The CHAIRMAN. We have three other gentlemen who would like to be heard this morning; and we must hold an executive session. Mr. LUCE. Yes. I thank the committee for its attention, and I hope I have not trespassed too much upon its time.

The CHAIRMAN. Not at all.

I want to compliment you, Mr. Luce. You have made a very fine.

statement.

Mr. LUCE. I just want to say that the matter of tax exemption has received the most earnest consideration, and we finally decided upon this, on the general principle that we have given the farmers of the country this help, and, having given it to them, it is fair to give it to the home owners.

STATEMENT OF HON. GUY E. CAMPBELL, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF PENNSYLVANIA

Mr. REILLY. Mr. Chairman and gentlemen, I should like to introduce Mr. Campbell, another member of the Subcommittee of the Committee on Banking and Currency, who wishes to address the committee for a few minutes.

The CHAIRMAN. We will be glad to hear him. But I would like you gentlemen to conclude at a quarter before 12, if you can.

Mr. CAMPBELL. Mr. Chairman and gentlemen, I do not care to say much except to corroborate what my colleagues have said.

I notice that one thing that they did not touch upon was the limitation placed upon the amount of the mortgage; it is limited to $20,000; they can not make loans on any mortgage where the value of the property is in excess of $20,000-which confines it, of course, to the little man.

Mr. Cox. In other words, with the 40 per cent limitation, the loan could not exceed $8,000?

Mr. CAMPBELL. It could not exceed $8,000; and not only that, but they could not make a loan on a mortgage that is placed on property in excess of $20,000 in value; that is the limitation on that.

With reference to the tax-exempt securities, I would like to touch on that for a moment. I feel just as Mr. Bankhead does about it; but we could not see our way clear not to exempt these securities, in view of the fact that we have issued others and we have done the same thing for the farmers and the banks. Here we are dealing with upward of 12,000,000 home owners; and it would be making a discrimination in favor of the others if we did not put that in here. Mr. MARTIN. You probably could not get the money unless you did put that in?

Mr. CAMPBELL. We probably could not get the money unless we did. These securities, I believe, will be readily salable, when you consider the security back of them.

Mr. BANKHEAD. That has always been the argument in favor of tax-exempt securities, that you could not sell the bonds if the securities were not exempted. But if we keep going on as we have in this matter, we are going to get to a point where we will not have any return to the Treasury from investments.

Mr. CAMPBELL. With conditions restored to the normal, I believe an overwhelming majority of the Banking and Currency Committee

of this House will vote for the discontinuance of the issuing of taxexempt securities; but in this emergency we did not feel that it was the proper time to start that especially when you are dealing with the home owners.

STATEMENT OF HON. PERCY H. STEWART, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW JERSEY

Mr. STEWART. Mr. Chairman and gentlemen, my position in regard to this situation can be stated in a very few words.

I have raised the question of the issue of large amounts of taxexempt securities, the question that Mr. Bankhead is considering. I think the title of the bill is rather misleading. Individuals can not get any loans through this organization-not that that is detri mental, but it certainly is misleading.

The great advantage, as I look upon it, of this bill will be that it is going to save a great many small home owners. Take my own State as an illustration: We have to-day $1,250,000,000 in this type of investment. Now, there has been a sudden dip in the assets of these various building and loan associations. They have been running along through this depression for some time and have been able to get along; but now the dip is hurting them very badly. They are having difficulty in getting loans from the banks.

I think that the advantage of this legislation will be that it will keep more fruit from falling from the tree if it is shaken. But I do not see any likelihood of there being any large additional construction through this bill.

On the whole, I am in favor of the bill and expect to vote for it. I have reserved the right to make some amendments on the floor. I think that covers my position.

The CHAIRMAN. Thank you, Mr. Stewart for your statement. Mr. REILLY. Thank you, Mr. Chairman. We are very much obliged to the committee for being given this opportunity.

The CHAIRMAN. We thank you gentlemen; and the matter will now be taken under consideration by the committee.

(Thereupon, at 11.45 o'clock a. m., the committee went into execu tive session.)

HOME LOAN BANK BILL

TUESDAY, JUNE 7, 1932

HOUSE OF REPRESENTATIVES,
COMMITTEE ON RULES,
Washington, D. C.

The committee met at 10.30 o'clock a. m., Hon. Edward W. Pou (chairman) presiding.

The CHAIRMAN. The committee will be in order. Mr. Steagall, will you proceed?

STATEMENT OF HON. HENRY B. STEAGALL, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ALABAMA, AND CHAIRMAN OF THE COMMITTEE ON BANKING AND CURRENCY

Mr. STEAGALL. Mr. Chairman, I am not going to tax the patience of the committee in discussing the merits of the bill. I have appeared here to support the application for the rule for the consideration of the home loan discount bank bill.

Mr. MICHENER. We have heard one side of this case. Everybody we heard seemed to be in favor of it. As I understand it, we are to hear the opposition to-day.

Mr. STEAGALL. I am not going to take any time except to say this: That I favor giving that bill its opportunity for consideration in the House.

There are a great many difficulties presented in connection with the legislation, and I am frank to say I do not think we have solved them all in the bill. I am going to vote for some amendments to the bill, and I reserve the right for free action, so far as I am concerned.

