3 and substitute the following: "by member banks in reserve and central re serve cities or by member banks not in reserve or central reserve cities or by all member banks."

SECTION 210

Page 49, strike out everything commencing with line 7, through and including line 8, on page 51, and substitute the following:

"SEC. 24. Subject to such regulations as the Federal Reserve Board may prescribe, any national banking association may make real-estate loans secured by first liens upon improved real estate, including improved farm land and improved business and residential properties. The amount of any such loan hereafter made shall not exceed 60 per centum of the appraised value of the real estate; but this limitation shall not prevent the renewal or extension of loans heretofore made and shall not apply to real-estate loans which are insured under the provisions of title II of the National Housing Act. The Federal Reserve Board is authorized to prescribe from time to time regulations defining the term 'real-estate loans' and other terms used in this section and regulating and limiting the making of real-estate loans by member banks, with a view of preventing an unreasonably large proportion of each bank's assets from being invested in real estate and real-estate loans, preventing such loans from exceeding a reasonable percentage of the appraised value of the real estate in view of the circumstances existing at the time, and otherwise requiring the banks to conform to sound practices in making real-estate loans. On and after the date on which the regulations first adopted under this section shall become effective, no State bank or trust company which is a member of the Federal Reserve System shall make new real-estate loans except to the same extent and under the same regulations and limitations as national banking associations are permitted to do so."

Section 210 alternative amendments, if foregoing substitute not adopted: Page 50, line 8, change the first word to " of."

Page 50, line 12, strike out the words "second or subsequent."

ADDITIONAL SECTION TO BE ADDED TO TITLE III

The second paragraph of section 9 of the Federal Reserve Act, as amended, is amended by striking out the period at the end thereof and adding thereto the following words: "except that the approval of the Federal Reserve Board, instead of the Comptroller of the Currency, shall be obtained before any State member bank may hereafter establish any branch and before any State bank hereafter admitted to membership may retain any branch established after February 25, 1927, beyond the limits of the city, town, or village in which the parent bank is situated."

[NOTE. The sole purpose and effect of the above amendment is to correct a technical error in the Banking Act of 1933 which results in State member banks being required to obtain the approval of the Comptroller of the Currency, instead of the Federal Reserve Board, before establishing out-of-town branches or retaining such branches upon admission to the Federal Reserve System, if they were established after February 25, 1927. It would neither enlarge nor diminish the right of State banks to establish or retain branches, but would merely require them to obtain the approval of the Federal Reserve Board instead of the Comptroller of the Currency.]

Governor ECCLES. The committee requested certain information on Friday with reference to the number of employees in Federal Reserve banks and the paper eligible for rediscount with Federal Reserve banks as reported by member banks. The latter statistics were prepared for selected call dates from 1928 to 1934, and include the total amount of eligible paper from that date, from 1928 to 1934, as well as the ratio of eligible paper to total loans and investments, by Federal Reserve districts.

Senator GLASS. Just file that with the reporter. Mr. Smead gave me that a month ago.

(Paper submitted by Governor Eccles, entitled, "Paper Eligible for Rediscount with Federal Reserve Banks as Reported by Member Banks on Selected Call Dates ", is as follows:)

Governor ECCLES. The number of employees of the System is 11,789. Five hundred and seventy-five is the number in the agents' departments, engaged in the issuance of Federal Reserve notes, in bank examinations, the statistical and analytical work, and the Securities Exchange units.

Two thousand three hundred and forty-one is the number in the fiscal agency, custodianship and depositary departments. That includes the number in the Treasury Department, Reconstruction Finance Corporation, Farm Credit Administration, Public Works Administration, and the Home Owners' Loan Corporation units.

There are 8,873 in the banking departments, all other units of the banks, including auditing. I will file these figures.

That concludes my statement, Senator.

Senator GLASS. We are very much obliged to you, Governor, for giving us that statement. Unless there are questions to be askedSenator COUZENS. I suppose the Governor will come back at the first opportunity and answer the question I asked last week.

Governor ECCLES. All right.

Senator COUZENS. Because I want that as a matter of record. I am anxious to have it in the record.

Governor ECCLES. I think, Senator Glass, in connection with your statement, you also asked that I state what the Federal Reserve Board did.

Senator GLASS. Well, you need not do that. I know very well what they did do, and the Senator from Michigan seems to think that my supplemental question, which was designed to aid him, was in some sense an antagonistical question. So you need not answer my question, because I know it.

I am much obliged to you, Governor.

Governor ECCLES. I have some copies of that, if any of the members of the committee want any.

Senator MCADOO. I would be glad to have a copy of it, Governor. Governor ECCLES. Thank you.

(The information supplied is as follows:)

Average number of officers and employees of the Federal Reserve banks during the last 6 months of 1934

Total__--_-

Federal Reserve agents' departments (Federal Reserve note issues, bank examination, statistical and analytical, and securities exchange units)_ Fiscal agency, custodianship and depositary departments (Treasury Department,' Reconstruction Finance Corporation, Farm Credit Administration, Public Works Administration, and Home Owners' Loan Corporation units)

11, 789

575

2, 341

Banking departments (All other units of the banks, including auditing) 8,873 Senator GLASS. Professor Kemmerer.

