INTERMEDIATE CREDIT CORPORATION

MONDAY, JUNE 3, 1935

HOUSE OF REPRESENTATIVES,

COMMITTEE ON BANKING AND CURRENCY,

Washington, D. C. The committee met at 10:30 a. m., Hon. Clyde Williams presiding. Mr. WILLIAMS. The committee will come to order. We will resume the hearing on H. R. 5918, introduced by Mr. Kopplemann. The first witness this morning is Mr. Bloome.

Will you give the reporter your full name, your address, and state what your business is?

STATEMENT OF CHARLES P. BLOOME, PHILADELPHIA, PA., EXECUTIVE VICE PRESIDENT PHILADELPHIA WHOLESALE DRY GOODS AND APPAREL MANUFACTURERS' BOARD OF TRADE

Mr. BLOOME. Mr. Chairman, my name is Charles P. Bloome; my address is 712 Spruce Street, Philadelphia; I am executive vice president of the Philadelphia Wholesale Dry Goods and Apparel Manufacturers' Board of Trade.

Mr. Chairman and Members of Congress, needless to say, I feel thrilled this morning to stand up before you and plead the cause of people who very rarely have an opportunity of coming before Members of Congress and opening their hearts to you, to show you their pain and their suffering.

I am a practical merchant, and I also am the head of an organization in Philadelphia that combines the wholesale dry-goods merchants and manufacturers in wearing-apparel lines, taking in everything worn by men and women.

I stand here this morning and say to you, Members of Congress, that this bill that has been introduced by Congressman Kopplemann, known as "H. R. 5918", is in my humble opinion, the most concrete and the most practical piece of legislation in line for recovery. Į do not know of any piece of legislation that has been proposed and passed by the Congress of the United States within the last 3 years that has had or will have the important practical, and concrete reaction in favor of recovery as this piece of legislation.

There is a great tragedy, Members of Congress, in the lives of small- and medium-sized merchants and manufacturers that has been brought about during the last 2 years.

A ray of sunshine came into our lives when the Congress of the United States allocated $580,000,000 to be loaned direct to industry, and when we read in the papers about it we felt that a new day had come into our lives.

But lo and behold, when we came to those sources of loans, the R. F. C. and the Federal Reserve Bank, and knocked at their doors, we found that we were out.

Members of Congress, I think that I am equipped to discuss the situation from the banking angle, although I am not a banker. The only connection I have had with banks is that three banks took away my money. But I have had the honor of being the chairman of the national depositors' committee, who have been battling for the enactment of a bank pay-off bill. But that question is not before you here

now.

But I bring that out here now, Members of Congress, because of the fact that I think I am thus qualified to say before you Members of Congress that of all the banks that closed in our great United States of America, between Maine and California, not one bank closed because they had loaned money to the little fellow.

I have discussed that with Mr. Merriam, of the Reconstruction Finance Corporation, in a number of conferences. I have sat in conference with 15 secretaries of banks in 15 cities. I was concerned to find out whether any one bank had been forced to close because their losses were distributed in amounts of small loans to merchants and manufacturers; and those authorities, the Comptroller of the Currency, the R. F. C., the Federal Reserve Board, and the secretaries of banks, told me that no bank had closed because they made loans to the little fellow.

Then we came to the R. F. C., after you Members of this great Congress of this great country shed a little sunshine into our lives. Members of Congress, here are the application forms we have to make out when we apply for a loan from the R. F. C. [showing application forms].

Undoubtedly, you are familiar with these blanks. I will say to you that when one of our little fellows took courage and hired an accountant he paid his $250 to make out his life's history. And 6 months later he was notified that they could not entertain his application.

They also require a preliminary application. This is the preliminary application blank [indicating blank form]. I suppose that application requires the history of his antecedents, and the other one requires the history of his business.

However, the Federal Reserve bank has been a little more merciful, and they only require three sets of these. They have possibly more of the human heart.

This little fellow-and when I say little fellow, Members of Congress, I stand before you and say that the little, intermediate class of merchants and manufacturers throughout our great country are, after all, the backbone of our great country.

