and denomination. At least this is the situation in the United States.

It would seem, therefore, that an industry that balances so finely such desirable economic and industrial essentials should have a national center of gravity.

In the United States practically all of the small homes are built from the sum which represents the difference between the amounts received for wages or salaries and the amounts spent for living; this amount then represents the thrift of the Nation. These savings are found in savings banks, trust companies, building and loan associations, postal savings banks, and similar depositories and are, only to a limited extent, available for individual building-construction loans and mortgages.

General practice and good banking suggests that the bulk of these deposits be loaned at short maturities in order to keep a stabilized liquidity rather than tie them up in frozen loans over the longer periods necessary to accommodate the builder and the owner of the small home; therefore, when the demands of commerce and industry are urgent these funds flow quickly and regularly to meet this shorttime demand, to the disadvantage and detriment of the great industry, which, probably more than any other, caters to the upbuilding of our economic assets. Moreover, this situation arises just at the time of greatest demand for housing, as that need is coincident with industrial expansion.

Should there be demand for such funds in any particular sections of the country, beyond the ability of that section to supply, the home builder's ambition in that section is very greatly curtailed if not actually made impossible of consummation. There may be ample funds and credit in other section, but completely unavailable because of lack of the intimate knowledge necessary to the establishment of such credit and utter lack of proper financial machinery or organization through which to present proper form of investment security instrument, as will convey to all of us, in terms of common understanding, that this form of investment for our funds is just as secure and profitable in one section as another.

In the aggregate our savings deposits represent a huge amount, which it is believed would be more completely available for home building when invited into investment in properly secured form under national enactment and supervision. It is plausible to think that this may be done in a manner that does not involve Government outlay or liability, but would only contemplate its activities in a supervisory manner. Obviously, it is desirable that the National Government should not be put into the building business or other private business enterprises having to do with the matter, our Government should engage in no practice that would slow up or destroy private initiative or make private capital indifferent, but it can, through a proper department, act as a clearing house and directing or supervising medium for presenting protected forms of investment in the shape of bonds to the nation's savers, collectively, and assist in circulating the proceeds back to the prospective home builder and owner. Such a plan, clearly, should be so devised as to aid and supplement existing agencies rather than handicap or destroy them.

it building groups I have not heard touched on . Through Michigan we have a great many large ling concerns that make a specialty of building and they buy lots in a city like Detroit, and build & ber of houses, 15, 20, 30, or 40 at a time.

such effort is only designed and only prosecutea emand for homes.

1 building of a speculative character for profit is ime when the demand exists.

hing that I did on this subject in 1925, if you are thought, I had four general groupings of memberr. They were not thrown together. There was a ained all building and loan and other mutual group No. 2 had all the savings banks, trust comorth, and group No. 3 had mortgage companies, or mpanies, and such groupings that were obviously panking department, and Group No. 4 contained zed and capitalized and responsible building enterto do with both construction and financing. There in various parts of the country. I find that that at sections, in some sections you find none of it and uite extensively engaged in. As I said, they have è number of homes, in fact, the majority of them. 1 that some provision, perhaps, might be made for of that element in organized form.

; along here in the high places.

we recognize that construction of houses with its lem of financing is an industry and give it a national ty as such, through an enabling act that will at equalize, and standardize its values and practiceshere will flow to it and become available the same Iministrative ability in corporate and organized form financial stability as is found in competitive effort in dustries, such as steel, lumber, etc.

ulk financing" will be possible as soon as it is in industry and the practical eye of the banker and e attracted to it because of its stabilized and liquid house as a single unit for financing, necessarily must ppraisal value as a basis of loan, that will not, even adverse financial conditions, offer the slightest chance

s the plan in detail here.

general methods of the plan, as I saw them at that ight out here.

the benefits that might be derived from institution banking idea might be said to include the following: ment, financially, of an industry, of an activity that way ranks near the top of the leading industries of

? in stabilization of government by assisting the mapeoples to become satisfied home owners, thus making ir economic foundation.

The conversion of frozen long-time credits with their unwieldy units as to time and denomination, into stabilized and standardized form of security with consequent liquidity and marketability.

An advanced step in a plan to make funds continuously available in any locality where housing need exists irrespective of local financial conditions.

The aiding, abetting, and assisting of every legitimate agency now engaged in the business of catering to this need in any form, that may qualify under the enactment and the augmenting of their facilities,

The inducement and encouragement to organize new corporations, new agencies, and groups to engage in the work.

The inducement to private initiative and private capital to lend itself to this effort, and we all agree these are two of the outstanding and neessary requisites to national growth.

The abandonment of the old single building unit basis of appraisal for mortgage valuation, the collective use of these units with added values behind them, and the raising of this appraisal value to a point more consistent with its real worth, as collateral.

The facility and ability to originate and dispose of a stabilized and commercial form of investment security that is understandable to all possible investors, many of whom would not under present conditions think of investing their funds in home building enterprises.

The making available of a safe form of investment which will make a strong bid for funds of such institutions as Postal Savings banks, some of the large insurance companies, trust funds, and similar deposits which have not heretofore been available for this purpose.