STATEMENT OF EDWIN WALTER KEMMERER, WALKER PROFESSOR OF INTERNATIONAL FINANCE, PRINCETON UNIVERSITY, PRINCETON, N. J.

Senator GLASS. Professor, just give your name and occupation to the official reporter.

1

1 Except certain depositary operations such as maintenance of the Treasurer's general account for which separate figures are not available.

Professor KEMMERER. My name is Edwin Walter Kemmerer. I am Walker Professor of International Finance at Princeton University.

Senator GLASS. Doctor, have you had any experience in the setting up of banking systems in this country and abroad?

Professor KEMMERER. I have had considerable.

Senator GLASS. And if so, briefly state what it has been.

Professor KEMMERER. I have had considerable experience abroad and have cooperated from time to time in this country; but my work in this connection has been largely abroad. I was currency and banking expert of the Philippine Government from 1903 to 1906, and at that time was the adviser in the inauguration of the gold standard and drafted first hand, or with the assistance of others, a good deal of the banking legislation of that time.

In 1917 I was currency expert to Mexico. In 1918, in the summer, I was with the Federal Reserve Bank of New York, assisting in the preliminary work of the establishment of their statistical department. In 1919 I was financial adviser to Guatemala, and I went down there on a second mission sometime later; the first one was a Government mission, and the second one was under private auspices but as a friend of the Government.

In 1922, I was a trade commissioner-at-large, and spent a greater part of the year traveling in South America studying banking and currency problems.

I was president of the American Commission of Financial Advisers to Colombia in 1923.

Senator BULKLEY. Was that a United States Government position?

Professor KEMMERER. It was. That was a dollar-a-year job.
Senator BULKLEY. Under what department?

Professor KEMMERER. Department of Commerce. I was a freelance but I had the official job of going down there to secure information in reference to the conditions down there.

Senator BULKLEY. In what year was that?

Professor KEMMERER. 1922. In 1923, I was president of the American Commission of Financial Advisers to the Republic of Colombia. And in that connection we drafted the legislation that established the central bank of Colombia, the Bank of the Republic, put the country back on the gold standard after many years of paper money, drafted the general banking legislation, and so on, which is still in operation. We covered other fields, including taxation, accounting, tariff administration, and credit policy.

Then, later, I was currency expert to the Dawes Committee in connection with the German banking and currency reorganization. In 1925, I was chairman of the American Commission of Financial Advisers to Chile. We drafted plans for the almost complete reorganization of the currency, banking, and auditing and accounting laws of Chile. There, we established the Central Bank of Chile, helped get the country back on the gold standard, drafted legislation for the general banking law, and so on.

In 1927, I was chairman of Commissions of Financial Advisers of Ecuador and Bolivia, which did much the same things in those countries.

In 1926 I was chairman of a similar commission to Poland, in which we among other things-drafted plans for revising the Central Bank of Poland, and for getting the country back on the gold standard. In 1924 I was-along with Girard Vissering, the president of the Bank of The Netherlands-currency expert to the Union of South Africa. We went down there and worked out a plan for the return of South Africa to the gold standard before Great Britain came back.

I had a commission as financial adviser to China in 1929. We spent practically the entire year there, and our work covered the field of currency, banking, taxation, auditing, accounting, public credit, financial administration, and railroad finance.

I had a second commission to Colombia in 1930, similar to the first one, in which we followed up and tried to perfect and improve our original work.

Last year I was invited to Turkey and assisted in carrying out what was known as the "Hines-Kemmerer Economic Survey of Turkey." In connection with our work there we worked out plans for helping in the monetary stabilization and the reorganization of banking.

Senator COUZENS. Would you kindly tell us who paid your expenses and salary at the time you went to Turkey?

Professor KEMMERER. Who paid my expenses?

Senator COUZENS. And salary?

Professor KEMMERER. Mr. Walker D. Hines was invited to make an economic survey of Turkey and he associated with himself a group of experts, who went out there. He had a financial arrangement with the Government for the work. It was continued for sometime, and Mr. Hines became ill. They wanted to get someone who had been familiar with this field to assist in carrying on that work. So they asked me if I would be willing to cooperate, and I said "yes." I got a group of people who were interested in that sort of thing and we cooperated with the original group, with Mr. Hines' group. Mr. Hines died shortly afterward, but we carried on from this end, and those in Turkey did likewise.

We finished the main report in May of last year, but did not finish the work on currency and banking until late summer, for I was unwilling to make any definite recommendations in that field until I had been on the scene in Turkey for 6 weeks.

Senator GLASS. Until what?

Professor KEMMERER. Until I had been on the scene, been out there. I went out there with a couple of assistants last summer, was there for 6 weeks and finished that work.

Mr. Hines' law firm made the arrangements with the Government of Turkey, and his firm paid me my expenses and honorarium. I had no negotiations in that case directly with the Government. In my Peru commission my negotiations and work were directly with the Reserve Bank of Peru, but it was work for the Government.

Senator COUZENS. While you are on that subject, you have mentioned many times the fact that you were an expert. So that us laymen understand just what an "expert" means, would you kindly define an "expert"?

Professor KEMMERER. Well, a popular definition of an expert is, "A guy who is long ways from home." To be serious, however, the