fifth Third Union Trust Co.

Senator Watson. How long have you been connected with that association?

Mr. DEPPE. That is a bank.

Senator WATSON. How long have you been connected with that bank?

Mr. DEPPE. About 18 or 20 years.

Senator Watson. You have made an investigation of this bill; have you not? I have seen you here quite a bit. I suppose you have listened to all the testimony.

Mr. DEPPE. I have heard quite a good deal of the testimony, Senator.

Senator WATSON. All right. Give us your impression of this bill.

Mr. DEPPE. First, Senator, I want to call your attention to the fact that I think there is some misapprehension on the part of some people as to just what act is being considered by this committee. I think that arises from a letter sent out by the Department of Commerce under date of January 15, with a questionnaire. That questionnaire was sent along with the President's statement of November 13, 1931, in a letter from the Department of Commerce, and a return envelope, but no copy of the bill was inclosed. I have here a photostat of the letter, if you care to put it in the record. (The statement referred to is as follows:)

DEPARTMENT OF COMMERCE,

OFFICE OF THE SECRETARY,

Washington, January 15, 1932. Circular letter to presidents of banks, building and loan associations, and other Mr. Luce, a member of the House Committee on Banking and Currency, which will hold hearings on the measure, has asked this department to ascertain the probable effects of the system upon the operations of local mortgage lending institutions. Accordingly, a questionnaire is attached which I hope you may .fill in and return.

mortgage institutions) DEAR SIR: The inclosed material in regard to the proposed system of 12 Federal home loan discount banks is sent you at the request of Representative Robert Luce, who has introduced in Congress a bill designed to carry out the suggestions outlined by President Hoover in the attached statement.

A full response from local institutions that make mortgages on homes should throw much light on the probable usefulness of the proposed measure. Thanking you for your cooperation in this matter, I am, Very sincerely yours,

R. P. LAMONT, Secretary of Commerce.

DEPARTMENT OF COMMERCE,

Washington, D. C., January 15, 1932. When you have replied to the following questions, please mail to the Secretary of Commerce, Washington, D. C., in the attached addressed envelope, which requires no postage.

1. Would the facilities provided by the proposed home loan discount banks for borrowing on your home mortgages add desirable flexibility and security to the conduct of your institution?

2. Would operation of the discount banks increase the amount of credit now available for legitimate use in your community?

3. Is there a demonstrable need for actual home construction, either new houses or remodeling work, that could be undertaken in your community if credit facilities were widened at the present time?

If so, could you estimate the probable extent of such contemplated construction?

4. Would the facilities afforded by the proposed discount banks help to relieve the dangers of foreclosures on urban homes and farms?

5. If the proposed system had been in operation, to what extent do you think foreclosures, local bank failures, etc., could have been avoided during the past two years?

6. It would be helpful in interpreting the results of this questionnaire if you furnish the following information for your institution:

Number of home mortgages
Outstanding principal amount of mortgages now held
Total assets
7. General comments :

Type of institution (check one): (1) National bank —; (2) building and loan, savings and loan, homestead association, or cooperative bank, etc. - ; (3) mutual savings bank —; (4) stock savings bank —; (5) State bank (6) loan and trust company —; (7)

Signed
Title
Name of institution
Street
City
State

Now, the original bill, as I was informed since I have been on this investigation, was Senate bill 35, introduced by yourself, Senator.

Senator Watson. That was the original bill, but that has been since modified.

Mr. DEPPE. That is what I mean. Now, in conversation with people, some of them do not get the import of this bill 2959. I think that is the reason that you find some differences that have been noted, and I am fearful that some of the opinions that have been expressed by different persons are based upon the President's statement sent with that letter, rather than on the bill.

One of the leading examples is that of the Ohio Bankers Association. They had approved—I am not speaking for the Ohio Bankers Association, but I am bringing this up to prove the point I am making

Senator WATSON. Yes; I understand.

Mr. DEPPE. The Ohio Bankers Association had approved the general plan, as given in certain testimony, and wired the President and wired different Senators. When this bill 2959 was brought to their attention they withdrew from that position. Not, however, withdrawing from approving a bill in principle of this character, but objecting to this bill as worded now and which we are considering.

With that preliminary statement I think I can proceed with the few remarks I want to make.

