the benefit of the depositors in dividends or in a reserved surplus for their greater security." Mutual savings banks, known in some States as saving-fund societies, and institutions or societies for savings, differ from commercial-banking institutions and other forms of savings banks in that they have no stock or stockholders. Under the principle of mutuality, they operate wholly in the interest of their depositors, and in the exercise of the principle of trusteeship, they lay great emphasis upon the safety and adequate liquidity of their funds. All income from investments and operation, after the setting aside of a sum, in accordance with the laws of the individual States as a surplus or reserve fund, and the payment of current operating expenses, inures to the depositors and is actually paid out to them in dividends or interest. There are 587 mutual savings banks located in 18 States of the Union. The total assets of these institutions on July 1, 1931, were $11,135,361,259; deposits amounted to $9,976,967,981 owned by 13,239,782 depositors, or an average of $753.56 per account. Mutual savings banks have 36 per cent of all savings on deposit in the banking institutions of the country. Because of the character of these institutions, not being in business for profit but endeavoring to invest the accumulations of the average individual in a way which will provide a satisfactory return consistent with safety, the legislatures of the various States have generally seen fit to set up restrictions as to the types of securities in which they may invest these funds. Naturally, the investments are of the highest type, and safety and liquidity with reasonable return are the three prime requisites. A consolidated statement of condition of the mutual savings banks of the country as of December 31, 1930, shows following distribution of assets: The mutual savings banks of this country have accumulated, during their 115 years of operation, a surplus account of $1,110,095,838, which is 11.1 per cent of the deposits. The present condition of mutual savings banks of the country is highly satisfactory, considering general economic conditions. Naturally, there has been some reduction in the market value of their bond holdings, but there is no present indication that they will need to dispose of these securities to meet their current demands. The records show that only three mutual savings banks have closed their doors since 1914. A fourth institution is being liquidated at the present time, and a fifth which was closed early in 1931 is being reorganized and is expected to be opened to the public again within a short time. It may be seen, therefore, that the record of mutual savings banks has been Inost remarkable. These institutions enjoy to-day the highest esteem and confidence of their depositors and the general public. Moreover, these banks, because of their strength and conservative policies, have served as stabilizing influences during these times when public emotions have been at high tension and the public confidence none too steady. During the year ending June 30, 1931, deposits in these institutions increased by $831,000,000, which is a practical indication of the faith and trust reposed in them. Statements which appeared in the press of the country before and during the time of President Hoover's conference on home building and home ownership laid emphasis on the fact that savings banks" are in a deplorable condi tion due to the illiquidity of their investments. Also, the proposal which has been presented to Congress for the establishment of home loan discount banks throughout the country is based upon the conclusion that "savings banks" and certain other forms of financial institutions are in need of relief with respect to their liquid position and that these home loan discount banks would serve to supply that relief. The fact is that there is no need for such relief in "mutual" savings banks, and it would be most unfortunate if any such impression were to become current among the millions of depositors who now avail themselves of the high quality of protection offered by this form of banking. The National Association of Mutual Savings Banks wishes to emphasize the point that the "savings banks" to which constant reference was made during the President's conference on home building and home ownership, and which the home loan discount banks would be designed to assist, are not to be interpreted as "mutual" savings banks and that "mutual" savings banks have taken no part in the proposal for the creation of an agency to supply such assistance. In consideration of these facts, we respectfully urge the banking committees of the Senate and the House of Representatives to include a statement in the record of their hearings to the effect that the term "savings banks" in their deliberations should be interpreted as exclusive of "mutual" savings banks. NATIONAL ASSOCIATION OF MUTUAL SAVINGS BANKS. Committee on Federal legislation: Jay Morrison, vice president Washington Mutual Savings Bank, Seattle, Wash.; Austin McLanahan, president Savings Bank of Baltimore, Baltimore, Md.; E. A. Richards, president East New York Savings Bank, Brooklyn, N. Y.; Milton W. Harrison, trustee Bowery Savings Bank, New York, N. Y.; W. H. Bennett, president Emigrant Industrial Savings Bank, New York City; R. C. Stephenson, vice president St. Joseph County Savings Bank, South Bend, Ind.; R. J. Rendall, president Hudson City Savings Bank, Jersey City, N. J.; H. P. Gifford, president Salem Five Cents Savings Bank, Salem Mass., chairman. STATEMENT OF HORACE RUSSELL, SECRETARY FIRST MUTUAL BUILDING AND LOAN ASSOCIATION COMMITTEE ON BANKING AND CURRENCY, United States Senate: My attention was called to the fact that certain evidence had been given before your committee that there are adequate funds for home financing in America and that these funds are being made available for such purposes and that there is no need for the United States to give any assistance to the home owners of America or provide a better means of organization for home financing, but I do not find these contentions borne out by the facts in my home city and in my section of the country, and I came to Washington to give this statement to this committee. There are not adequate funds, in my opinion, in Atlanta or in Georgia for home financing, and what funds there are are not being made available on account of fear as a result of the poor organization of home financing. I reside in Atlanta, Ga., am engaged in the practice of law in the firm of Jones, Fuller, Russell & Clapp, and handle loans for clients of that firm, including First Mutual Building and Loan Association, of which I