I said to the Governor of our Federal Reserve bank and to the president of the Philadelphia National Bank not long ago, "If you will pump a million dollars into the Philadelphia market and distribute it in loans of 2, 3, 5, and 10 thousand dollars, you will see that 20 or 30 thousand people will get employment immediately. I know what I am talking about."

Mr. Merriam said to me, "Sure, Mr. Bloome, we are making loans; of course we are." I said, "Mr. Merriam, what are the sizes

of the loans?" He said, "$100,000, $75,000, and half a million." I said "Mr. Merriam, I do not feel thrilled at all. Have you made a loan of $1,500 to somebody? Has the Federal Reserve bank made a loan like that out of its $580,000,000?"

Forgive me, Mr. Chairman and gentlemen, if I get confused or puzzled in talking about these large figures of many millions of dollars, because now I can only count up to $300. So when I say $580,000,000, then I get dazed.

I discussed the situation with the president of the Philadelphia National Bank, and he said, "Mr. Bloome, we are ready to loan money to the little fellow, but we cannot loan him if he does not deserve it, if he has not the necessary financial stability."

I said, "How is it that the big fellow gets a loan from the R. F. C.? If you are judging them by certain standards, if you are judging them by a certain status of financial stability, why was the fellow who got $100,000 from the R. F. C. or the Federal Reserve bank in a position to get it from his own bank? Why did he have to apply there?

I stand here and say, Members of Congress, that the little fellow who shows a financial stability of $5,000 is entitled to a loan of $500, which will be a godsend to him, just as much as the fellow who shows a financial stability of $200,000 is entitled to a loan of $100,000.

From a practical standpoint, I would rather loan out my money in a wide sphere than to put all my money in one basket.

I say that a loan of $1,000,000 to one concern is more risky, both morally and financially, than if you take that amount and distribute it among 500 merchants and manufacturers.

Here is the situation today, as I see it, Members of Congress. The other day a manufacturer who has an honest business, amounting to $10,000, went to one bank and wanted to borrow $500. The banker asked him for a statement, certified by a public accountant, and a public accountant certified to that statement. He spent $75 to get the statement certified and took it in to the bank. The bank, after making a thorough investigation, found that he had a brotherin-law. The banker said, "Will your brother-in-law endorse the note?" He said, "Surely; I will call him."

He called his brother-in-law, and the brother-in-law said, "Of course, I will do it." Then they asked the brother-in-law to submit a financial statement. So he submitted a financial statement showing that he had $18,000. In his statement he listed some Otis Steel Co. stock, paid up.

After a considerable discussion the bank said, "We will take your note, plus your brother-in-law's endorsement, plus the collateral of his Otis Steel Co. stock."

Members of Congress, I am not standing here to relate to you some mythical stories, but these are facts.

Today, if a middle-class merchant or manufacturer needs $5,000, $1,000, or $2,000, the doors are closed to him. I will say there are two sources where he can get money today, but when he gets it from one source he pays as much as 42 percent annually. To another one, which will discount his bills receivable, he will have to pay 30 percent.

Talk about the condition involved in chiseling in trade today, Members of Congress, I say to you that the chiseling, the cutting

of prices on merchandise today is not because a man is an evilhearted manufacturer or merchant and wants to bring ruin to this country, but because if he has merchandise on his shelves and if he needs money for his pay roll, he cannot get it. He has to go to the chain stores and the department stores and sacrifice his goods.

And, Members of Congress, those buyers of those large department stores and chains can tell from looking at the face of the seller immediately what is troubling him.

They say to him, "Yes; you take this price; this is our price, and we are going to run a sale next week and use this merchandise ", and so the manufacturer who has slaved in his business has lost on that transaction. The department store or the chain store will advertise in full-page advertisements saying that this is a closingout sale of goods from the manufacturer. There is your story.

If we have a bad week's business-there was a time when, if I had a bad week's business, I used to go into the bank and say to the banker: "Mr. Jones, you know my account that I have here. I need $1,000 to discount my bills this week." It was raining or snowing, or something else happened that made it a bad week, and I would say to the banker: "I want to discount my bills, and I would like to have a loan for 30 days or 60 days."