Senator WATSON. Yes.

Mr. DEPPE. The objections to this bill from a banking standpoint have been noted. And in my remarks I might refer to that from time to time.

There are one or two things that I would like to bring especially to the attention of the committee. We have heard so much about foreclosures, and I think that in the running comment that has been made all of us do not get quite a clear conception of this subject of foreclosures.

Now I can speak advisedly and not from theory but from actual experience. Our bank has approximately $35,000,000 savings deposits. We have between $12,000,000 and $13,000,000 mortgages. A great percentage of those are preferentially home mortgages, so that in any statement that I make I am speaking as one from actual experience rather than in theory.

Senator Watson. Made direct by you to the home builders?
Mr. DEPPE. Yes.
Senator Watson. Not through the building and loan?

Mr. DEPPE. No. I am just going to define how we make those loans.

Senator WATSON. All right.

Mr. DEPPE. The majority of the testimony here seems to be on the principle or theory that building and loan associations are taking care of the home-building industry in America. We overlook entirely here—I do not think the figures have been presented—the mutual savings banks of the country. They have something over $5,800,000,000 of mortgages, mostly home mortgages. That is their business in the local communities. They are mutual concerns absolutely. The depositors get all the profit. There are no stockholders.

The other banks as reported on mortgages—it is pretty hard to bring to a hearing the exact data, not being uniformly reported as to the total amount of these mortgages—the last figures that I have seen show the mortgages in other banks—that is, trust companies, national banks, and others reported through the various banking departments in their annual statements-run, I think, $4,700,000,000. Probably that is the report a year ago or a little over.

That puts the known mortgages of banks somewhere between $10,000,000,000 and $11,000,000,000. A very good percentage of those are based on home loans.

With the insurance companies the reports show figures something over seven billion.

The building associations on the statements that they have filed here show a little less than eight billion. Although in the testimony most of them talk about nine billion. But that does not make any material difference for the point we are making.

Objection has been urged that the short-term loan is not to be considered. They are talking about long-term loans. I want to show first how we make our loans, and then, secondly, the foreclosures, so I am going to take actual figures from Hamilton County, Cincinnati, where I am located, taken right out of the sheriff's office, so there can not be any denial of the figures.

We make mortgages just like any other institution. There is no one special way to make a mortgage. We take the application direct from the borrower. We have our own appraisers. And some institutions are probably a little more liberal than others. But our banking law in Ohio prohibits us from lending more than 60 per cent of our appraisal.

Now, the building associations in our State have no limit as to the amount they can loan. The State law in regulating those associations does not prescribe any limits. The limits are made by the associations themselves through their by-laws. A very liberal law. The law has been in existence I don't know how many years. We will not go extensively into that. I am just giving you the facts as we are operating to-day.

Now we have those applications. And when our appraisers come in with the appraisement we do not loan over 60 per cent. We make mortgages three to five years. We would make a year mortgage. Now, that does not mean by making those terms that the mortgage is paid at that maturity. Every loan that we make is amortized. Î'here may be exceptions-very few. And we have established for years an amortization payment of 8 per cent a year; 2 per cent a quarter. That amortization is paid with the interest, which keeps an even keel.

I can confirm from actual experience some of the statements of the insurance represeentative. Last year the payments that we received—the compulsory payments and the voluntary payments they have a right in certain instances to pay more--were more than we loaned during the year. That has been the condition for several years. So our mortgages have not increased very much.

Now, with this tremendous amount of money that the banks have in this mortgage loan field, home owners, some home owners, at least—I do not want to use the word “competitor”-would rather deal with the bank than with the other agencies. Because our operation is simple. We charge them no commission. The only thing they pay is the fee of the title company, and the fee for registration and filing of the mortgage. We find that we get along very well. If a man has paid down his loan pretty well and is hard up, and can not pay his amortization, why, we do what any good business man would do, continue the loan. "If you have a debtor and he owes you $1,000 and he can only pay you $500, you do not take a sledge hammer and knock him down; you go along with him. That is what we are doing.

Senator Watson. How many foreclosures do you have?

Mr. DEPPE. That is just the point. I have the figures and I want to give them to you, right here. Now this statement is for 26 weeks, from August 7, 1931 to January 29, 1932. If I had had

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