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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:)

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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

States

Number

Total mem-
of asso-
ciations

bership

Total assets

Increase in

assets

Increase in member

ship

Pennsylvania
Ohio.
New Jersey.
Massachusetts
California
Illinois
New York
Indiana
Wisconsin
Maryland.
Missouri.
Louisiana
Michigan.
Nebraska
Oklahoma.
Texas.
Kansas.
Kentucky
Washington
North Carolina.
District of Columbia.
Virginia..
Colorado.
Utah..
Iowa.
Arkansas.
Minnesota
West Virginia.
Rhode Island
Oregon..
Alabama
South Carolina
Connecticut.
Maine
Montana

3, 445

791 1, 561

227 209 933 307 398

189
1, 150

242
102
67
83
82
154
155
161

73
235
24
92
68
24
74
66
78
63

8 31 40 150 44 36 27

1, 540, 585 $1,371, 223, 429 1 $28, 776, 571 1 109, 415 2, 583, 767 1, 244, 266, 926 139, 398, 950 195, 142 1, 198, 177 1, 211, 941, 913 60, 438, 950 11,823

513, 431 562, 718, 248 19,063, 250 15,767 600,000 510, 520, 490 33, 294, 374 162, 416 945, 500 470, 073, 267 21, 649, 950 27,500 595, 865 440, 729, 014 18, 587, 734 2,767 429, 447

306, 870, 182 15, 460, 102 1 20, 926 304, 861 290, 625, 985 7,844, 583

1, 454 330, 000 220, 000, 000 5, 000, 000.282, 031 210, 920, 602 12,068, 234 16, 257 200, 930 182, 358, 292 18, 203, 02413, 566 210, 722 167, 199, 813

6, 094, 55611,950 225, 000 148, 706, 763 1 14,753, 601 255, 000 139, 804, 195 14,587110,679 184, 760 134, 743, 150 1 2,272, 754 13, 120 210, 283 132, 362, 649 175, 901 11,655 182, 900 118, 928, 259 8, 122, 55312, 400 298, 844 108, 261, 370 95, 915 92, 192, 374 13,655, 683 19,143 75, 253 75, 404, 000 6,994, 284 3, 210 66, 730 60, 439, 644 1,561, 002 1, 730 121,854 60, 034, 372 6,016, 750 95, 263 55, 642, 704 3,962, 561 1 31, 273 65, 343 49, 708, 190662, 541922 72, 717 44,737, 088 1, 135, 722 12,554 106, 038 42, 514, 855 3,092, 436 13, 484 58, 800 36, 252, 147 15, 575, 33818,500 44, 480 31, 541, 252 3, 713, 789 2, 459 52, 000 30, 569, 103 2, 248, 436201,000 41,340 29, 434, 882 1 836, 318 11, 160 34, 00027,000,000 500,000 1,000 38,000 26, 166, 906

1, 436, 0845, 192 30,000 25,000,000 1, 491, 643 1,000 45, 163 21, 235, 125 867, 295

1, 435 · Estimated.

9W 4,831

1 Decrease.

TABLE I.-Summary table of number of associations, total membership, and total

assets of building and loan associations by States, 1930.Continued

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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

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States

Increase in

mortgage Mortgage loans Mortgage loans

Per cent

loans outoutstanding outstanding

mortgage Total assets

standing loans to 1930 1929

1930

over previous assets

year

Alabama.
Arizona.
Arkansas.
California
Colorado.
Connecticut..
Delaware.
District of Columbia
Florida
Georgia..
Illinois
Idaho
Indiana.
Iowa.
Kansas.
Kentucky
Louisiana
Maine.
Massachusetts..
Michigan
Minnesota
Mississippi.
Missouri.
Montana.
Nebrasks.
Nevada..
New Hampshire.