Today that merchant either goes to the chiseler and pays 42 percent, or he turns over his accounts receivable and pays 30 percent. The buyers of these chain and department stores know that the manufacturer has to take advantage of such opportunities to dispose of his goods, and he never get a penny on his sales to the department stores and chains.

Members of Congress, I wish television was so perfected that you could creep into the hearts of these small merchants and see the tragedy going on among the middle class and smaller merchants and manufacturers. The banks have taken away what we had in liquid capital, but we still hang on to our little business and the few employees we have. And many times when Saturday comes around the pay roll cannot be met, and we will say to the fellow who is supposed to get $22 a week, "We will go 50-50 with you and we will give you $11 now, and maybe during the week some checks will come in, and then we will give you the balance." That is the situation.

I contend that any business man who has borne the brunt of the struggle of this depression for the last 4 years and still has the courage and the mental fortitude to hang on to his little business is just as sound today as the Pennsylvania Railroad Co. or the United States Steel Corporation.

Members of Congress, you must come to our rescue today. I tell you the little fellow is being wiped out; the medium-class merchant and manufacturer is being wiped out.

If you will go through our cities you will see vacant stores everywhere. Why? Because the little merchant who knows his business just as well as Gimbel Bros. know their department-store business, can buy just as judiciously as the big fellow. But when he needs $500 to enable him to buy right, he cannot get it. But the other fellow who needs half a million dollars to close out something, does get that.

I hope you gentlemen will not consider me a inan of radical views. I am not. I am conservative. I still say this is the greatest coun

try in the world, in spite of all they can say. What a wonderful thing it is to live here!

But they are choking us, they are stifling us.

If we have had a bad week, where can we turn? We go to our men and women, our employees, and tell them we have the merchandise, but we cannot get it to work, because we have been confronted with a pay roll. So we have to tell them to go home, and say to them, "When we get the money we will send for you."

You must help us, Members of Congress, you must come to our

rescue.

I think Congressman Kopplemann will receive the blessings of millions of merchants and manufacturers because of this piece of legislation.

I have allowed credits, Members of Congress, to concerns throughout the world. I pride myself, as a little fellow, that I ship merchandise out of the port of Philadelphia of American-made goods to almost every trade center in the world.

I have studied it, and I know what the financial requirements are, and I say to you that if Congressman Kopplemann's bill goes through in this House and in the Senate, it will be a godsend to us.

I cannot stand here and quote you statistical figures. I am not cut out that way. I am mingling with my fellowmen on the highways and byways of life. I sit down and discuss our problems with them from a practical standpoint, and not in an abstract way.

We know what is affecting us. We know that if we owe a bank some money we will go through the tortures of hell, but we will pay it. We do not very often run to the cover of section 77 (a) or (b) and take advantage of the moratorium that Congress provided last year.

It is the big fellow who has the advantage. I do not stand here and criticize the big fellow. Whatever he says is right, or is supposed to be right.

But the little fellows do not do those things. We pawn our wives' jewels in order to meet our obligations. That is the way we are meeting our obligations, because we have embodied that wonderful tradition of this great country, because we feel that we have an opportunity to go out and make a decent living.

But in the last 3 or 4 years the ground has been cut from under us, and wherever we go the banks laugh at the little fellow.

Do you know, Members of Congress, that when the little fellow goes into a bank today to ask for a little accommodation, the bank says to him, "Go out of business; there is no more room for the little fellow in this country."

That cuts us to the heart. And may I be frank with you and say here that I was going to punch the face of a vice president of a bank because he said that to me.

I have been in business for so many years, and have worked together with my wife, and I need $500, and he told me to get out of business because there is no more room for the little fellow.

That is contrary to every precept of this great Nation.

They do not want to take our accounts in the banks today. First, the banks take away all we have, and now, if we have a thousand dollars and we go into a bank, they say, "Your account is too small for us to be bothered with."