Mr. BODFISH. I think the bill already recognizes the national banks participation in it. It authorizes the national banks to include in their liabilities

Mr. WILLIAMS. That, in itself, does not bring them in, if the law otherwise prohibits it.

Mr. BODFISH. I see.

Mr. WILLIAMS. I have only directed that as an inquiry. I am not taking the position that they can not come in, although I was informed yesterday, on the opinion of the gentleman who was speaking to me, who was somewhat of a lawyer, that he did not think they could.

STATEMENT OF E. E. MOUNTJOY, DEPUTY MANAGER AMERICAN BANKERS ASSOCIATION, WASHINGTON

Mr. MOUNTJOY. Mr. Chairman, may I read a resolution? For two days I have been expecting a banker to come down here from Wilmington, one who is familiar with this bill. I fully expected him here this morning, and I came up to present this resolution to him to offer, but I know most of the gentlemen here, and unless it would be that gentleman over there, he is not here. So I would like to offer it in his stead, if I may.

Mr. REILLY. What is the resolution?

Mr. MOUNTJOY. In opposition to the bill.
Mr. REILLY. Adopted by whom?

Mr. MOUNTJOY. By the interim committee of the American Bankers Association.

Mr. REILLY. Where, the District of Columbia?
Mr. MOUNTJOY. No, American.

Mr. REILLY. Let it be filed.

Mr. MOUNTJOY. Mr. Chairman, may I read it?
Mr. REILLY. Yes.

Mr. MOUNTJOY. At a meeting of the interim committee of the American Bankers Association held in Washington on March 21, 1932, it was resolved that the American Bankers Association vigorously oppose the home loan bank bill (S. 2959, H. R. 7620) as setting up a permanent banking system which is unnecessary and which would interfere with the operations of the present banking system. Mr. LUCE. How many members are there of that committee? Mr. MOUNTJOY. Six.

Mr. LUCE. How many were present when it was passed on?
Mr. MOUNTJOY. All of them.

Mr. LUCE. Then it is clear that six bankers are undertaking to speak in the name of all of the national bankers of the country, of the banks of the country?

all

Mr. MOUNTJOY. Well, of course, in an organization as large as ours, it is difficult to get them all together, or to poll them, to get their sentiment. This, as I stated, is by the interim committee, which, by its terms, indicates it is just for the purpose of acting in an emergency, when they can not get the larger group together. Mr. LUCE. It consists of six men?

Mr. MOUNTJOY. Yes.

Mr. LUCE. We often have before us the statements of these national associations, and it is interesting to know how they speak for thousands scattered over the country.

Mr. MOUNTJOY. Of course, they were elected by the banks at large throughout the United States to be their representatives. That was their purpose.

Mr. LUCE. But you, yourself, would not attach much stress to a resolution of that kind, would you?

Mr. MOUNTJOY. I think I should.

Mr. LUCE. Well, let me assure you that the Members of Congress do not.

Mr. MOUNTJOY. Well, there is no other way to get the sentiment of the larger group immediately. If it were before our national annual convention, we could take the vote.

Mr. LUCE. Several times Congress has had to doubt the wisdom of taking organizations like those of the farmers, notably, in allow ing a small group of men to put upon the record, and send over the wires of the country, the statement that an organization with perhaps 50,000 members has committed itself on that kind of proposal. Mr. MOUNTJOY. Well, this, if I may say so, will be taken up the next time the association is in annual convention, for the members to approve or disapprove, as they please.

Mr. LUCE. But, meanwhile, should it carry much weight?

Mr. MOUNTJOY. I think it should, sir. These people are thoughtful, they are conservative, they are trying their best to represent the membership at large, and I think they are doing it as well as any group of people could.

Mr. REILLY. The American Bankers Association did not pass on this at all in their annual conference?

Mr. MOUNTJOY. No, sir.

Mr. REILLY. This organization is what you call it, an interim committee for the bankers?

Mr. MOUNTJOY. Yes.

Mr. REILLY. Yes. And on their own initiative, they have passed that resolution?

Mr. MOUNTJOY. Yes.

Mr. REILLY. We will adjourn until half past 10 o'clock to-morrow. (Thereupon, the hearing was adjourned until 10.30 o'clock a. m., Wednesday, March 30, 1932.)

