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Senator MORRISON. Do you know anything about how much interest they get out of the people of their State, concerns like that? Mr. LAROQUE. Senator, I really could not tell you, sir. It is an enormous amount of money.

Senator MORRISON. I can, when the time comes.

Mr. LAROQUE. I really do not know. It is an enormous amount of money, I think you will agree.

Senator MORRISON. You know that a lot of our State is plastered over with mortgages so amortized that the people are paying 12 and 14 per cent.

Mr. LAROQUE. I thought you meant in volume. I didn't know you meant the interest.

Senator MORRISON. I mean that.

Mr. LAROQUE. Yes; 12, 14, and 15 per cent.

Senator MORRISON. And one of them has been just put in the hands of a receiver down there, and all that sort of thing, and it comes out that they plastered it all over the State with 12 and 14 per cent mortgages.

Mr. LAROQUE. No doubt about it.

I want to say that there has been no building and loan failure in North Carolina in more than four and a half years, and we do not expect to have any.

Senator WATSON. Is there anything else you want to say?

Mr. LAROQUE. I do not know of anything, except to express my appreciation for the courtesy extended me to-day.

Senator WATSON. We are delighted to have you. Thank you. Senator Townsend has asked to have the following letters inserted in the record.

Hon. JOHN G. TOWNSEND,

Senate, Washington, D. C.

JOSEPH BANCROFT & SONS Co., Wilmington, Del., February 5, 1932.

MY DEAR SENATOR: My attention has been called to some of the features in Senate bill 2959, introduced by Senator Watson, of Indiana, which bill, I understand, is supplemental to the reconstruction finance act, and which has, as one of its ideas, the encouragement of the construction of new houses for residential purposes. Although I realize that business conditions are in anything but a good shape, and that whatever can be done to take care of the unemployed is praiseworthy, I strongly feel that any such inflation to building at this time would be most unfortunate, as my information leads me to believe there are more houses now than there are persons to occupy them, and that a great deal of the frozen assets which the reconstruction finance act is intended to liquefy are mortgages on home properties. A further objection is that such legislation would be decidedly socialistic in its tendencies.

I hope that you will use your best endeavors to see that this bill fails of passage, and, if that is impossible, that the feature spoken of above is eliminated or materially changed.

With kindest regards, I am,

Very sincerely yours,

JOSEPH BANCROFT, Chairman of the Board.

WILMINGTON, DEL. February 5, 1932.

Hon. JOHN G. TOWNSEND,

Senate, Washington, D. C.

MY DEAR SENATOR: I am much interested in some features embodied in Senate bill 2959, introduced by Senator Watson, of Indiana, and have been in correspondence concerning same with one of the chief executives of the Penn Mutual Life Insurance Co., and in personal interviews with Governor C. D.

Buck, president of the Equitable Trust Co., and Frederick E. Stone, president of the Wilmington Savings Fund Society, of this city. All of these gentlemen, together with myself, are in agreement that there are some very objectionable features in Senator Watson's bill, which, I understand is supplemental to the reconstruction finance act, and it has been drafted for the purpose of stimulating new residence construction, with the idea in view of reducing unemployment. I can see that the purpose is laudable in that respect, but the result, I am sure, will be very disastrous, as it seems to me that further construction of residences is not necessary, and, if undertaken, would put a big strain on the life insurance companies, trust companies and savings funds, who would be expected to make the necessary loans. At the present time these corporations are overloaded with such loans, and many residences are without tenants, and purchasers can not be found for such properties being sold under mortgage foreclosures, which necessitates their having to be taken over by the mortgagee. Now, it seems to me that it would be foolish to adopt any legislation that would increase the already overstocked real estate condition. and, as I underwould increase the already overstocked real estate condition; and, as I underwhich is having hearings on this bill, I hope-if I have been able to point out to you what I consider serious objections to it-that you will endeavor to see that it does not get favorable action by your committee, and if it should, that you will vote against it if it is brought for passage in the Senate. With my best personal regards, I remain,

Yours very sincerely,

JOHN BANCROFT.

DELAWARE STATE LEAGUE OF BUILDING AND LOAN ASSOCIATIONS,
Wilmington, Del., February 17, 1932.

Hon. JOHN G. TOWNSEND, Jr.,

Senate Office Building, Washington, D. C.

MY DEAR SENATOR: I wish to record with you the official view of our Delaware league respecting Senate bill 2959, proposing to organize the Federal home loan bank system.

Our executive committee has been closely following the development of this bill since the first announcement of the President that it was part of his general program for strengthening the financial situation in this country.. We believe it is of very definite value, and fully indorse it for the following

reasons:

1. It should play a part in thawing out the frozen assets and in starting refunctioning at an earlier date of many of the 10,000 building and loan associations in the United States, which at this time have over $8,000,000,000 loaned on small home properties. This building and loan system has been steadily expanding and serving small communities, or local town groups, throughout the United States in a manner that no other long-term home loan system provides. This system needs strengthening both from the emergency position of the moment and for permanent reasons hereinafter stated.

