Different statements were made by Mr. Robinson. I think he did it through lack of knowledge rather than intentionally. I give him credit for that. We have 88 counties in Ohio; in 55 of the 88 we have had bank failures. There are to-day total liquidations of $350,000,000.

Now we have a rule in our associations, for both stockholders and depositors, which provides, in most associations, that withdrawals may be paid in the order in which they are filed as fast as the money is paid in on the principal of the mortgages on which it is loaned. In other associations they provide that payments should be made from 50 per cent of all receipts, from whatever sources, so that that leaves 50 per cent of the receipts for the operation of the business. Owing to the unusual heavy demand for withdrawals, we have been compelled to use our withdrawal notice rule, and take notice for withdrawals in about 60 per cent of the associations in the State.

This is not our first experience with withdrawals, because all depressions have had the same effect.

Senator COUZENS. In those cases where you take advantage of the rules and regulations by which you accept deposits, how long has the delay usually been in these people getting their money?

Mr. DEVINE. That depends upon localities, of course. For instance, last July probably was the high point for notices of withdrawal being taken in most of the associations. Then they were filed in order. Many of the companies now have paid their July notices, their August notices, their September notices, and October notices, and are 60 days behind. Other companies are 4 or 5 or 6 months delinquent in paying those notices.

Senator COUZENS. Are the depositors generally disturbed because of that delay?

Mr. DEVINE. They were at first much disturbed, because many of them, innocently, simply deposited their money without paying attention to the rules and regulations. And then there grew up this unequalled business prosperity in the last 10 years, and there was the abundance of money, and depositors could come in and get their money without giving a notice of 10 or 20 or 30 days, or whatever notice was provided for. So in that manner the impression was abroad with a lot of people that all they had to do was to walk in and get their money, just the same as they do in a bank. But under the laws of the State we can't take demand money in that way; that is, all kinds of money.

Now, then, we have reached this position with reference to this home loan bank bill: That there are two advantages to be gained by this bill. First, that the bill, if it is passes and becomes a law and comes speedily into operation, that it will relieve conditions by being able to obtain funds wherewith to pay withdrawals that are actually needed. If business resumes and we get back to a normal basis, we still will be in the position of having to liquidate all of our available cash, and have a period of reconstruction for homes which must necessarily ensue for the next two or three years, because now since 1929, we have had no building construction-it is at a very low ebb, and it will be necessary to raise funds and begin to rebuild. Under the present circumstances we believe that it will be at least a period of five years, if we are left alone, before we can start construction. That is, unless we have assistance. And I was very much impressed

by your question this morning if heretofore this question has been brought up. It was discussed for 20 years. In 1916 I was appointed on a committee to devise the ways and means, and it was discussed a great deal. For two years we discussed it, and more or less have discussed it for many years, and we have not been able to do anything, so whatever happens down here, if you are not able to work it out in a short time, it is not to be wondered at, because we have been working at it for many years.

But in 1925 Ohio did attempt to set up its own reserve within itself, and while it was not used that way, it was called a Federal reserve, the same as the banks had, wherewith we made an arrangement with a New York bank whereby we paid in a certain sum of money, and where we had a credit in time of emergency. The very objection that come up on that credit was raised by some competent men in financial circles, and the objection was that if we use all the money in time of emergency in one place and we have an emergency in another place, before we can get to it to build it up again, what happens? My reply was that smallpox does not break out all over the Nation at one time, and it is not likely that there will be this same trouble all over the country at one time. We used that credit, which was $5,000,000, until we had $17,000,000, in addition to the money we borrowed from the banks in the State, which was probably several million dollars, so that we owed, at the beginning of 1930, probably $20,000,000. In 1931 the banks demanded those loans be liquidated, and we have been in the process of liquidating the loans in the last six months. That necessarily restricted our ability to make any loans.

Senator COUZENS. Just for what purpose do people want loans now? Mr. DEVINE. Men who want to build homes now because of the lumber condition, because of the brick condition, because of the building-material condition, and because of the labor condition; men who have saved for that purpose and who feel that now it is the opportune time. They are men who have purchased lots, and who have held them hoping to build, and who realize that this is the time to build. Senator ČOUZENS. And they have the means to do it?

Mr. DEVINE. Not all the means, no.

