Mr. CLARK. This next telegram is from Raleigh, N. C. [Reading:] THOMAS F. CLARK, Washington, D. C. RALEIGH, February 11, 1932. Answering in our opinion there is already an oversupply of buildings of practically all kinds not only in this city but throughout North Carolina. D. A. HOUSTON, President Carolina Mortgage Co. Here is one from Detroit, Mich., as follows (reading): THOMAS F. CLARK, Chairman Legislative Committee DETROIT, MICH., February 13, 1932. Mortgage Bankers Association of America, Washington, D. C. We are advised by Detroit real estate board January vacancy report shows single residences, 7,000. Two, three, and four family flats 15,000; apartments above four family, 12,000. In view of this oversupply of housing facilities we are opposed to the home loan bank bill. F. J. BEYER, Vice President Bank of Detroit, Now Guardian National Bank of Commerce of Detroit. One from Lima, Ohio. [Reading:] THOMAS F. CLARK, LIMA, OHIO, February 11, 1932. Chairman Legislative Committee Mortgage Bankers Association, Washington, D. O. Your telegram 10th. There is a profound oversupply of homes in this city. Excessively low rent and no demand for purchase of residential property. Would be opposed to any legislation promoting building of additional homes in this city. H. J. FAST, Executive Vice President the Lima First American Trust Co. We are taking large and small, as I picked these out geographically. Here is one from New Haven, Conn. [reading]: THOMAS F. CLARK, Washington, D. C. NEW HAVEN, CONN., February 14, 1932. Re proposed home loan bank bill, there is a present oversupply of homes in New Haven and throughout most of Connecticut. Already large numbers of properties are offered for far less than present replacement cost. Our 36 years in mortgage investment business and sale of over $100,000,000 of mortgages given us knowledge of situation and we feel that a stimulation of new building in this section would only be a temporary benefit to a certain few and a grave danger in depreciating the mortgage investments of thousands of investors and many banks: further depreciation of values by added oversupply of new properties will tend to drive all money out of mortgage field. LOMAS & NETTLETON Co. This is the largest mortgage company in New England, and it covers most of Connecticut. We are trying to compete with them. They are a substantial company and operate privately in Stamford, Conn. The next telegram is from Boston, Mass. [Reading:] THOMAS F. CLARK, BOSTON, MASS., February 11, 1932. Chairman Legislative Committee, Washington, D. C. There is an oversupply of all types of buildings in Boston and generally throughout Massachusetts. Any artificial stimulation of new building at this time would react to the disadvantage of present property owners. Present vacant buildings may be purchased at less than cost because of overbuilt conditions. PRESTON S. COTTEN. That is the Lawyers' Title Co. in Boston, a large title company. The next telegram is from San Francisco. [Reading:] THOMAS S. CLARK, Washington, D. C. SAN FRANCISCO, CALIF., February 11, 1932. Oakland and East Bay cities have vacancy about 6 per cent but fast increasing. San Francisco, largely an apartment-house city, has more than normal vacancy, steadily increasing. Residence vacancies slightly above normal but increasing. Same situation in Peninsula cities, Burlingame, San Jose. Large vacancy in Stockton. A telegram from Butler, Mo. [Reading:] THOMAS S. CLARK, Chairman Legislative Committee, H. A. WILLOUGHBY. BUTLER, Mo., February 11, 1932. Mortgage Bankers Association of America, Washington, D. C. We have a good number of vacant residences in our little city of 4,000 population. A number of people moving to farms throughout our lending field, thereby creating vacant properties in many towns of like character in Missouri. There is sufficient home money for all needs if any homes are built. It is the general opinion that the number of vacant properties in towns in Missouri will increase under present conditions. Positively no need for prospective home loan bank bill. We are interested in having general overhead decreased including Government expenditures. WALTON BANK & TRUST Co. I would like to submit also a telegram from the Bridgeport Land & Title Co., an old company or organization doing a land and title business at Bridgeport, Conn. [Reading:] THOMAS F. CLARK, Washington, D. C. BRIDGEPORT, CONN., February 11, 1932. There is no shortage of homes in this locality. In my opinion it would be most unfortunate for our home owners and mortgagees if the proposed home loan bank bill became a law as it would seriously impair the value of our improved real estate. Have already wired Senator Bingham and Representative Tierney to this effect. THE BRIDGEPORT LAND & TITLE Co., This company loans in Fairfield County, which is