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any more time, I would have gotten it for a year; I would have gone back two or three years; but I thought this would give you the drift of the operation.

The total foreclosures in Hamilton County during that period of 26 weeks, that is half a year, was $2,237,373.31.

Senator Watson. Do you know how many individual homes that would be? Are you talking how about homes, or of all foreclosures!

Mr. DEPPE. I have a certain point to make here.

Senator WATSON. There is no use of making a point unless I know what the point is. Does that mean all foreclosures in Hamilton County of every kind, every character!

Mr. DEPPE. Yes; 307 foreclosures. That was all there were in Hamilton County.

Now, 36 of those foreclosures were held by the banks as being named in the mortgage. But that does not mean that all those foreclosures are being brought by the first-mortgage holders. Someone has a minor lien, a second or a third mortgage, and forecloses, and we have to go through with it. Those 36 foreclosures amounted to $587,853. I will not give the cents.

The building associations had 243 foreclosures, aggregating $1,404,000.

Senator Watson. Do you know how many loans the building and loan associations had ?

Mr. DEPPE. No; I do not. I can not give you those figures. Mr. Cellarius and other men here can give them to you.

All the others were 28 in number, amounting to $245,000.
That made the total 307, amounting to $2,237,000.

Now, in 171 of the above foreclosures-of course I haven't the time to go in and show whether that is residence property or any other property; I am trying to give you the history as we have it.

Senator WATSON. Yes.

Mr. DEPPE. In 171 of the above foreclosures, 221 minor liens were involved, in the amount of $518,000. So back of the $2.237,000 first mortgages there was $518,000 of secondary liens, or third liens or fourth.

Now, as to the new mortgages filed in Hamilton County in the last half of 1931. You have heard a good deal said here about no money for mortgages. In the last half of 1931 there were 3,556 new mortgages recorded in Hamilton County, Ohio.

The banks recorded 456, of an aggregate of $4,777,000.

The building associations recorded 2,860 mortgages, aggregating $13.827.000.

Insurance companies recorded 240 mortgages, aggregating $3,491,000.

That makes a total of $22,000,000 of recorded mortgages the last six months of 1931, in Hamilton County, Ohio.

Senator Watson. How did that compare with the previous six months!

Mr. DEPPE. I did not get that, Senator.
Senator WATSON. All right.

Mr. DEPPE. I would be glad to get those figures and send them in, but when you are called suddenly you do not have time to get everything. But it shows the trend.

Senator WATSON. Yes.

gages now?

Mr. DEPPE. Now, there are not any foreclosures except when a man gets in bad and can not pay. Just exactly like a lot of commercial concerns have gone out of business through failures. Too little capital. Now, when a home owner has too little capital he must stop. You can not run along. It is good for the economic situation to have some one that has the income that can take up and pay that mortgage. So that with a bill of this character, whether it is this bill or another, no matter how perfect you get the bill, you can never stop foreclosures. The people themselves can stop that. It is due to overlending. And right there I want to say that our banking law, as I stated before, restricts us to 60 per cent of the appraisal. Under our experience we feel that is about right.

Senator Watson. Well, it would be due to more causes than that, would it not? Suppose all the people that borrow lose their jobs ?

Mr. DEPPE. I am going to touch on another phase of that in just a moment. Now, at the present time we feel that on account of the depression we should sometimes drop to 50 per cent of the appraisal. We will make an exception and take new mortgages at 60 per cent, but we are taking the situation as we find it. And sometimes now, as stated, we are not lending over 50 per cent. So when you get up to 75 or 80 per cent mortgages I am just fearful that we will have trouble,

Senator TOWNSEND. Have you plenty of funds to loan on mort

Mr. DEPPE. We have restricted credit right now for commercial loans, and all loans are restricted. The home-loan people or the mortgage people are not the only ones that are restricted in credit. There is a restricted credit all over the country commercially. It is not only the home-loan people or the mortgage people; the railroads are in it, and others are operating in the red. You can not find an industry that can go out and get all the money they want at this time with the depressed condition. Now that is the situation, the general condition in the country.

