Mr. LUCE. You have ample assets, I gather, with which you can extend utmost leniency?

Mr. RINDSFOOS. We certainly are doing it, and we have to do it. Mr. LUCE. How about a banking institution that has not the assets which will permit it to extend leniency?

Mr. RINDSFOOS. It has got to do it. If you will permit me to diverge a little. I may get a little long winded, but I am full of this subject.

Mr. LUCE. I think we can save time.

Mr. RINDSFOOS. I know what you are going to bring out. You want to know what the banker will do that is in as bad shape as his borrower?

Mr. LUCE. Yes; and the bank has not the assets which will permit it to extend leniency.

Mr. RINDSFOOS. He does not foreclose because he can not; and I can explain with a practical illustration: There is a bank in Youngstown, Ohio, now broke and in the hands of a receiver. It is going to reopen, we think. Not only did the bank go broke, but the whole town went broke. There was not a single mortgage foreclosed or called. Here is what happened. These are practical matters. We went to Youngstown. We went over their portfolio, and we went over all mortgages on properties that were acceptable, and we said, "We can lend this much and that much. We told them what we would lend on every piece of property where they had 90 and 100 per cent loans.

The banking department gave the closed bank permission to take a second mortgage back for the difference, and the fellows were never foreclosed. There was a case where the whole town was flat. There was only one bank left in the town, and Youngstown is a big city with big banks.

Mr. REILLY. Are there any further questions?

Mr. LUCE. Yes; I want to get back to my question, and I will preface it by saying that Congress was confronted with the same situation in the farm field and has just appropriated a large amount of money to the farm-loan system, in order to furnish it with funds by means of which it may be able to carry out the injunction of Congress specifically put in the bill that it extend leniency to these

borrowers.

Mr. RINDSFOOs. Yes.

Mr. LUCE.. Is that impossible, do you think, under this present bill?

Mr. RINDSFOOS. I think if you do this you will be called on to exercise discretion in a big way; in other words, I think it is all right to do what you did for the farmer.

Mr. LUCE. Is it wrong to do it for the home owner?

Mr. RINDSFOOS. Oh, no; you are not going to do it for the home

owner.

Mr. LUCE. We are putting money in the hands of thousands of institutions that now have not cash with which to be lenient to their borrowers.

Mr. RINDSFOOS. Yes; they have; they are lenient with their borrowers. They have to be. If they did not, they would have to foreclose.

Mr. LUCE. Let it go at that. I would like to ask another question.
Mr. RINDSFOOS. All right, sir; go ahead.

Mr. LUCE. You said you thought there should be a provision in this bill so that any institution borrowing from a central bank would not lend until that loan had been repaid?

Mr. RINDSFOOS. Absolutely.

Mr. LUCE. Would you have a similar provision put in the Federal reserve act?

Mr. RINDSFOOS. No; because from the Federal reserve you borrow for 90 days and 4 months, and here you propose to make long

time loans.

Mr. LUCE. What is the difference?

Mr. RINDSFOOS. Because at the end of 90 days and 4 months the Federal reserve expects you to pay off and here you do not?

Mr. LUCE. What is the difference?

Mr. RINDSFOOs. The difference is that one is for 90 days and 4 months, and the other is for 10 years.

Mr. LUCE. What difference does that make?

Mr. RINDSFOOS. It makes the difference between solvency and insolvency.

Mr. LUCE. Please explain.

Mr. RINDSFOOS. If I lend money that is rediscountable in the Federal reserve bank 1 have to have the supporting collateral, do I not! Mr. LUCE. Yes; and so do we in this system.

Mr. RINDSFOOs. No; you do not, because

Mr. LUCE. You can not borrow the money without putting up collateral.

Mr. RINDSFOOs. I know, but the collateral is not good.

Mr. LUCE. Neither is the collateral of a 90-day note.

Mr. RINDSFOOS. Oh, yes; it is; otherwise it is not acceptable.
Mr. LUCE. It is not due until 90 days.

Mr. RINDSFOOS. I would rather have a good piece of commercial paper due in 90 days than a mortgage. That is the reason all the banks have failed, and all the banks have frozen assets; that is the difference between frozen assets and liquidity.