Because of our inability to fix upon a plan that seemed to be practical, at least to the extent of covering the range that legislation of that sort should cover, there are a great many difficulties in it. Maybe we can improve it in the House.

In any event, the President wants the legislation, and I assured him, as far as I am concerned, I, as one Member, was in favor of giving it consideration in the committee and in the House, and I am taking that position here to-day.

Mr. Cox. As I understand it, you have been friendly disposed toward this legislation?

Mr. STEAGALL. I think Mr. Williams-I am not authorized to speak for him-but Mr. Williams is against the bill, and was on the subcommittee that prepared the bill, and desires to appear before the committee in opposition to the rule.

The CHAIRMAN. Are there any gentlemen here who want to appear in opposition to granting a rule for the home loan banking bill?

STATEMENT OF HON. CLYDE WILLIAMS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MISSOURI

Mr. WILLIAMS. Mr. Chairman, I am here as a member of the Committee on Banking and Currency, and I would like to be heard. I understand the committee had a hearing of the proponents of this measure, but I was not able to be here.

I was a member of the subcommittee of the Committee on Banking and Currency that held extensive hearings on this measure. I was one member of that subcommittee who could not see my way clear to follow the recommendations of the committee.

This committee will observe that in the Committee on Banking and Currency there are a number who have signed a minority report which is here and who have expressed their views on the other side of this question.

The vote in the committee-and I hope I am not divulging any secret of the committee-was more extensive than shown by the report in opposition to the measure.

Mr. O'CONNOR. What was the vote?

Mr. WILLIAMS. The vote, as I recall it, was 6 in favor of the measure, 6 opposed to it directly, and the balance of them voted to permit the measure to come out of the committee, but with reservations, which, of course, gave the measure a favorable report, and it is here for that reason.

However, there were some of the gentlemen on the committee who announced positively at the time that they could not support the measure, and would not.

It is a very long, complicated measure, and much involved. Of course, I am not going to discuss it in detail in the short time I am here before you, but will only speak of the general features of it.

This bill, in the beginning, seems to have had its origin in the President's conference, and, to my mind, there are some peculiar features about it. Of course, I want to say-and it is not necessary to say it-I am not opposing it because the President opposed it, and I certainly would not be for it because he is for it. The measure must stand upon its own merits and its own grounds.

It is not new legislation entirely. Similar legislation to this was proposed in the Sixty-sixth, Sixty-seventh, and perhaps some later Congresses. Those bills were known as the Nolan-Calder bills, introduced by Senator Calder in the Senate, I believe, and by Representative Nolan, of California, in the House.

Those measures provided for the establishment of building loans to banks throughout the country much upon the plan provided for here, except that the stock in those institutions was to be subscribed and paid for by the various building and loan institutions of the country. The Government, in other words, was to put no money

into it.

Those measures were referred to the Secretary of the Treasury, Mr. Glass, in the first instance, and Mr. Mellon in the last; and they both reported adversely on those measures. A quotation from Mr. Mellon was set out in the minority views of Mr. Stevenson and others.

This measure was not referred to the Secretary of the Treasury. It was not referred to any of the financial agencies or representatives

of the Government for some reason or other. It was intrusted entirely to the Commerce Department, and that department seems to have taken charge of it and sent out a questionnaire.

There is considerable stress placed on that questionnaire in the majority report. That questionnaire was prepared in the Commerce Department and was sent out without even the knowledge of the author of this bill; and there was no copy of the bill accompanying it, but there was a rather strong appeal on the part of the President for the measure.

As Senator Couzens said, it was simply an invitation to the various institutions of the country, banks and building and loan associations, to say as to whether money would be desirable in those communities under present conditions; and the answer came back, yes.

A majority of the answers to that questionnaire, as the report shows, expressed a need for these banking institutions. However, I place very little importance on that for the reason stated. It must be borne in mind that this is purely an institutional affair, as distinguished from an individual. It is a system whose members are institutions, rather than individuals, banks, insurance companies, trust companies, and building and loan associations. Those are the ones who can become members of it, and those are the ones to whom loans can be made.

There is a misapprehension, I take it, among people generally throughout the country-I know that is true in connection with my own correspondents-and they have the impression that they can borrow money if this bill is passed. That is not true, directly, because institutions only can be members, and loans can be made only to those institutions and not to individuals.

There is no unanimity of opinion among the various institutions as to the merits of the measure. I think I can say that without any question, in view of the testimony given in this case.

The building and loan associations' national organization at their meeting in Philadelphia last year had up for consideration a measure similar to this. It was discussed and laid on the table and did not meet with their approval.

Then the National Association of Real Estate Boards met in Baltimore, and they had a similar discussion, but they did not go on record in favor of such a measure. While they can not be members, they are interested in the financing and building of homes throughout the country.

The national banks have gone definitely on record against the measure, and many of the State institutions have done the same thing. And there is opposition on the part of most of the insurance companies of the country. So I think it can be safely said, on the face of the hearings, that there is no unanimity of opinion in favor of this measure; in fact, the sentiment is decidedly divided.

I think it may be said in fairness that there is a very highly organized movement on the part of certain building and loan associations of the country in favor of this bill. That, I think, accounts largely for some of the propaganda that has gone out and has come back. I know, at least, that I have been swamped with it, from sources that I know are inspired from some organization here or in this immediate neighborhood.

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