Senator WATSON. That is altogether, city and town real estate, you deal in all of it?

Mr. KISSELL. No, sir. Some of our people deal in farm real estate. Senator TOWNSEND. Is it general over the country for the insurance companies to foreclose on mortgages, as they did in Pittsburgh, as you just related?

Mr. KISSELL. Yes; it is pretty generally the case, Senator.
Senator WATSON. You think this bill will work, do you?

Mr. KISSELL. Absolutely, it will work. And it is not only for this emergency. I am not talking about a building campaign at this time. I am not saying there is need for a lot of new homes. I am not trying to stimulate building at all. Colonel Ayer told me the other day at Cleveland that there probably was a lack of housing in the making. Possibly there is. But in 5 or 10 years, maybe 3 years, with the population increasing, there should be a change. The population of this country the last eight years increased 13,500,000, and in 257 cities there have been 1,222,000 less home units built in those identical cities since 1925 than would have been built had the 1925 program continued.

What does that mean? It means the supply has been going down and the demand has been continuing. Some day they are going to meet, and some day they are going to need new homes in this country. When that time comes this bill here will solve the problem and make it possible for these building and loan associations to function.

These building and loan associations are perfectly solvent, but they are simply frozen. There is no criticism of them, because the money was put in there for the purpose of loaning on mortgages. That was the idea.

I will venture if this bill had been in effect-Mr. Robinson spoke about the situation in Ohio-if this bill had been in effect I do not believe it would have been necessary to have put up the notice on the doors of the building and loan associations in Ohio if the people had been able to get their money. If they could take those good loans and rediscount them, the people could have satisfied their needs. They would not have wanted it in the quantity that they seemed to want it, because they knew there was a possibility that they could not get it at all. If this bill was in effect now it would not require any one billion two hundred million to straighten out the situation in Ohio by any means. If they could just rediscount a small amount of their mortgages it would help.

Senator TOWNSEND. Your judgment is, then, that the real need for this corporation is to take care of the present situation?

Mr. KISSELL. No, I won't say that, Senator Townsend. I think there is a definite need. I do not see how you are going to straighten all this situation out unless you do this, because it goes way beyond just the housing proposition. It goes beyond even the foreclosure proposition. There are a great many merchants over the country who had their surplus capital, working capital, in building and loan associations, which had to put up the notices, and they are in distress at this time. I happen to know of two in one city-they were not in the building and loan but savings institutions which closed, old concerns in the city that are both in the hands of receivers. What does that mean? It means clerks out of employment, it means bookkeepers out of

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employment, it means vacant storerooms, the inability of owners to meet the demands on their mortgages, and so forth.

Senator TOWNSEND. Does not that confirm the thought that the present situation demands this sort of legislation?

Mr. KISSELL. I have said that. It is not the only thing. I think that in the present situation it is very urgent. But I do think there is a very tremendous need on the permanency feature of it. I can go back over many years when there was great need for building in this country, when the building and loan associations could not meet the demand.

Senator TOWNSEND. And that will come again.

Mr. KISSELL. Yes; it is bound to come again.

Senator MORRISON. There are a great many cases over the country where a mortgage has matured, partially amortized, and the home. owner is unable to pay, has not paid in full, and he wants to refinance it. Mr. KISSELL. Certainly.

Senator MORRISON. Doesn't he have a great difficulty to find somebody that will let him have the money, regardless of the adequacy of the security?

Mr. KISSELL. Certainly. You can not blame the banks. They want to keep liquid.

Senator MORRISON. Absolutely. They must be liquid, whether they are safe or not.

Mr. KISSELL. Absolutely.

Senator WATSON. All right, much obliged to you.

(Witness excused.)

Senator WATSON. Any other of you gentlemen from out of the city that want to be heard tonight? Do all the rest of you live in Washington?

Mr. BODFISH. I am from outside of the city, but I will be here for several days.

Senator WATSON. Owing to the engagements of the members of this committee on other important committees, I do not think we can meet again to-morrow. But on Saturday I believe we will all be able to be together. Suppose you come back here Saturday morning at 10 o'clock and we will start in again.