1 Decrease.

25, 634, 807 3,968, 295 37, 965, 108 416,802, 996 45, 117, 257 22, 752, 873 12, 062, 400 65, 163, 001 17, 074, 400

4, 457, 486 415, 190, 738

4, 001, 215 282, 837, 023

45, 081, 130 107, 956, 918 108, 611, 540 173, 887, 938 22, 048, 158 502, 637, 271 147, 942, 994 33, 234, 090 17,891, 290 178, 416, 924

18, 281, 801 139, 870, 118

745, 974 12, 196, 619

23, 628, 399 4, 223, 338 38, 298, 681 437, 418, 591 48,083, 886 23, 885, 216 13, 336, 806 70, 894, 000 12, 494, 954

5, 228, 700 432, 685, 967

4, 245, 105 275, 644, 799 45, 081, 525 110, 102, 244 116, 012, 235 161, 525, 736 23, 300,000 506, 592, 629 144, 208, 587 35, 652, 466 18, 410, 000 184, 861, 283

18, 866, 046 128, 154, 297

1,686, 236 12,098, 813

72,006, 408

255, 043

333, 573 20, 615, 595 2, 966, 629 1, 132, 343 1, 274, 406 5, 730, 999 4, 579, 446

771, 214 17, 495, 229

243, 890 17, 192, 224

395 2, 145, 326 7, 400, 695 1 12, 362, 202

1, 251, 842 3,955, 358 13, 734, 407 2, 418, 376

518, 710 6,444, 359

584, 245 111, 715, 821

940, 262 1 97, 806

80. 3 87.3 80.3 85,7 80.1 91.3 86.2 94.0 70.1 86.6 92. 1 75. 3 89.8 90.7 83. 2 97.6 88. 6 93. 2 90.1 86. 3 83.9 90.0 87.7 88.9 86.2 81,2 87.7

$29, 434, 882

4, 838, 421 44,737, 088 510, 520, 490 60, 034, 372 26, 166, 906 15, 488, 721 75, 404, 000 17, 828, 835

6, 039, 453 470, 073, 267

5, 639, 876 306, 870, 182 49, 708, 190 132, 362, 649 118, 928, 259 182, 358, 292 25,000,000 562, 718, 248 167, 199, 813 42, 514, 855 20, 462, 096 210, 920, 602

21, 235, 125 148, 706, 763

2,076, 372 13,793, 064

TABLE II.- Mortgage investment of building and loan association Continued

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89.6 1, 211, 941, 913 85.7 5,111, 330 88. 2

440, 729, 014 91.3 92, 192, 374 88.7

13, 385, 735 88.0 1, 244, 266, 926 89.3 139, 804, 195 80.0 30, 569, 103 84.8 1, 371, 223, 429 93.5 31, 541, 252 84. 3 6, 350, 585 85. 3

18, 399, 386 88.9 134, 743, 150 74.9 55, 642, 704 94. 2 4, 749,000 89.8 60, 439, 644 74. 2 108, 261, 370 88.8 36, 252, 147 93.5 290, 625, 985 89. 5 9, 829, 096 88. 5 247,000,000 88. 08, 824, 119, 159 86.1 4, 492, 766 88.0 8,828, 611, 925

1 Decrease.

Table III.-States reporting mortgage loans made in 1930 compared with 1929

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One hundred and ninety failures of building and loan associations were reported by the supervisors of the several states for 1930, as compared with 159 reported for the previous year, distributed among the states as follows: Arkansas 1, California 5, Florida i, Illinois 2, Indiana 3, Kansas 1, Michigan 2, Missouri 4, Nebraska 1, Pennsylvania 153, Ohio 5, Oklahoma 4, Texas 4, and Wisconsin 1. There were also 2 failures in Maryland where there is no supervisory department. The probable loss which will be sustained by the shareholders in these various failed associations is estimated at $24,676,059, which is the largest loss ever reported in a single year, and probably exceeds the aggregate sum which building and loan association shareholders have sustained during the last three-quarters of a century of their existence. The total loss for the preceding 10 years for which figures are available amounted to only $5,555,935. Losses from failures by building and loan associations have been exceedingly small. The unusual and excessive amount shown during 1930 is attributable mainly to the speculations of a few crooks who unfortunately got into the building and loan business. Over one-half of it is chargeable to the dishonest practices of one man, George H. Beesemyer, a former banker, who looted the Ĝuaranty Building and Loan Association of Hollywood, Calif., and affiliated companies, and who is now serving time in the California State Prison. There is nothing inherently wrong with building and loan associations and they should not, as an institution, be held accountable for acts such as these. Honestly managed, building and loan associations still continue to be the safest possible place for savings investments. This experience simply emphasizes the primary importance of capable and honest management which the public will look for in selecting building and loan associations for patronage. Yet in all fairness and to the everlasting credit of building and loan associations it should be stated that only in rare instances have officers or directors violated their sacred trusts.