2. Even in normal conditions, certain local sections of our country may be expanding or contracting abnormally; hence making greater demands than local building and loan associations can cope with through their normal share subscriptions. When these situations develop, the proposed Federal home loan bank will be available both to serve and to provide confidence to the community that the local associations can meet the local needs.

3. During the past 10 years these situations have been met by great numbers of building and loan associations borrowing up to their limit of 20 to 25 per cent of their assets from local banks and trust companies on short-term obligations, and these funds have been placed in the usual long-term loans, running in the neighborhood of 10 years, on home mortgages, following the usual plan of doing business in building and loan associations. We know that these conditions have existed in our immediate territory of Wilmington and Philadelphia during the past 12 or 15 years, and at no time that we know of have the building and loan associations of this immediate district been entirely free of the need of borrowing on such short-time obligations to fill the need of their long-time mortgage demands. This is definitely bad practice, and the recent liquidating period with the position that the banks have been in has accentuated and brought to the front the dangers of this situation. The proposed Federal home loan banking system should substantially reduce the amount of such temporary borrowing for long-term investments by the building and loan associations and should mini

mize the strain during periods of liquidation which have prevailed the past two years.

4. We believe that greater confidence will develop in the use of building and loan associations on the part of the public where they know that such associations are backed up by the proposed Federal home loan banking system, and that they are members of the new Federal bank. The fact of this membership and the further supervision that goes with it should definitely act to make the directors and managers of the building and loan associations throughout the country more conservative and careful in the handling of their affairs, and this fact should be of great stabilizing and constructive influence in assisting the building and loan associations to become stronger and safer institutions in serving the public. The proposed Federal home loan banking system will certainly have this effect in a great many cases over the country, and this is important, since there are over 100,000 directors of building and loan associations in the United States to-day.

We, therefore, strongly indorse this Senate bill 2959, and its companion bill before the House, as of value both to assist in bringing us out of the present depression and to strengthen the loaning of money on homes in a permanent

nanner.

Very truly yours,

Now Mr. Nelson.

CHARLES WARNER, President.

FURTHER STATEMENT OF HERBERT U. NELSON, SECRETARY NATIONAL ASSOCIATION OF REAL ESTATE BOARDS, CHICAGO, ILL.

Senator WATSON. Let us have your name and position, please, for the record, Mr. Nelson.

Mr. NELSON. Herbert U. Nelson, secretary of the National Association of Real Estate Boards, Chicago, Ill. Senator, this will just take a moment.

Senator WATSON. That is all right. You may go right ahead. Mr. NELSON. Our association, the National Association of Real Estate Boards, has for about seven years conducted a semiannual survey of the real-estate business. We conduct this through the issuance of questionnaires to 554 local real estate boards. These boards are composed of a variety of men who are engaged in the real estate business. Some are loan men, some are brokers, some are builders. They appoint committees, which reply to these questionnaires.

During the past eight years this survey has been developed to the point where we believe it is a very reliable index to the actual situation. We conduct this survey, not for the purpose of kidding ourselves or anybody else, but because we want to know what the facts are. During the past few years this survey has gained recognition by the Department of Commerce and by the statistical organizations that use that material as being sound and reliable.

The questionnaires that are issued are signed by the officers of the local real estate boards, and during the past six years we have not published the names of the cities reporting, but have summarized the results according to the sizes of different cities and according to geographical regions. We found very quickly that adverse facts would not be reported when the name of the cities were given.

I would like to submit this survey, which contains fact material with respect to the vacancy situation, with respect to the overbuilding situation and the availability of money.

The last survey, released on February 6 of this year, covers 318 of the principal cities, and it shows in general that there is in 84 per cent of these cities either a normal supply or an actual shortage of single-family dwellings, 71 per cent showing an equilibrium of supply and demand, 13 per cent an actual present shortage, and 16 per cent an oversupply.

It also shows some very interesting facts concerning the doubling up that has been going on, which is estimated, for instance, in Kansas City, where an actual count was made, at 6.2 per cent of all of the homes that would be normally occupied by one family that are now occupied by two or more.

I would like to submit this for the information of the committee, because it is a fact. It contains a number of tables, which I hope might be printed in the record, because they are small and they do show the concreted information.

Senator WATSON. I think they can be printed.

Mr. NELSON. They are very small.

Senator WATSON. You give it to us, and if it can be printed it will be printed.