Senator WATSON. Does a trust company in Ohio do a general banking business?

Mr. DEPPE. Yes.
Senator WATSON. Just the same as a bank?

Mr. DEPPE. Yes. Now, I have not included in this table I gave you on mortgages the amounts held in the trust departments. This gentleman from Pennsylvania touched on that. Those are figures that you can not get publicly, because the trust departments do not publish the holdings there.

Up to this time in Ohio we have not taken very many mortgages in the trust department on account of the taxation laws. That has been changed now, and with our new taxation system there probably will be a great many mortgages go in there.

Now, about the loans. We have these applications. There are applications, many of them. And some are turned down. Many are turned down even in normal times. Why? In normal times the only time we ever lose a mortgage when it is presented to us is wben a man wants to borrow more money than we can lend. Now, where they get it I do not know.

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I have found this in my commercial experience in the last six months or a year-well, say in the last two years, but increasing in the last six months. The applications for home loans are not always based upon a desire to buy a home. It is the application for a loan on a house that is already owned. They have suffered losses in the stock market, they have had business reverses, they have lost positions, and their dividends have been decreased—that is, on investments—although they are not speculators. They are depending on their dividends to live, their incomes have decreased, some bonds are in default, stocks are passing dividends, they haven't anything to live on, and they are borrowing money, or making application to borrow money on the basis of financing themselves; and they offer their homes on first mortgages.

So I think the point that has been brought up here, that there are so many of these applications that are unsatisfied, is not based upon purely the mortgage-loan feature. It is based upon commercial needs, and they are so interrelated that I think you must take that into consideration.

Now, the banks that I speak of, the mutual banks, operate mostly in the East. We have a few in Ohio. There are some in California, strictly mutual banks; but the commercial banks and the national banks now have authority, and are taking a large amount of savings. State banks have them. Now, where you find mortgage loans in banks you find savings departments. And if the building association can take money on savings and loan it on mortgages, then mutual savings banks can take savings money and loan it on mortgages. What you call an organized bank with a savings department—why can they not loan their money—the savings deposits on mortgages just the same as building associations.

We have $35,000,000 savings, and we run about $12,000,000 or $13,000,000 mortgages. You see the percentage. We do not loan all of our savings in the one thing. It would not be good banking. In other words, we could not afford to put all our money into mortgage loans.

Now, take the big mutual savings banks in New York. The law there permits them to invest 60 per cent of their savings in mortgages. The other part is a backlog with which they buy bonds and different investments, Government bonds, and things of that kind.

Senator BULKLEY. Would you say that all banks are as careful and conservative as you have been about that proportion?

Mr. DEPPE. They have to be, Senator, to a degree, unless it is the fault of the bank examiners. Now, there is the law. Here is the part that we do not understand and do not like in Ohio. And I say this in the most friendly spirit. Here is the State Legislature of Ohio that passed a banking act some years back and restricted an organized bank—said what their duties were and what their reserves should be, similar to the national bank act to a degree. The same members of the legislature passed a building association act with no restrictions on them, and tell the public that they can do prac. tically anything they want to, but we are restricted to 60 per cent on appraisals. We think that is a bad law. We think that where you are going to have banking operations that you ought to have the kame restrictions as banks.

Senator TOWNSEND. Are your building and loan associations under the supervision of the State banking department?

Mr. DEPPE. No. They have their own supervision; they are under the supervision of their

own department. Senator TOWNSEND. In some States they are supervised under the same department.

Mr. DEPPE. Yes; but they do not do a banking business, they do not take deposits like in Ohio.

I thought it would be interesting to the committee to show you a clipping from one of our local papers. There has been so much said about banks and bankers that I thought it would be interesting to show you this. The building associations say that they are not bankers. Here is this newspaper clipping, with photographs, and this is the heading : “ Bankers Discuss Home Loan Bíll With Hoover.” And then down below the picture, at the bottom, it says:

A group of bankers recently called on President Hoover to urge enactment of legislation he has proposed for a home loan bank system to aid home owners.