SUMMARY OF BUILDING AND LOAN ASSOCIATION FAILURES 1920–1930 The following is a summary of building and loan association failures and losses for the years 1920 to 1930, inclusive, together with a statement of the total number and total resources of all associations for each year, the total liabilities of failed associations for 1930, and annual per cent of loss to total resources:

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Senator Watson. Of course, that is not a consequential question when it comes to the merits of the proposition.

Mr. BODFISH. As some building and loan leaders see the bill, it will do much to revive public confidence in the associations at the present time.

Senator Watson. Are you interested in this measure primarily for new construction or the salvaging of homes that are already built, the owners of which are in distress?

Mr. BODFISH. Primarily for the assistance it will give building and loan associations in aiding them to function normally. It will do much toward salvaging homes, as far as the building and loan associations are concerned, because all of our mortgages are long-time mortgages without a due date, so there are no foreclosures in connection with building and loan associations caused by mortgages coming due. Borrower distress occurs where they have these one and two year mortgages coming due, and then the bank or trust company, or whoever made that type of mortgage, insists on a substantial reduction in the mortgage or refinancing.

Senator COUZENS. Do I understand that these long-time amortized mortgages do not have a due date?

Mr. Bodfish. "They do not have a due date. A building and loan mortgage contract, Senator, is not due until it is paid off. That is a universal condition. The contract is one for monthly repayment, and when the monthly repayments are made the mortgage debt is completely extinguished. Most of our mortgages run from 9 to 13 years.

Senator COUZENS. Is that true in every State?
Mr. BODFISH. It is true in every State.

Senator COUZENS. Do these contracts not provide a specific time to amortize the mortgage?

Mr. BODFISH. Yes, a specific monthly payment.

Senator Couzens. Would that not automatically fix the date of maturity, if the amortization amounts were paid off at specified periods?

Mr. BODFISH. Yes; but the amortization covers the whole amount of the loan.

Senator COUZENS. I understand, but if they fall down on an amortization payment, then there must be some due date for the principal, isn't there?

Mr. BODFISH. Yes, if they fail to make their monthly payments, the whole amount is accelerated and the mortgage is foreclosed.

Senator COUZENS. Then they do foreclose on them.

Mr. BODFISH. There are occasions, but that is only when a borrower can not make his payments, and, naturally, to protect the investors in building and loan associations.

Senator COUZENS. Isn't that true of every mortgage, that when the borrower does not pay his installments or his interest or his principal, his mortgage is foreclosed?

Mr. BODFISH. That is true, but there are hundreds of mortgages which have been made for a term of one or two years.

Senator COUZENS. I understand that. But I understood you to testify to the fact that the borrowers in your institutions do not have any fixed date when the mortgages must be paid.

Mr. BODFISH. That is true.

Senator COUZENS. There is no difference between your customers' condition and those who borrow from a bank, if there is a failure to live up to the contract, is there?

Mr. BODFISH. That is true. Senator CouZENS. Then automatically there must be a due date, if all the amortized amounts are not paid during the life of the mortgage.

Mr. Bodfish. Yes, Senator.

Senator COUZENS. Then I do not see any difference between your form of doing business and the form of doing business by a savings bank, except as to the period of time, of course.

Mr. BODFISH. The period of time is of major importance to the borrower. We have considerable distress in Chicago right at the present time, due to 1-year and 2-year mortgages. The due date comes and the bank or trust company insists upon the borrower refinancing in another institution of making a major reduction in principal. This never happens to a borrower from a building and loan association.

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