everything from New York up, including Stamford. The next telegram is from H. B. Morehouse, in Stamford, who represents several of the mortgage companies. It is just one word, "Oversupply." That is a very substantial organization. A telegram from Greenwich, Conn. [Reading:] THOMAS F. CLARK, GREENWICH, CONN., February 13, 1932. Chairman of legislative committee Washington, D. C. Consider we have normal supply of homes. OGDEN BIGELOW, First National Bank. I would like to submit, Mr. Chairman, for the record, the balance of the telegrams. Senator WATSON. No; we would not want all of those. Mr. CLARK. All right. Senator WATSON. Yes. those, if you want them to Then this digest. But the Senators would not read all of read the record. Mr. CLARK. May I also put in, as a graphic chart, this chart which I have here? Senator WATSON. That could not be printed in the record. Senator WATSON. You can leave that map with us, but the Joint Committee on Printing would not permit us to print it in the record. Mr. CLARK. All right. May I also, at this time, with your permission, put into the record. an editorial from the Hartford Courant a week ago Sunday. This is by the editor. I want to read the first five lines. [Reading:] THOSE PROPOSED HOME LOAN BANKS We have received under Washington date line a long telegram from one of the parties at interest urging us to open wide our columns for news propaganda and to give warm editorial support to the House and Senate bills looking to the establishment of 12 Federal home loan banks. Senator WATSON. What do they say? Mr. CLARK. Shall I read it? Senator WATSON. Yes; see what they say. Mr. CLARK. It is very short. [Continuing reading :] The Associated Press and our own Washington correspondent can be depended on to keep our readers informed as to the actual developments in this proposed legislation, which is as far as our news columns can properly go. As for giving our indorsement to these home loan discount banks, we have already indicated our opposition to this part of the President's six point program for the relief of the financial situation. Since Mr. Hoover called his home building and home ownership conference two months ago the Reconstruction Finance Corporation act has been passed, and those institutions that have been accustomed to help finance home building projects may shortly be expected to be in a position to resume their usual functions in this regard. When banks no longer feel required to maintain an abnormal state of liquidity and when insurance companies no longer have to pay out most of their premium receipts in loans to policyholders, any stringency now existing with respect to proper mortgage loans will be relieved. Present agencies, including cooperative banks and building and loan associations, are able to meet the legitimate and proper needs of those who find themselves in a position to build a home. Additional credit facilities are not required for the accommodation of those who have any real business to become home owners in advance of the proper time. The great problem in most communities is to find occupants for homes already built. No housing shortage exists. If mortgages on homes are being foreclosed it is because those holding title to the property have been unable to meet their obligations, and this 98195-32-PT 3- 6 same situation presumably would arise if the mortgages were held by banks especially created to deal in such mortgages. Many persons during the recent lush times were encouraged to acquire homes actually too expensive for them. Of such persons a considerable number very likely would have found themselves in difficulties even if prosperity had continued to run on. The old New England idea that one ought to have some capital of his own to put into a home before borrowing the remaining amount necessary to make the purchase is still basically sound. Too easy credit and a too liberal use of the installment plan are in a large measure responsible for the difficulties in which not a few people find themselves. If the initial capital for these proposed home loan banks is not obtained by private subscription, then Mr. Hoover thinks it should be subscribed by the Federal Government. This would be putting the Government still further into private business, and it is in deep enough now, conscience knows. Having created two billions of new credit through the Reconstruction Finance Corporation, that seems about as far as we can prudently go. It may be true in some States, notably in Ohio and Colorado, that agencies which have overencouraged home building find themselves pretty sick, but that hardly affords a sufficient excuse to set up a new and elaborate banking system, backed by Government credit, in every Federal Reserve District. These, then, are some of the reasons why we can see no occasion to comply with the