And the pictures of four leading members of the building association league are published. Now, I have a fuss with that kind of publication. It is an Associated Press dispatch, and gives the wrong impression.

Now, that is just supplementary to what the gentleman said to you yesterday. This problem in Ohio of doing a banking business withcut banking restrictions is a thing that we think ought to be corrected.

Senator WATSON. Well, we can not correct that.
Mr. DEPPE. No, Senator. I understand that. But wait a min-

That is the reason that we do not want the matter enlarged.
Senator WATSON. We admit that it is a foolish law.
Mr. DEPPE. Well, I just bring that in.
Senator WATSON. Yes.

Mr. DEPPE. But the point in this bill here of creating a banking operation, I think, is a situation we ought to touch upon.

Senator Watson. If we pass this bill, would it interfere with your business, your banking business?

Mr. DEPPE. In the shape it is, yes; it would be very detrimental to the banks.

Senator WATSON. It would ?
Mr. DEPPE. Yes; seriously.

Senator Watson. What effect would it have on building and loan associations ?

Mr. DEPPE. This bill? Senator WATSON. Yes. Mr. DEPPE. It would give them a self-contained banking systein. You might as well put up a banking system for the railroads, and give a banking system for the lumber dealers-practically any class of business. It is entirely different from farm loans.

Senator BULKLEY. I wish you would make more clear how this would operate detrimentally to the banks.

Mr. DEPPE. Well, this bill, as I read it, starts out and creates a Federal bank. Gives it unusual powers, which you have to do, as you said yesterday, to make it legal, make it an instrumentality of the Government—you have given them the right to issue tax-exempt

bonds, which come out in the market and compete with all other securities. The Government borrows the money for a special pur: pose. Now, on top of that you give them $150,000,000 at the initial organization, without interest. I am speaking now of this bill. That at 4 per cent would be $6,000,000; at 5 per cent it would be seven and one-half million dollars each year.

In addition you give them banking functions. You put them in just exactly the same position as the national banks and the State banks, having correspondent banks sending in their deposits-only you denominate it here that it is a deposit of the member. Now, you gentlemen can not tell me or I can not tell you how many members there will be. There may be thousands of members in this home-loan bank.

Senator BULKLEY. Well, your bank could be a member if it wanted to, could it not?

Mr. DEPPE. Yes; I know, but you put a bank in this position, in this bill, and that is a feature that has not been discussed. Everyone that comes in the home loan bank and borrows money has to publish it in their statements. Now bank statements are called for periodically. Say we have $12,000,000 mortgages. We would not want to say constantly, “ $3,000,000 or $4,000,000 owing the Federal home-loan bank,” would you?

Senator BULKLEY. Well, you know better than I do about that. What I am asking you is: Is there some reason why the banks will not get any benefit out of this bill?

Mr. DEPPE. Well, I was going to touch on that in my final statement, Senator. I just wanted to run along and make a brief survey just as fast as I could, and then come back and tell you what is in our mind. That is my individual opinion about that.

I have tried to show you that foreclosures are not a factor here. That legislation can not stop foreclosures. The borrowers and the lenders themselves can stop those foreclosures.

I have tried to show you that the mortgage made by a bank, taking savings deposits, is not a bit different than other mortgage loans. And on the three or five year loans that we make, at the end of those periods, the party does not pay them. There is not one loan out of a hundred paid at maturity. We continue it. Reappraise it. As long as the fellow pays we go along. I suppose we have some mortgages on the books 10 years old—I do not know12 years old. As long as the loan is kept amortized and coming down we do not bother with it.

There were some statements made here yesterday about the inability to get money. On account of the banks discouraging the home loans in 1929. When banks were loaning money on call in New York at 10 per cent. Well, we must go back over two years ago. There has been no 10 per cent rate on call money in New York since then. And at that time there was no scarcity of money for building associations, there was no scarcity of mortgage money, there was no scarcity of money for any operations. The scarcity, if any, and the curtailment has been just recently, as this depression has grown. And I think it is a good thing: You could not keep on going as things were at the previous period.

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