It will be understood that in setting up the plan as suggested that all figures wherever used are merely for purposes of illustration and that no attempt has been made at definite calculation, as financial, local, and other conditions as they exist in our different countries would make this impossible in a general presentment of a subject of such magnitude and importance. Rather the desire has been to roughly sketch and outline the idea in skeleton form for what it may be worth as a basis for developing further thought on the subject.

The crying need for housing is always met with a series of retarding influences which begins and ends with a lack of funds and a lack of liquid equities, due mostly to the long maturities involved and with no satisfactory manner provided for revolving funds, once they are invested.

Now, your proposal here, I have not read clear through. I read half way through it this morning while sitting here listening. There were two or three things brought up by some of the gentlemen that were talking here that it occurred to me that perhaps you would want to give considerable thought to before you presented them for public criticism.

One was the problem of making these banks banks of deposit. I would question very much the desirability of doing that. We have already plenty of banks. We have plenty of competition in a banking way. There are too many banks in some sections right now, and

eem desirable, as I see it, to inject another chain of cture. It might be in order to require deposits of ontracts with your banks, to a certain amount, to ole extended liabilities to that regional bank, but it esirable to go further in that field.

› something said about the fee for joining, as Mr. the dues or membership fee, or whatever you care believe that your bill here provides that there shall sum of 1 per cent of the outstanding balance of at institution holds. It would seem that whatever se should be applied only to the face value of mortlimit of $15,000, not outstanding balances, but the es up to $15,000, if that is your sum. Personally I t $15,000 was a little high, and that probably $10,000 ⚫ better.

I heard discussed here this morning was the deing your bonding ratio up to 20 to 1, and the thought hat the Federal reserve act is so based. I would tion to the fact that your Federal reserve act deals r most liquid form of credit, 30, 60, and 90 day comhereas these proposals here deal with the lowest and form of credit that we can have to apply in our tions. A 12 to 1 ratio, as I would figure it out, is a io. Certainly 20 to 1 would be the maximum, as I

here, “Small banks." I do not know what it meant. is some question someone raised as to the desirability a small bank to participate.

if these privileges are not to be obtained by small ot extended to them, you will miss a great deal of ctives of the enactment. How they srould be tied bership, and by what groupings and how much it n, of course, I am not prepared to discuss. That is f the thing, but this thing has two real objectives for imate proposal, and a helpful constructive thing, or extend to the greatest number of people, our average ection and privilege and opportunity to own a home. st go just as far as safe banking and good practice o do in making that possible.

to make possible a revolving fund for the liquidation for no average man can, out of the difference between what it costs him to live, possibly hope to save enough short years to buy a home. It necessarily means a t operation and, as I have said here, gentlemen, the uilding demand is the greatest is at the time that our ommerce is going at full pace.

It

unger, you are sitting at your desk and a man comes to borrow $100,000 for 90 days, and over at the he desk are gentlemen who want to borrow $10,000 ears apiece. Which loan are you going to take? you long. You have liquidity here and turnover, and to make your big loan, but any progressive banker so far as he helps his town and helps the people to

lay solidly their economic foundations, he is certainly doing something for himself and his institution.

Now, if he knew that he could take these 10 loans, or any given number of them, and could discount, rediscount, those instruments, and had the facilities for doing it, why, it is obvious that he would be found making more of such loans than he would at the height of his building time, which is the exact time that the average man or woman has the opportunity to build a home or own one. So, I think, by and large, that you gentlemen here can do but one thing. furnish a machine through and by which we will for the first time have a positive and a continuous place where we can discount from time to time these loans that now are troublesome to look after. Banks make them because they feel that they should. They would prefer many times to make other kinds of loans, but they must make so many of these loans. Then, again, if I can refer to the sore place that a lot of us have been sitting in in the last couple of years with mortgages out, payments in arrears, and depositors on the other hand thinking you are running a cash institution and not a credit institution, and wanting to withdraw their money, you have the alternative of foreclosing mortgages, which you can not do without forever shutting your front gate. Now, clearly, with such machinery as this, if this plan had been going since 1925 or 1926, we would have avoided a great deal of the grief that we have all had to go through.

There is no reason at all why the United States Government, if it makes a contribution, should not receive dividends or interest on its investment, just the same as any other investor, and he sits in a preferred position and will be retired as you reach a certain stage of development in your business.

The thought is that it is pretty easy to regulate the other fellow's money and legislate the other fellow's money and spend the other fellow's money, but I have always found when you put up a similar amount yourself alongside the other fellow's that you all have a pretty keen interest in how it is going to be handled.

Now, as I said in the beginning, I do not believe that I can contribute anything to human knowledge on this subject, and I hope I have not detracted anything from it.

The CHAIRMAN. That is all you care to state?

Mr. LEWIS. That is all, thank you.

The CHAIRMAN. We will adjourn now until 10 o'clock to-morrow morning.

(Thereupon, at 4.45 o'clock p. m., the committee adjourned until 10 a. m., of the following day.)