(Whereupon, at 4.25 p. m. January 14, 1932, an adjournment was taken to 10 o'clock a. m. January 16, 1932.)

CREATION OF A SYSTEM OF FEDERAL HOME LOAN

BANKS

SATURDAY, JANUARY 16, 1932

UNITED STATES SENATE,

SUBCOMMITTEE OF THE COMMITTEE,

ON BANKING AND CURRENCY,
Washington, D. C.

The subcommittee met, pursuant to adjournment, on January 14, 1932, at 10 o'clock a. m., in the hearing room of the Committee on Interstate Commerce in the Capitol, Hon. James E. Watson presiding. Present: Senators Watson (chairman of the subcommittee), Couzens, and Morrison.

Senator WATSON. Mr. Bodfish.

STATEMENT OF MORTON BODFISH, CHICAGO, ILL.

Senator WATSON. Give the committee your full name.

Mr. BODFISH. Morton Bodfish.

Senator WATSON. Where do you live?

Mr. BODFISH. Chicago, Ill.

Senator WATSON. What is your business?

Mr. BODFISH. Executive manager of the United States Building and Loan League.

Senator WATSON. Is there a building and loan league in the United States?

Mr. BODFISH. Yes.

Senator WATSON. What is the object of it?

Mr. BODFISH. Principally to encourage and advance building and loan associations, which are designed for home financing and for systematic saving, particularly for low-income groups and the ordainary American people.

Senator COUZENS. Do you have an office in Washington?
Mr. BODFISH. No, sir.

Senator COUZENS. You do not engage in lobbying before State and Federal legislatures?

Mr. BODFISH. We naturally make an appearance when there is something affecting our associations or their shareholders. I would say we do not engage in lobbying, Senator. We desire to advance generally the interests of these cooperative home financing institutions.

Senator WATSON. How many persons are investors that are not borrowers?

Mr. BODFISH. Approximately 10,000,000.

Senator WATSON. Investors in building and loan associations?
Mr. BODFISH. Yes.

Senator WATSON. But who do not borrow money?

Mr. BODFISH. That is true.

Senator WATSON. Do you know whether or not most of them invest for the purpose of buying in the future or invest primarily for the sake of investment?

Mr. BODFISH. A substantial number of them invest in building and loan associations to accumulate money ultimately to buy a home. The building and loan associations emphasize a great deal the saving of money with the objective of owning a home.

Some inquiries and references have been made in the course of the hearings regarding the distribution of building and loan associations, their assets and membership. It might be useful for the committee to have in the record these data and also information on the mortgage loans of the building and loan associations, their membership and number of associations by States, as well as their safety record.

Senator WATSON. Why not just insert that in the record?

(The data referred to, contained on pages 918, 919, 920, 921, 922, and 923 of a pamphlet entitled, "Excerpts from Building and Loan Annals, 1931," are here printed in the record in full as follows:)

STATISTICAL TABLE FOR 1930

The following statistical table shows, by States, the number of associations, the total membership and total assets, and increases or decreases for the year. The data given are for the fiscal year of the respective State supervising departments ending in 1930:

TABLE I.-Summary table of number of associations, total membership, and total assets of building and loan associations by States, 1930

TABLE I. Summary table of number of associations, total membership, and total assets of building and loan associations by States, 1930.-Continued

MORTGAGE LOAN INVESTMENTS OF BUILDING AND LOAN ASSOCIATIONS

The mortgage loan investments of all building and loan associations in the United States in 1930 amounted to $7,760,163,958, a decrease of $30,671,213 over the amount held the previous year. Including the Territory of Hawaii, the total mortgage loan investments amount to $7,764,034,674, which is 88 per cent of the total assets of these associations, as compared with 89.6 per cent in 1929. The accompanying table shows comparatively, by States, the amount of mortgage loans held in 1929 and 1930, the amount of increase or decrease of such loans for the year and the percentage, by States, of mortgage loan investments held to total assets.

TABLE II.-Mortgage investment of building and loan association