read these figures? It is alarming how interest payments have kept up, and this is from the National Bureau of Economic Research, Inc., a report issued January 26. In 1932 salaries paid in selected industries were 59.3 of 1929 and wages were 39.8 percent. Technical salaries and wages with interest were 69.9 percent; labor income was 59.8 percent; and dividends were 43.4 percent. Interest was in 1932, 96.8 percent of 1929 payments. So, you see, the interest collectors have been pretty well protected. I wanted to read into the recordbut I do not want to take the time to read it now-an article from the Federated Press giving further figures on that.

Mr. BUSBY. How does that apply to this bill? Don't you see that is encumbering the record with a lot of general information that we already all know.

Mr. MARSH. I withdraw the request.

Mr. BUSBY. I am not saying that you should withdraw it but I am saying that is encumbering, filling the hearings on the legislative proposal before us with material in the nature of a general lecture on economics, interest, and national income, all of which the Department of Commerce has repeatedly announced, and I think every member of the committee is very familiar with it. I am just suggesting what I believe to be pertinent to the hearings.

Mr. MARSH. My chief point was the request that you reduce the interest rate guaranteeing it up to 3 percent.

Mr. BROWN. Mr. Marsh, you recognize that along about the 10th of February the President asked the Congress to guarantee these home-loan bonds. There was considerable rise in the market in the value of those bonds. At no time, to the best of my information, have they exceeded 97, except possibly for a few eighths over 97. Í do not think they ever reached 98. Having in mind that our purpose is to get money for these distressed home owners, I fail to see how we could carry this project through unless we fixed the maximum somewhere around 4 percent. Our bonds would be forced right back down to where they were, to about 82 or 83. If we are going to carry out the purposes of the bill, we must give the Treasury Department some leeway, and that is why we feel that 4 percent is reasonable. They will get the money, of course, at the lowest rate possible. We fix a maximum of 4 percent. I personally do not see how we can do other than that.

Mr. MARSH. It would be very difficult unless you entirely revamp the revenue act.

Mr. BROWN. Of course, we cannot do that.

Mr. MARSH. But Congress can. It is rather difficult to compartment Congress into its various functions. I would say this, however, that I hope you will draft a supplementary measure so as to prevent foreclosures so far as possible.

Mr. BUSBY. I have no desire to cut you off or to prevent you from putting anything in the record that you desire to put in. If you have that article there, it might go in as an exhibit to your statement, letting the stenographer just copy it in.

Mr. MARSH. It is very brief and I would not ask to get a long one in.

(The article referred to is as follows:)

INTEREST TOLL CONTINUES ITS UNBROKEN RISE DEPRESSION LEAVES HOLDERS OF BONDS ENTIRELY UNTOUCHED

Just as in every other year, with no exception for more than a decade, the coupon clippers got more in dollars during 1933 than they did in 1932. Thus the record remains unbroken. Throughout the years of expanding business preceeding 1929 the amount of interest paid to the bondholders and mortgageholders climbed steadily. That was expected. The amounts paid in rent, dividends, and possibly wages climbed during most of those years.

National income had big fall. Then came the stock-market crash of 1929, followed soon by the devastating collapse in industry. Wages fell 60 percent and a bit more between 1929 and 1932. Total national income fell 40 percent. But interest payments continued their steady climb. Every depression year was a new picture of decline in practically every activity, meant new suffering for the workers, and new disasters for business. But the interest gatherers raked in a little more every year.

Here are the annual figures over a period of 11 years: 1923, $2,621,964,000; 1925, $3,017,028,000; 1927, $3,471,396,000; 1929, $4,109,952,000; 1930, $4,374,408,000; 1931, $4,553,124,000; 1932, $4,564,673,000; and 1933, $4,585,663,000.

The figures are gathered by the New York Journal of Commerce and do not cover the entire field. The Journal of Commerce estimates that they get about 70 percent of the interest payments. But they compare with the same figures for the other years, so that they show the trend.

Never a drop since 1923. They show that when business booms interest payments leap forward; when business collapses they crawl upward. But never in the years since 1923 has there been even 1 year in which the Journal of Commerce has reported a drop. Perhaps most astounding of all is the fact that in that first quarter of 1933, when banks were collapsing, the stock and bond markets closed, even the banking system stopped for days, the interest payments were larger than they had been in the first quarter of 1929.

With the slight pick-up in 1933 business, the gain in interest payments nearly doubled over 1932's gain.

Mr. BROWN. As to debts in lower amount, that is not anything to be put into a Federal measure; and as to a moratorium on mortgages, we have a moratorium in Michigan, and there is also one in Minnesota and possibly some other States, but that, it seems to me, would have to come from the State legislatures, and not from Congress.

Mr. MARSH. Well, the functions of the Federal Government as a whole have been so vastly expanded that this would not seem to overburden the expansion, and, particularly, I do not believe a constitutional question would be raised. After all, we are figuring on what we have to do to save people from getting out of those homes. It is a question that has not been satisfactorily answered yet.

Mr. WOLCOTT. That might be controlled by the Federal Government through a tax bill of the Congress of the United States.