Mr. LUCE. Unfortunately, nearly all the commercial banks are frozen; we are trying to help them out.

Mr. RINDSFOOS. I do not think that is correct. In the city I come from that is not correct.

Mr. LUCE. You are very lucky.

Mr. RINDSFOOS. No; we are not lucky; there is no such thing.
Mr. LUCE. That is not true of the entire country.

Mr. RINDSFOOS. Let me tell you another city of which it is not true, Cincinnati.

Mr. LUCE. You were talking about Ohio. I did not ask questions about Ohio. I recognize the virtues of Ohio.

Mr. RINDSFOOs. Absolutely, everybody does.

Mr. LUCE. I also recognize the fact that gentlemen who have come here from Ohio have not realized that the Congress must legislate for 48 States and not for one, and in view of all the conditions in the 48 States. Do you know that in the region from which I come, New England, there is comparatively little of this allotment business and within my own locality, metropolitan Boston, a city of about a

1

million and a half people, so far as I am aware the allotment question is not alive?

Mr. RINDSFOOS. I congratulate you.

Mr. LUCE. Now, in view of the fact that we are to legislate for that region as well as for others that have been called to our attention similarly situated, where there is no allotment question, do you still think that the allotment problem in Ohio should dominate the legislation?

Mr. RINDSFOOS. Oh, no; certainly not. I do not think Ohio should dominate the situation.

Mr. LUCE. Of all the witnesses we have had, both in the Senate and in the House-and I have either read or heard all their testimony-I can not recall more than three or four allotment men who have come before us asking for this legislation, nor have they objected to such legislation.

Mr. RINDSFOOS. They objected? They would not.

Mr. LUCE. They either have not asked for it or have not objected. Mr. RINDSFOOS. I have read the testimony.

Mr. LUCE. The allotment proposition has, so far as the interest in this bill goes, been an insignificant factor. That being so, should legislation for the whole country be determined by the allotment problem?

Mr. RINDSFOOS. No; but I think they have had more to do with this proposition than you realize, because they have remained in the background. I know two or three hundred. They are active, but they do not openly appear.

Mr. LUCE. Do you think the allotment men exerted an influence in the building conference here prior to the initiation of this bill? Mr. RINDSFOOS. You ask me some questions I hate to answer, because I would have to tell you some things which would be very embarrassing about people I know very well, intimately, and people in that conference. I happen to know something about them, and I personally. I do not want to get into that. I would rather present my side of the story and let the other fellow present his side of the story. I do know that the allotment pressure was very great, although they did not come here as allotment people.

Mr. LUCE. Out of 300 or 400 letters I have on my desk, do you think it would be possible for that to have the importance you have indicated, when I have received no communications indicating any such thing?

Mr. RINDSFOOS. They would not write to you; they would be very foolish to do so. But they were here. Some of those fellows are mighty fine politicians; most of them are. They go out in the edge of towns and get things to the city council that would make you laugh. We are all politicians in Ohio, all born with the presidential certificate out there, and we know how to pull the wires; and those boys are past masters. The allotment men are the very quintessence of good politicians. You do not have to tell them anything; they know just how to handle their affairs. They will go before a city council and arrange to have streets, sewers, sidewalks, cluster lights, and all that put out in their developments.

I was up to Winnipeg some years ago, on a hunting trip. Up there in Winnipeg, where I used to spend a lot of time hunting and fishing, they had a city council extend street-car lines out 8

or 10 miles in the country for their subdivisions. We have not got quite that far in Columbus, but they know how to do it; and if they want to influence your committee they would have a very fine idea about how to get to you, if you want to know it. I imagine you are a fairly good politician or you would not be here in Con gress. I am just an ignorant country boy, but I do know these allotment men could bring the proper testimony before you and never let you know they were allotment men at all. I do not say they are after you, but I say they are on their knees every night praying to God almighty that you pass this bill.

Mr. LUCE. Do you think the allotment business is an illegitimate business?

Mr. RINDSFOOS. No, sir; I do not. I think it is a vastly overdone business. The closest friends I have got are allotment men and on my board is an allotment man.