Senator COUZENS. What percentage do they have?
Mr. DEVINE. Some 30, some 40, and some 50.

Senator COUZENS. It has been represented to me that if this system was set up, it would help to relieve the second-mortgage holders and the third-mortgage holders, or trusts, and in some cases they are called the land contracts. Can you explain how that would be brought about?

Mr. DEVINE. No; I am perfectly frank to tell you I do not believe we would make a loan where a second mortgage was involved. In other words, we try to teach thrift and have people understand that they should be able to carry a home with a first mortgage, because if you burden them with the second-mortgage and the third-mortgage money, then there is trouble not only for the man himself, but for us also.

Senator COUZENS. I presume you know it is the practice in some States that a real-estate man will sell a lot to a purchaser who will pay 10 per cent down on the cost of the lot and the house combined. Say, for example, the house and lot were to cost $10,000, he pays $1,000 down and gets $5,000 on a mortgage, and that leaves $4,000

unpaid. That would be a lien, of course, and that would be a second mortgage, or a land contract, and that balance is very burdensome to the home builder, because he has to pay an exorbitant fee to get that additional $4,000.

Mr. DEVINE. Yes, sir.

Senator COUZENS. Is it your judgment that this bill would help out that situation?

Mr. DEVINE. I can not see that it would; no, sir; because I do not think we should proceed on that theory. I think we should proceed on the theory that we would make a first-mortgage lien to the home. owner, and if it is necessary to have a second mortgage, to encourage the man to wait until he can have enough money so that he will have only a first mortgage; because it has been demonstrated that as we have been going in the past few years, all of us at top speed to sell a man a $10,000 home on a $1,000 payment down, that it is wrong. And in may instances the man did not have enough money to make his payment on bis home and to keep up his payments on other things that it was necessary for him to pay, his automobile, and things of that kind.

Senator COUZENS. To what extent has this long period of unemployment affected those who might want to take advantage of the low cost and build now?

Mr. DEVINE. It has affected them to this extent, that in the city of Columbus, where I have my office, the lumber dealers are making their own arrangements to carry them, and we are unable to meet the demands for money, although we have strong banks and 23 building associations with $143,000,000 in them. We had runs there that lasted several days, and in the first day they paid $1,140,000, before they put on the withdrawal rule. And we have had all over the State large withdrawals. We have had in 55 counties out of the 88 counties in the State, bank failures, and that was in a radius in which every community and every home in the State was affected, because you can't tell people that their money is safe. You can tell it to them, but they will not believe it.

Only last week I saw a new bank opened at Youngstown. Youngstown is the large steel town between Cleveland and Pittsburgh. I saw a bank opened there with $23,000,000, and out of the $23,000,000 they had over $8,500,000 cash on hand for regular bank purposes. And when you go over to the post office, you see the windows there busy, the people putting their money into the post office. And, strange to say, many of them came to the building associations. But I say, that condition exists in the minds of the people, and we have hoarded money. I am satisfied if we could get the money that is hoarded, we could go ahead and do business normally. And this land bank bill would do for us what the Federal reserve has done for the banks.

Senator MORRISON. I notice you call this the Federal land bank bill. Mr. DEVINE. Yes, sir.

Senator MORRISON. That might cause some confusion. This is the home loan bill.

Mr. DEVINE. Yes.

Senator MORRISON. That might be confusing in the record.

Mr. DEVINE. Yes. This home loan bank bill would do two things for us if the regulations under it were right. It would relieve condi

tions now if it was put to work in 12 months. Always, with legislation of this kind, it might be wise if we had asked for it several years ago, so that now it could be functioning, if we had known there was to be so much demand for it. But what I think is important is financing the homes of this country.

Senator COUZENS. It has been represented to me that other nations have such a system. Have you had any experience with them? Mr. DEVINE. In what?

Senator CoUZENS. Other nations.

Mr. DEVINE. For a system of loans?

Senator COUZENS. Yes. Do you know anything about that? Mr. DEVINE. I do not know anything about it. I have read about it, but not enough on the subject to discuss it.

Senator COUZENS. You may proceed.

Mr. DEVINE. That is all, unless you have some questions.

Senator MORRISON. Do you think that this measure, if enacted into law, would make mortgages on lands more desirable investments for all banks and other investors than they are now? That is, all of them who might join this association?