113235-32- -27

1

CREATION OF A SYSTEM OF FEDERAL HOME

LOAN BANKS

WEDNESDAY, MARCH 30, 1932

HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE OF THE COMMITTEE ON

BANKING AND CURRENCY,
Washington, D. C.

The subcommittee met at 10.30 o'clock a. m., Hon. Michael K. Reilly (chairman) presiding.

Mr. REILLY. Gentlemen, the committee will be in order. We are pleased to have with us this morning General Dawes, president of the Reconstruction Finance Corporation, and Mr. Gardner of their building and loan division.

General, we should be glad to have any statement from you touching the activities of your corporation, especially with regard to building and loan associations.

STATEMENT OF HON. CHARLES G. DAWES, PRESIDENT RECONSTRUCTION FINANCE CORPORATION; AND A. R. GARDNER, BUILDING AND LOAN EXAMINATION DIVISION

Mr. REILLY. General, can you give us an estimate of the applications you have had from building and loan associations and if you care to do so, your estimate as to the probable demands upon you in the near future?

General DAWES. Gentlemen, of course, we are confronted with the same difficulty in an attempt to appraise future demands upon us in the line of applications from building and loan associations, as we are in connection with banks, mortgage companies, livestock associations, railroads, and so forth.

The demands which will come to us will vary with the general state of confidence in the country, and will vary according to whether the depression continues or not. It is very difficult, therefore, at this early stage for us to talk in any but very general terms.

As to the building and loan associations, at the close of business March 28 we had received a total of 69 applications, amounting to $10,975,298. Of these 25 applications have been approved, in the amount of $4.423,750. Applications pending are in number 44, in amount $4.756,548. These applications are from 13 States, as follows: Alabama, California, Illinois, Louisiana, Michigan, New Jersey, New York, North Carolina, Ohio, Oklahoma, South Carolina, Texas, and Virginia. They cover a wide area.

Estimates of those who are in close touch with the building and loan situation are always accompanied by a statement something like this:

If you can give so much money now, to satisfy these pressing demands the effect will be so to restore confidence in the situation that the demand for withdrawals will cease, the demands by the banks for payment of loans will cease, and the large amount of money which we estimate as necessary may not be called for.

Of course, that is the same situation with which we are confronted in the case of banks. And it is remarkable how true it is.

To what extent our help will check the demand on the building and loan associations for withdrawals, is just a pure estimate.

Mr. CAMPBELL. This money that has been advanced to the building and loan associations so far, has been repaid to the banks, has it not? General DAWES. I do not know as to that. Mr. Gardner will tell you about that. He can give you more detailed information with regard to this matter than I. My own impression is that the legislation you have before you is good legislation. So far as our corporation is concerned, when it comes to an estimate as to what we can allot to any one of these particular corporations, the estimate will vary from week to week as we get the demands from the twelve classes of corporations with which we deal.

We do not know. The pressure on the banks over the country seems to be lessening. This emergency situation in the case of the building and loan associations may pass, but we do not know. We can not make any fair allotment of our resources to satisfy a situation like that.

All we can say is that we have to pass on each case on its individual merits. We are going ahead now and meeting the demands made upon us. But, of course, we have just started. Our money is not all gone. Mr. Gardner, who is present with me, has been in charge of the building and loan associations and the State banks of the State of Washington. He has had long experience in that work, and he can tell you something about this situation in greater detail. I have just made a very general statement with regard to it. Mr. CAMPBELL. You would recommend the enactment of this homeloan bank bill?

General DAWES. I would, absolutely; yes.

Mr. CAMPBELL. You give it your unqualified indorsement?
General DAWES. My unqualified indorsement; yes.

Mr. REILLY. Mr. Gardner, how many States are so situated to-day, from the standpoint of the State laws, that their building and loan associations could join this institution?

Mr. GARDNER. So far as I have been able to determine, it is now rather definitely held that nine States would be barred from immediate participation in the home-loan bank system. We are finding, as we inquire into and analyze State laws, that fewer of them have provisions which bar participation than was at first thought. To date the only State from which a building and loan application has been denied because of restrictions imposed by State law is Oklahoma. There are a number of other doubtful States from which applications have not reached us. Of course, no definite ruling is made by the corporation until a test case comes before the board.