Mr. LUCE. If they thought it would help them even though they have not disclosed that fact to this committee or the Senate committee, would there be anything improper in considering their point

of view?

Mr. RINDSFOOS. Absolutely not. I think you gentlemen ought to consider everybody's point of view; that is only fair. You have got to have judicial minds in this thing. You can not just take me and my point of view; but you have to take everybody's point of view. That is only right.

Mr. LUCE. That is all.

Mr. REILLY. Thank you, Mr. Rindsfoos.

Mr. RINDSFOOS. Thank you. I want to thank you gentlemen for your courtesy.

Mr. REILLY. Mr. Chandler, give your full name and address and

business to the reporter.

STATEMENT OF BUCKINGHAM CHANDLER, PRESIDENT STATE REALTY CO., CHICAGO, ILL.

Mr. CHANDLER. My name is Buckingham Chandler, 40 North Dearborn Street, Chicago, Ill.; president of the State Realty Co., general real-estate business in Chicago.

Mr. REILLY. Did you appear before the Banking and Currency Committee of the Senate?

Mr. CHANDLER. No, sir. I have not very much to say. It is not going to be long; it is very brief, and there is only one point I want to bring out.

At one of its monthly meetings attended by about 75 members, out of a total active membership of about 800, the Chicago Real Estate Board voted in favor of this bill. Not believing this to be an accurate cross section of the views of the entire board, some of the members of the mortgage loan committee, of which I was then chairman, took a referendum vote of the entire membership, as printed in the club's official year book. The result was a vote of 41⁄2 to 1 against the bill, of which a digest prepared by Mr. Newton C. Farr, past president of the Chicago Real Estate Board, and pub lished in the official magazine of the Chicago Real Estate Board.

was inclosed with the referendum document. We also inclosed a copy of the official report of the mortgage loan committee of the Chicago Real Estate Board, which has unanimously voted against the bill. The committee members who cast this vote were: Milton S. Yondorf, A. A. Brock, Sidney Lowenstein, Henry E. Coonley, and myself. The actual count was 58 in favor of the bill and 252 opposed.

Mr. REILLY. Without a public meeting on that, can you give us briefly on what ground they based their opposition, in a concise manner?

Mr. CHANDLER. There was no public meeting on this bill in Chicago at all. In the past, probably last year-I was not present at the meetings, but I have been to a lot of their meetings; they held them in the evening, and there are generally about 75 out of 1,000 or 800 men that attend.

There was no notice sent out to the general membership asking for discussion on this question, but this question came up at one of those meetings. And, so I am informed, the board and those present voted in favor of the thing, a yea-and-nay vote.

Mr. Waterfield, the president of the board, appointed me as chairman of the mortgage-loan committee this year. One of the members of the mortgage-loan committee suggested we ought to investigate and see whether this bill was beneficial to the general real-estate interests and to the public. We had two or three meetings and discussed the bill, went through it from front to back, and the unanimous decision of our committee was that it was not favorable to either the public or the real-estate fraternity.

Mr. REILLY. For what reason, in a general way? Now, just give your views so we can have them. Let me put this question: Is not your objection based largely on the fact that you think the bill will encourage building that will be detrimental to the general real-estate situation?

Mr. CHANDLER. No; that is not my particular view on the thing, I think some members of the committee feel that way.

Mr. REILLY. Do you think this bill will encourage home building to such an extent that it would be detrimental to the home owner and of the loan banks and other home owners?

Mr. CHANDLER. I make the point it probably will not encourage much home building, because it will not produce the results that are anticipated by the bill.

Mr. REILLY. What is your particular objection to the bill?

Mr. CHANDLER. My objection to it is that it is setting up a machinery of the Federal Government that will eventually require $60,000,000 of Federal money to be invested in these banks. It is a permanent machine, and the permanent machine will live on when its usefulness or any possible usefulness is over, and that therefore it is a bad thing for the Federal Government to go into. It creates another bureau.

Mr. REILLY. In other words, you do not think it will work?
Mr. CHANDLER. I do not think it will work.

Mr. REILLY. Either as regards the proper functioning of the bank or as regards satisfying any demand?