Mr. MARSH. Possibly, following out the suggestion, there might be some provision in this bill that it would not apply to States the legislatures of which did not enact legislation_prohibiting moratoriums for a year, or whatever period it was. I assume that stipulation could be put in this bill. There was one point that was referred to as to how we could start up heavy industries. Just in passing I would like to suggest that writing down the capital structure of the United States Steel, that started out with water of $175,000,000 in capital structure, would help, and other corporations would be very materially affected. There will be a resolution introduced shortly in the Senate for an investigation of the capital structure of large corporations. They must write down the capital structure, as well as the interest rates.

If you decide that you cannot pass this legislation with less than 4 percent, it will probably be helpful, but we hope you can see your way fit to fix the maximum rates at 3 percent.

Mr. GOLDSBOROUGH. Thank you very much,, Mr. Marsh. It has been a pleasure to hear you.

Congressman Howard, of Nebraska, is present, and we will hear him if it is agreeable to the committee.

STATEMENT OF HON. EDGAR HOWARD, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEBRASKA

Mr. HOWARD. Mr. Chairman and gentlemen of the committee, very early in the session I introduced a bill to accomplish just what this committee is trying to accomplish by the bill it is now considering. Quite naturally I should have viewed with approval the action of the committee and the Congress if it should have taken up my bill and carried it to enactment, but my great desire is not for undue publicity or for promotion of myself, but really my great desire is to see this legislation or the principle of it enacted into law as quickly as may be. In other words, I am after results.

I do not feel that I ought to burden the committee by any extended remarks with reference to the pending bill. I am quite satisfied that this committee and indeed that the Congress has now made up its mind that legislation of this character involving the principle must be enacted and will be enacted during the present session of the Congress, and I believe that nothing we could do as a representative body in behalf of the home interests of the American people could be done better than passing the proposed legislation you have before

you.

It is not for me to deal with details; I am not a detail man; I see the principle. I see it clearly, and I believe that the bill you have before you if enacted into law will accomplish all that I as the endorser of a measure similar to this bill could hope for or indeed could ask, and so, Mr. Chairman, with this brief statement I thank you for the opportunity to appear before you in behalf of this principle, and it is great. The strength of our Republic was well said 100 years ago by a sage as resting upon the American home. That is true today. Those of us who have had the opportunity, and practically every one of us in the Congress has had the opportunity to hear or read appeals of people who in good faith have gone along doing the best they could, had mortgaged their homes, and then had to meet the situation under the terms of which it was impossible for them to free their homes from the mortgage covering them. Now, here we are, as a Government extending the helping hand to every interest in America, wherever we can, seeking to lift ourselves and our country out of the ditch of depression, into which some of us believe we were pushed by unholy hands, and I see no legislation so well calculated to lift us out of that ditch as the enactment of the legislation which your chairman has presented to you in the bill now before the committee. [Applause.]

The CHAIRMAN. We are very glad to hear you and thank you very much. Mr. Seger had asked to appear before the committee for 2

49036-34-10

minutes, and I have been trying to get word to him in order that he might be heard. I think that closes the hearing.

Mr. GOLDSBOROUGH. Just one question before you adjourn, if you please.

The CHAIRMAN. Yes.

Mr. GOLDSBOROUGH. Who has got to pay the interest on these bonds, the Treasury direct, or is the Corporation going to pay that?

The CHAIRMAN. What I understand is that the Treasury is not paying anything out, simply stands back of this business. They do not conduct the details, but the Treasury stands back of it.

Mr. HOLLISTER. The Corporation does as long as it is able to. Mr. CAVICCHIA. If you are going to pay 3 or 4 percent on these $2,000,000,000 of bonds, isn't that a revenue bill to be made up out of the tax collections?

Mr. HOLLISTER. The Corporation is an independent entity, it has an obligation to pay its interest.

Mr. CAVICCHIA. I want to make sure that I understand that question.

Mr. REILLY. Mr. Chairman, I think you ought to have Mr. Russell here this afternoon. We have some amendments that have been proposed here.

The CHAIRMAN. You want to have him here when we take them up?

Mr. REILLY. We want to have him here this afternoon.

Mr. HOLLISTER. Did he ever submit that rewriting of the teeth we were going to put into this?

Mr. HANCOCK. No.

Mr. HOLLISTER. You remember Mr. Russell was going to write in some kind of a criminal liability on a person who is not in distress.

The CHAIRMAN. I thought they had all kinds of criminal provisions in the bill. You see, any man who made a false representation to get a loan would be covered in all human probability by existing laws, even if there were nothing in there.

Mr. HOLLISTER. I am not urging that, Mr. Chairman, but if it is there we might go into that.

The CHAIRMAN. We ought to make sure of it.

Mr. HOLLISTER. That is all I was interested in.

The CHAIRMAN. Gentlemen, if you are willing, we will meet at 2:30, and we will get Mr. Russell here and we will see if we can vote this bill out.

Mr. REILLY. Have you got a copy of the Senate bill?

The CHAIRMAN. I am going to try to get copies.

Mr. HOLLISTER. Has there been a memorandum submitted of the various amendments that have been suggested?

The CHAIRMAN. I assume each member suggesting an amendment will take care of that. If I understand now it is agreed that the hearings are closed.

(Whereupon, at 11:45 a.m. the committee adjourned until 2:30 o'clock of the same day.)

X