Mr. MACCHESNEY. From a reading of the provisions of that bill, House 9203, section 2, subsection 10 (b), and section 10 (a), it would seem that that means that the home owner who has his mortgage to renew could never get another accommodation, because this bank can only use that once as collateral when it has got less than $5,000,000 capital; and when it is in such a desperate situation that it has no eligible collateral whatsoever, and when a majority of the board are willing to vote that it is in that condition, that they ought to accept his collateral.

Now, what this ought to be, this ought to be a collateral, not a preferred collateral, but it ought to be a collateral in view of its real value, in fact, substantially greater, where the building and loan association and the bank, and under my suggested amendment the mortgage broker will be able to discount his notes at the bank; will be able to come in and get that discounted when he needs it in order to save disaster.

This Glass-Steagall bill does not help the mortgage owner one iota. It does not help the building and loan association. It does not help the individual mortgagee. It simply saves that institution, the bank, which has exhausted all its available assets, from disaster.

Mr. WILLIAMS. What about liberalizing that law and making it take care of your situation?

Mr. MACCHESNEY. It would seem, Mr. Williams, that what is needed in this country is what they have in every other civilized country in the world; and that is alongside of your commercial bank a long-credit reserve system.

Now, this system is a very limited system. It is limited to homes occupied by people, not more than three families, and not exceeding $15,000. Now, there are no such limitations in other countries. This country is short-every financier, every political economist and every public man who has studied the question will tell you that this country is woefully short on long-term credit facilities as opposed to commerical facilities.

We have developed on the one hand the great commercial banks to an extent that has given us confidence in them. But we have not developed on the other hand the great international banking houses which we need. We began to have doubts about it, but this situation has shown us that they were not as smart as we thought they were. They let the people of this country into terrible losses.

What we need in this country are great long-term legitimate commercial-banking institutions. My judgment is then when this bill is put into effect, the time will come when no sane man will say but what it ought to be enlarged, and that no sane man will ever say it ought to be repealed.

(Whereupon at 1.05 o'clock, p. m., a recess was taken until 2.30 o'clock p. m.)

AFTER RECESS

(The subcommittee met at 2.30 o'clock p. m. pursuant to recess taken.)

Mr. REILLY. We will first hear Mr. Sherlock, and he may proceed if he is ready.

STATEMENT OF CHESLA C. SHERLOCK, MANAGING EDITOR LADIES HOME JOURNAL, PHILADELPHIA, PA.

Mr. REILLY. Please give your full name, your address, and the position you occupy.

Mr. SHERLOCK. My name is Chesla C. Sherlock; I am managing editor of the Ladies Home Journal; Philadelphia, Pa.

Mr. Chairman, may I say in the beginning

Mr. REILLY. Just a moment. Did you appear before the Senate hearings?

Mr. SHERLOCK. Yes, sir; I did. May I say this for the purpose of the record, that after I testified before the Senate committee I took the pains to make a trip across the country again, to check up and verify on some of the points that were brought out by the opponents of this bill. I was as far west as Minneapolis. I conferred with 15 or 16 of as outstanding leaders in the building industry, in finance and in business generally as I could find and reach, in order to review and to assure myself on points brought out by the opponents of this bill, and I am here, Mr. Chairman and gentlemen, only to present new material, if I may do so.

Mr. REILLY. Very well.

Mr. SHERLOCK. May I say something in rebuttal? And I might say for the purpose of the record, that since the Senate hearing I have had two letters from Senator Couzens asking information on one or two points which he himself is in doubt about, and I assume all the Members of Congress will be in doubt on those points. I refer particularly to page 603, of part 3, of the hearings before the subcommittee of the Committee on Banking and Currency hearings, on which Senator Couzens makes this statement [reading]:

During the whole growth of the Nation, the greatest growth that we have ever seen

This latter meaning home ownership and home financing

this has been taken care of before.

What I do not understand is this. I think these people

Meaning those who are in favor of this bill, as I assume

have gone off on a tangent, because we are in a depression.

Now, Mr. Chairman, if I may say this, that we have not taken care of home ownership in this country during the past 87 years, because the percentage of home ownership has constantly decreased; and, so far as I have been able to find from the governmental agencies here in Washington, we have no records behind 1850 on the percentage of home ownership. We have shown a constant decrease all the way down, and the Senator from Michigan and those who are minded as he seems to be over this question are in error when they say this has been taken care of all through these years, because it has not. The cold facts are there.