Mr. DEVINE. Of course, that is all we loan on in our State, first mortgages on homes and first mortgages on real estate. That is the only asset we have.

Senator MORRISON. I am not talking about your business only. Mr. DEVINE. Oh, other businesses?

Senator MORRISON. The bill embraces banks as well as building and loan associations, and I am asking you if, in your opinion, it would not make real-estate mortgages on lands a more desirable investment for all banks.

Mr. DEVINE. It would give them an opportunity to relieve themselves by rediscount of those mortgages.

Senator MORRISON. It would furnish the funds for that?

Mr. DEVINE. It would furnish the funds. That is what we are crippled with now-lack of funds.

Senator COUZENS. Has your association any information as to the extent to which the building associations of the State of Ohio would rediscount in those banks?

Mr. DEVINE. At this particular time, I doubt, if it was in operation to-day and we could rediscount, if we would reach over $50,000,000 or $60,000,000 of rediscount paper, for this reason why, because we owe those banks some $20,000,000, and we would rediscount to relieve them because they want to be relieved, and then we might rediscount $20,000,000 or $30,000,000 more for the purpose of the necessity of taking care of withdrawals, and to take care of a home owner we would loan to a man, where a man has a lot for $2,500, and wanted $7,500 to build a home. But the indiscriminate applications which are coming in now, we do not even record those, because we have not the funds and ability to take care of them.

Senator COUZENS. How many applications are you receiving now? Mr. DEVINE. Oh, not many now, because there are notices posted all around that we will not take them. But there is not a place in the whole State that would not want some loans, and we have 809 associations, and if they wanted from $10,000 to $1,000,000 you can see where it would run to. The minute we advertise for applications for loans we would be swamped.

Senator MORRISON. Do you think the savings associations and the banks would join this association if it were a law?

Mr. DEVINE. Absolutely; they would join it if they never redisdounted a dollar.

Senator MORRISON. You think it would be good legislation?

Mr. DEVINE. Absolutely I do, or I would not be here asking for it. Senator MORRISON. I gathered from your remarks you were in favor of it, but I want the record to show it.

Mr. DEVINE. I am and our executive committee, which consists of 25 members, and this association has been organized for 43 years. Since the inception of the business it has been a business for the purpose of loaning money to build homes. Up to 1923, in Ohio, a building association had the right to loan on anything; they could loan on your overcoat, or on your hat, and yet in all that time there was very little money loaned for any purpose except building homes and on homes. Over 98 per cent of the money was loaned on homes. Senator COUZENS. Will you describe your understanding of a home? Is it a building with four homes?

Mr. DEVINE. It means one home, where a man lives with his wife and raises a family.

Senator COUZENS. In other words, it does not mean a 2-flat or 4-flat home?

Mr. DEVINE. It can include where a man has a business, a 2-story building, and has his home above. In 1923 we passed a law making it restrictive. Some comment was made here about the legislature being favorable to us. Why is it? Because until 1923 no depositor ever lost a dollar. We took care of their money and we deserved it, and then after the war we had passed a law to limit the loans.

Senator COUZENS. Does your association make loans on two or three family apartments?

Mr. DEVINE. Yes; we have some in the cities that make loans on apartments; large loans, $125,000, especially in a city like Cleveland. Senator COUZENS. That would not come within the purview of this bill.

Mr. DEVINE. I think that would not, so far as home loans are concerned. I do not think they could rediscount an apartment loan. But the bill provides for the rediscount of home loans.

Now, under the regulations, whoever draws those regulations, I should say they should be strictly drawn. They should be drawn with the idea of having the bill function as it was intended to function. Senator COUZENS. How would you draw the regulations?

Mr. DEVINE. I have not gone into the details, but when it comes to specifying homes, it is an easy matter to specify a home. It is where a man lives with his family and gives a mortgage on it. The banks say, "We will loan on a home where a man lives in it."

Senator COUZENS. A single home.

Mr. DEVINE. A single home.

Senator COUZENS. Not double or triple.

Mr. DEVINE. We don't like double or triple homes.

Senator COUZENS. A single home.

Mr. DEVINE. A single home. And that is the only kind that should apply for a loan.

Senator COUZENS. Do you believe the Federal Government is entitled to a return on the capital it puts into this system?