request to get squarely behind the House and Senate bills to establish Federal home loan banks. Certainly not until local and State agenices have proved themselves utterly inadequate to meet the bona fide requirements of the situation should the Federal Government embark on this venture. It has enough on its hands without taking on anything more. Senator WATSON. As I understand it, the two branches of that paper are in a joint debate with each other. Mr. CLARK. This is the editor. Senator WATSON. Do you want to put anything else in? Mr. CLARK. I just want to make one observation with regard to my connection with a mortgage company; and also what Mr. Crandall said about foreclosures. Mr. Crandall failed to say how many of those were first mortgages, how many were third mortgages, or how many were collateral loans, or how many were mechanics liens. It is safe to say that a very small portion-a very small portion were first mortgage loans. We have no foreclosures in Stamford at the present time, and we have had very few in the period of eight years. Senator WATSON. Do you live in Stamford? Mr. CLARK. I live in New Haven. I operate all over the State. I thank you very much for the opportunity of presenting these telegrams. Senator WATSON. Now, I will come back up here at 2.30, and I may get another member of the committee to come, and I may not; it is owing to whether we pass this bill. And if the bill is in such condition that I shall not want to leave down there, I will tell you about it, and we will adjourn until to-morrow. But I am going to stay here until all of you have an opportunity to be heard. (Whereupon, at 12 o'clock noon, the committee stood on recess until 2.30 o'clock p. m.) AFTERNOON SESSION The hearing was resumed at 2.30 o'clock p. m., pursuant to the noon recess. Senator WATSON. Mr. Haase, come around here and we will hear what you have to say about this. STATEMENT OF CHARLES J. HAASE, MEMPHIS, TENN., SECRETARY OF THE HOME BUILDING LOAN ASSOCIATION, AND PRESIDENT OF MARX & BENSDORF, INC., INVESTMENT BANKERS Senator WATSON. Your home is in Memphis? Mr. HAASE. Yes, sir. Senator WATSON. What is your business, Mr. Haase? Mr. HAASE. Secretary of the Home Building and Loan Association and president of Marx & Bensdorf, Inc. Senator WATSON. What is their business? Mr. HAASE. Investment banking; in reality the handling of real estate mortgages. Senator WATSON. How long have you been in this business? Senator WATSON. Have you right now an extensive business? Mr. HAASE. An aggregate volume of mortgages handled through the office of approximately $15,000,000, of which approximately $1,000,000 is handled through the building loan association and about $3,500,000 is handled as correspondents for one of the larger lifeinsurance companies, and the remainder in direct first-mortgage bonds sold to local investors. Senator WATSON. How old is your building loan association? Senator WATSON. That is an old-timer. How many members have you at the present time? How many loans? I call them members. Mr. HAASE. About 550 loans. Senator WATSON. What is the present condition of those loans? Mr. HAASE. In very excellent condition, comparatively. Until the present depression our association never had a foreclosure. Since the depression we have probably foreclosed in the neighborhood of 25 pieces of property. We own at the present time in real estate about 212 per cent of the association's assets and about 32 per cent in notes arising from the sale of previously foreclosed property. Senator WATSON. Have you other real-estate loans besides homes? Mr. HAASE. Possibly 5 to 10 per cent of the investments. Not over 5 per cent, probably, are in anything but homes. Senator WATSON. You may make any statement about this bill you care to make, Mr. Haase.. Mr. HAASE. Senator, I have been impressed with the fact that our office being equipped for making loans on homes in three different ways, that is: 1. Through the building and loan association; 2, direct investment of local funds; 3, and as a representative of one of the larger life-insurance companies-affords a rather comprehensive viewpoint of the home-loan situation within the limited area in which. the office operates. I have also been impressed with the fact that the bill under consideration is a particularly comprehensive one as viewed by someone who has had this type of experience. I am going to take the liberty to analyze the origination of money that is loaned on homes as reflected in a territory similar to that of Memphis. I think you may divide the money that is loaned on homes into what I classify as two types, one national and the other local. The moneys of the insurance companies and the larger investment companies might be classified as national money in its distribution with respect to the country as a whole, while the money |