Mr. Chairman, in 1920—and, so far as I know, those are the last statistics we have on home ownership in this country-we had only 40 per cent of the families of the country owning their own homes.

Mr. REILLY. Just there, do you not think, as it has been suggested, that the coming in of the automobile and the attractiveness of the

apartment house and the disinclination of some women to busy themselves with the household duties are responsible for a decrease in home building?

Mr. SHERLOCK. Mr. Chairman, I can not agree with you.

Mr. REILLY. In home owning?

Mr. SHERLOCK. As editor, in close contact with the women of this country for the past 11 years, I can not agree with you. The woman was never born who started out as the head of a family that did not want a home of her own.

Now, the competition for the family dollar has been so easy and every other thing that we can buy under God's sun

Mr. REILLY. Don't you think the automobile has been a very strong competitor of the home?

Mr. SHERLOCK. I do not agree with you, Mr. Chairman. I think that the automobile has contributed more to home ownership than anything has that has come along. Take 10 or 15 or 20 years ago we thought it was a competitor. It is not. Why? It provides easy transportation out to the suburbs, if you please, so that more people can live up to the old Anglo-Saxon idea of a detached house for every family. And I tell you, if I may say so, emphatically, Mr. Chairman, the automobile has contributed more to home ownership in the last 10 years than anything that has ever happened in this country.

There are other things that have detracted from it; I am frank to admit that, but, as sure as I stand here, I am sure of that fact.

Mr. REILLY. My belief is, Mr. Sherlock, that years ago before the coming of the automobile people used to put their money into a home, and now the automobile and the garage has absorbed that money.

Mr. SHERLOCK. I do not agree with you, Mr. Chairman. It has provided cheap transportation for the second third, if I may so characterize it, of our family population, so that they could go out a distance of 2 or 3 miles where they could afford to have a home of their own; and without transportation you can never put this Nation on a basis of home ownership. The automobile has contributed that. It has opened up vastly more land for homes which people can get out in the suburbs where they can live up to this old Anglo-Saxon idea of the detached house for every family.

I want to say this and this is repeating what I said before the Senate committee-that we have got to get back to that basis or the American market is going to constantly diminish and be contracted down until this whole Nation is in tenantry; and then where do we stand?

I am surprised that Mr. Cody over here and so on, and the interests that he represents, absorbing only the top third of our family population, and I would like to lay a wager with him right now that if this bill is enacted and easier credit is afforded to the second third of our family population, that 15 years from now the Association of Mortgage Bankers that he represents will be doing a bigger volume of business than they have ever done before. Yet the very gentlemen who come here opposing this act come here because they are afraid of limited competition, and they do not see over into the years ahead. Mr. Chairman, I have been diverted, and I am sorry, on that point. As I said in the beginning, I am here representing 3,000,000 women immediately now.

Since I appeared before the Senate subcommittee, I also took pains to send out under cover that nobody could ever attribute to the Ladies Home Journal, to find out whether mortgage money was available or not. That questionnaire went to 117 communities, and with the exception of two-Hartford, Connecticut, and Providence, Rhode Island-the evidence is that there is no first mortgage money available to-day anywhere in the United States.

On the point of second mortgage money, it is available only in one community, according to this questionnaire reaching 117 cities, and in that community they are asking a discount of 60 to 80 per cent, Mr. Chairman.

Mr. LUCE. What do you mean by that? I do not understand you. What do you mean by "discount of 60 to 80 per cent?"

Mr. SHERLOCK. That is the way the questionnaire came back, Mr. Luce, worded that way.

Mr. LUCE. That is one of your technical phrases of which, as a layman, I do not understand the meaning.

Mr. SHERLOCK. I would assume, being a layman myself and not being a statistician or a banker, however, if you want to borrow on a 1,000 second mortgage you probably get $400 or something like that. Mr. Luce. I see. I understand now.

Mr. SHERLOCK. $400 or maybe $200, depending on what they thought of you as a risk. But the point is there is not any money available.

Mr. LUCE. That was second-mortgage money?