Mr. NELSON. And I will submit with it a copy of the questionnaire. (The documents referred to, namely, survey findings and questionnaire, are as follows:)

[From National Association of Real Estate Boards, Chicago, Ill. Release February 6] ASSOCIATION MAKES PUBLIC SEMIANNUAL SURVEY OF THE REAL-ESTATE MARKETGENERAL MONEY SITUATION HAMPERING REAL-ESTATE SALES-84 PER CENT OF CITIES SHOW NORMAL HOUSING SUPPLY OR SHORTAGE

CHICAGO, ILL., February 5.-Effect of present money conditions in hampering real-estate transfers or other transactions involving any new financing is notably reflected in the eighteenth semiannual survey of the real-estate market, made public to-day by the National Association of Real Estate Boards. The findings are based on confidential reports made by member real-estate boards in 318 principal cities.

In measuring the present supply of residential space the survey shows that "doubling" of two or more families in units intended for a single family is practically counterbalancing the effect of the present practical cessation of residential construction. It is thus masking what under other conditions would in many cities be un undersupply of desirable single family dwellings. With this counterbalance, 84 per cent of the cities report the supply normal or short, 71 per cent showing an equilibrium of supply and demand, 13 per cent an actual present shortage, and 16 per cent an oversupply.

In every one of the nine geographical sections of the United States the money supply for real-estate mortgage loans is insufficient for the demand, the survey shows. In 70 per cent of the cities loans are seeking capital; in 22 per cent there is a balanced situation as between supply and demand; in only 8 per cent of the cities is there a condition where capital is seeking investment.

The East North Central and West South Central sections show greatest prevalence of loans seeking capital. Most pronounced shortage of mortgage money is shown in cities of under 200,000 population. Of the smaller cities only 2 per cent show capital seeking loans. But in cities of the largest population group 60 per cent report loans seeking capital, only 20 per cent have capital seeking outlet. Interest rates are rising in 21 per cent of the cities reporting, steady in 75 per cent, falling in only 4 per cent of the cities.

Financing costs as well as money supply show a decided change from conditions of six months ago, when only 53 per cent of the cities reported a dearth of mortgage funds. In the survey of a year ago 40 per cent of the cities stated that loans were seeking capital.

LOAN STRINGENCY TIES UP SALES

Practical effect of general loan stringency on real estate movement is indicated in comments of the reporting real-estate boards.

"Banks not making loans. Local building and loan associations in good shape but loaning only on new building. Makes it hard to transfer real estate where financing is involved, which is nearly always."

"Loaning agencies will loan only when a house is completed and sold." "No sales can be made where it is necessary to secure any loan from the banks. This has completely tied up the real estate market."

"There is a statistical shortage of 5,000 single family homes in this community and an actual market supply that is daily growing inadequate. Builders and architects have several million dollars worth of projects awaiting financing."

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'Capital is extremely timid on account of the unemployment situation and fear. There are very few loans being made, and it would appear that the lenders of money are waiting to see what effect the new fund proposed by President Hoover will have in stabilizing values."

"No mortgage money here. Outside money needed. Ample security is offered."

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There is difficulty in refinancing homes in old districts."

'Practically no mortgage money available except special funds at very high rates."

On the other hand other cities say:

"Banks and building associations are putting the best foot forward, and confidence is being renewed."

"The life insurance companies doing business here have raised their requirements, making it difficult to handle refinancing, but there is some private money available."

"A dividend of 20% by a bank closed a year ago released $400,000, which had a good effect."

"Most mortgagees are refunding old loans for customers who are meeting interest payments."

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Shortage of money for conservative first mortgages. Trust some relief from Mr. Hoover's new plan."

"Tax relief and a good supply of capital for loans at a reasonable rate would induce considerable building in this section."

Many real estate boards report a general feeling, quite apart from statistical proof, that a turn to a better situation is under way.

SELLING PRICES LOWER-RENTS DECLINE

Selling prices reflect general business abnormality, and are lower than they were a year ago in 85 per cent of the cities reporting. While 31 per cent of the cities report market activity approximately the same as a year ago, 5 per cent report a less active market, 12 per cent a more active situation.

In recording the nation-wide downward movement in rents which has accompanied general cost reductions some reporting cities indicate that the bottom seems to have been reached. Apartment rents, however, are the only group showing any indication toward rising rates. Business property rents show the most pronounced effect of present uncertainties. Office building space is indicated as being in a somewhat more stabilized condition both in regard to rent levels and occupancy than is apartment space. Both show greater present stabilization than does business space.

Central business districts are more generally stable than are outlying subcenters in regard to rents for business space, and to an even greater degree in regard to office rents. The larger cities as a group show this differentiation most strongly.

Cities of under 500,000 population show a much larger degree of stabilization in the matter of rents for structures of every type than do cities above this population line.

EXCESS FAMILIES IN 6.2 PER CENT OF HOMES

Contraction of general business activity is reflected in the fact that despite the practical cessation of building during the past year 63 per cent of the cities state that they have a normal supply of business property, 36 per cent of them

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