am secretary, and have for many years had an intimate knowledge of the real estate market, and especially the question of home financing in that territory, and having been president for two years of the Atlanta Chamber of Commerce I have a general knowledge of the community conditions. It has been said by certain insurance executives that there are adequate funds for home financing and that the same are now being made available. The fact is in our city, and over the State of Georgia generally, the insurance companies have entirely withdrawn from the loan market in a very large percentage of the territory, and I believe that I am safe in saying that they decline entirely to consider a loan of any kind or character upon more than two-thirds of the homes of our State. It is true that they continue to make loans in the highly restricted and perfect neighborhoods upon only the most select houses in such neighborhoods, and to the most select personal risks and for a very small percentage of the value. However, the insurance companies do not make loans of $1,000 to $2,000 in our State scarcely, if at all, and this field probably includes half of the homes in the State, who are left almost entirely without financing in these times, and there are many other restrictions which are being applied in these times apparently for the purpose of holding down the amount of money to be put out. Representatives of the Mortgage Bankers Association, so called, have testified that there is no need of a Federal home loan bank bill. In our State the members of this association are substantially mortgage brokers and not mortgage bankers. They represent largely the insurance companies and must be speaking for them. The fact is, in our State, that one mortgage company for the period 1925-1929, inclusive, was lending from about $1,000,000 to about $5,000,000 a year on homes, and, therefore, absorbed a large part of the loan market during that period and it is now, not only out of the market of marking loans, but is calling all of these loans which are now maturing and demanding payment in cash and our people are able to find no cash. There are many other mortgage companies in our section which have pursued the same course. It may be that it is best for the selfish interest of the mortgage companies to leave home financing in its present chaotic condition, but it is clearly not best for the home owners of our State. Georgia has about 30 per cent of her families residing in homes which they own, or in which they are engaging in purchasing, and it would be better for the State and the United States if we had more home owners. We have the most pitiful condition existing now that has ever existed in reference to home ownership. Our people have been induced to undertake good homes with heavy financing and they have been abandoned in these times. Many, many of these people have paid one-half or even much more than one-half of the cost of their home, and have a loan come due at this time and are wholly unable to refinance in any way, and are losing their homes. Not only grave injury is being done to these individual citizens but also the most serious. harm is resulting in the case of home ownership when one man gets his home more than one-half paid for and loses it. The experience will not only discourage him but will discourage his relatives and neighbors and friends for a generation. The fact is that our system of home financing is broken down. I do not advocate the Government going into the business of home financing, but I do say that it ought to provide a form of organization which will better serve the home owners, as the banking community is better served by the Federal reserve bank. The Government has appropriated a large sum of money to the Reconstruction Finance Corporation, and is putting up government money for the relief of the bankers, insurance companies, and industrialists. It ill behooves these people, who have secured their relief to object to some small measure of relief for the home owners of this country, and this is especially true when the Federal home loan bank bill, now pending, does not provide for the Government to go into the business, but merely makes provision for the organization of home financing institutions, so that home owners will be better served. In my opinion the Federal home loan bank bill, now pending, as S. 2959, is perfectly sound from an economic standpoint, and as a plan of finance, and that it will render substantial immediate relief and will be of the utmost benefit to the home owners of America. WESTERN NEW YORK LEAGUE OF SAVINGS AND LOAN ASSOCIATIONS, To whom it may concern: At a meeting of the board of trustees of the Western New York League of Savings and Loan Associations, representing 46 savings and loan associations of western New York, the following resolution was unanimously adopted. Resolved, That the savings and loan associations constituting the Western New York League disapprove Senate bill No. 2959, authorizing the creation of Federal home loan banks. After thorough study and debate it was the unanimous decision of the board that this bill, if enacted, could not be of any benefit to savings and loan associations in the State of New York, but, on the contrary would cause them irreparable harm; and be it further Resolved, That a copy of this resolution be forwarded to the United States Senators of the State of New York and to the Representatives in Congress representing the districts included in the territory covered by this league, urging them to use their influence to defeat this bill, it being detrimental to the best interest of the public and our institutions. CHARLES A. HAHL, President. HENRY F. HOLTZ, Secretary. Whereas the Government of these United States of America is planning to inaugurate a Government home loan bank plan to relieve the burden resting on the shoulders of the home owner; and Whereas, it is just and fitting that such relief be given to the home owner, with the least possible expense to the said home owner: Therefore be it Resolved, That this post, the Metropolitan Water Supply Post No. 185 of the American Legion, in the county of Wayne, city of Detroit, State of Michigan, be on record as requesting this Government of these United States of America to open a Subtreasury office in every state of the Union, and an office in each major city, in order that the home owner desiring this “ Government home loan may attain such loan at cost and without the necessity of paying a bonus, and be it further Resolved, That the rate of interest charged by the Government of these United States of America shall be the lowest rate possible consistent with business methods. |