Mr. SHERLOCK. Second-mortgage money, which I was talking about. In other words, one segment of finance has completely collapsed.

As I made this trip around the country-and I would like to put these names into the record, if I might, Mr. Chairman-I talked to many of these leaders I mentioned a little while ago: Mr. Fred Weyerhauser, of the Weyerhauser lumber interests in St. Paul, Minn.; Mr. B. G. Dahlberg, of the Celotex Co., in Chicago; Mr. Henning, of the United States Gypsum Co., in Chicago; Mr. Wade Leach, of the General Motors Acceptance Corporation, in Detroit; Mr. Frederick H. Ecker, president, Metropolitan Life Insurance Co. in New York City; Mr. George B. Cortelyou, president, Consolidated Gas Co. and director in some 25 other corporations, according to his statement, and member of the finance committee of the New York Life Insurance Co.; Mr. Lewis Brown, president of the JohnsManville Co., in New York City; Mr. Q. T. Stevenson, National Association of Real Estate Boards; Mr. William E. Best, president of the United States League of Building and Loan Associations; Mr. William H. Mason, vice president of the Masonite Corporation; Mr. W. N. Upson, of the Upson Co., Manufacturers of Wallboard, at Lockport, N. Y.; and Mr. Putnam, of the John Hancock Mutual Life Insurance Co.; and others who do not occur to me now.

With the exception of two on that list, I found that they are all in favor of the enactment of this bill. Mr. Ecker and the other insurance gentlemen are opposed to it, I think for obvious reasons. Mr. CHAIRMAN. I have said one or two times I was here representing 3,000,000 women. Yesterday, before I left the office to come down. here in response to your invitation, a letter was put on my desk in

the day's mail, from a subscriber to the Ladies Home Journal. She said-and it is so vividly burned in my mind that I am quoting it verbatim to you, I am sure:

We have worked for the past five years for our home. We have squeezed on clothes and everything possible, and by doing that we were able to pay off the second mortgage fully this year. But, now, they have told us, as the first mortgage is coming due also, that we may pay $750 down now, reduce the principal that much, and add service fees and costs, which means that we must raise a total of more than $1,000, and we can not do it. We are going to lose our home. What can we do about it?

In the same mail, Mr. Chairman-and I may say there were seven other letters in that one mail, and being minded of the rule about the record and so on, I brought just one. Having told you that, I would like to insert this letter in the record, if I might.

Mr. REILLY. Without objection it may go into the record. (The letter referred to is as follows:)

MR. CHESLA C. SHERLOCK,

SUBURBAN HOME BUILDERS CO.

Ladies Home Journal, Philadelphia, Pa.

New York City, March 15, 1932.

DEAR SIR: A fortnight ago you made an interesting broadcast in which you urged building, in view of the recent enactment of Congress, which is calculated to help prospective home builders.

Just at this time we are experiencing considerable difficulty in securing firstmortgage loans for people owning lots in Westchester County.

If you have any information on the subject of obtaining loans, would you be kind enough to forward it to us? It would be greatly appreciated, and we thank you in anticipation of an early reply.

Very truly yours,

That is from New York City.

SUBURBAN HOME BUILDING CO.,
C. A. LEE.

The point is that Senator Couzens is in error when he says that this has been taken care of splendidly in the past 87 years. I am surprised that so many of our people have been able to pay for a home under all the hurdles that have been raised up.

Mr. Chairman, I do not know your profession, but if I might divet here a moment and point out to you that the reason why there are so many other things in the world that families can buy and buy easily is due to the fact that our legal base and thinking towards the partial-payment idea was changed away back there about 18 years ago, so far as any purchase under chattel mortgage is concerned.

Once upon a time the law profession, as I understand it, was absolutely united that the buyer should be protected whether he bought chattel or bought real estate, although he had more protection thrown around him if he bought real estate. Then the automobile came into the picture, and so many of us wanted automobiles that it was made easy for a buyer to buy and easy for the seller to protect himself in case the buyer defaulted.

The point I am getting at is this, that me must make it as easy for a person to buy a home, if we have to change the entire legal base, Mr. Chairman. And the people who are out here in this second third of our population, which represents the big American market, have got to have the opportunity to realize that ambition, which means more to this country and means more to industry and more to the