Mr. JONES. We understand it would be; yes.

Mr. GIFFORD. While that is a hypothetical case, that is a case that confronts me.

Mr. JONES. We had an application recently from some fellow who was doing a trucking business, and he had a lot of rather old equipment. The case was pretty well along the lines you talked about, and we could not do anything, could not loan him anything like what he paid for it.

Mr. GIFFORD. This gentleman, for instance, seemed to be in a great deal of need when he came to Washington, and was wondering if the committee was to blame in framing the law so that you did not have to take the actual valuation that the property might, you thought, be sold for immediately.

Mr. JONES. We do not do that. We will make losses on our industrial loans; there is no doubt in the world about that.

Mr. GIFFORD. Well, there is a feeling on my part that if Harry Hopkins had charge of these matters, he would lend more money. Mr. JONES. Congress has created Harry Hopkins a job and given him $4,000,000,000. You tell him to do one thing and tell us to do another.

Mr. GIFFORD. I have stated before this committee several times that I would not mind if you did lose quite a sum of money, if you lost the way he was doing. I think we ought to give him more authority, more power, when there was labor to be protected, when labor was to be furnished. In this particular case, it really was very important to a large number of people that he take the farmers' products. He had a splendid reputation, and he thought that the plan had failed. When he came to see me I thought, for instance, under the law, you could possibly not pay much attention to the man, himself, or his previous record, or his future prospects.

Mr. JONES. Oh, but we do. If we think a man is a good, industrious fellow, and has been a good citizen, we will take all that into

account.

Mr. KOPPLEMANN. That does not say so in your answer to the question, the hypothetical question.

Mr. JONES. Whether it seems so to you or not, we do.

Mr. DIRKSEN. There must be a limitation somewhere. For instance, if a man goes into a town and sets up a $100,000 wholesale bakery without a dime's worth of business, and is not a pioneer in that industry in the town, which is already filled with adequate bakeries, it seems to me largely an element of figures, insofar as the prospect of the repayment of that loan is concerned, and his prospect of future business.

Do you have any particular formula-I suppose you have to resolve every case on the basis of the individual?

Mr. JONES. Every case must be decided individually. You cannot have a yardstick or rule. Just as in the case you mentioned, if the town that you speak of already had enough bakeries, and another man built a plant, if he is going to operate that plant he ought to furnish his own money, the Government ought not to go in and furnish him the money to destroy the other fellows.

Mr. KOPPLEMANN. As a matter of fact, Mr. Jones, you do not consider any new industry that way, do you?

Mr. JONES. As a matter of fact, we do.

Mr. KOPPLEMANN. Consider a new industry?

Mr. JONES. Yes; there is no objection in the world to it.

Mr. KOPPLEMANN. Have you any such case where you started a new industry with a loan; have you considered one?

Mr. JONES. We have offered to do that a number of times.

Mr. KOPPLEMANN. Have you any that you can name?

Mr. JONES. I don't know.

Mr. KOPPLEMANN. I have never heard of one.

Mr. JONES. There are a lot of things you never heard of. Mr. HOLLISTER. I am wondering whether, on individual cases, we are not getting too far away from the philosophy of the grant of authority to the R. F. C. Was it your idea that the grant of authority, that we were trying to fill the gap which many people said existed in the local banking facilities? Their complaint was that there were many loans which should be bankable loans, in reasonable times, which industry could not get which, for some reason, either because of the lack of resources or timidity, they could not get them from their local bankers; and when we gave the authority to the Reconstruction Finance Corporation and the Federal Reserve System to make industrial loans, the theory was that they would be reasonably bankable loans, and it would not be a relief measure.

Was that your idea, that the R. F. C. should be in the position of lending money, and getting away from relief purposes, when there was little chance of industries coming back?

Mr. JONES. That is not what the law says.

Mr. HOLLISTER. Am I correct in my statement of what you feel the theory of the grant of authority to the R. F. C. was, as I have stated it?

Mr. JONES. Yes.

Mr. HOLLISTER. Rather than do as Mr. Kopplemann said, if a man lost his factory and it was an emergency measure, and where some time in the past Congress has granted money when there was a flood or fire or something, it was not the theory of this grant of power that the R. F. C. could go and help out somebody who had a fire, or had been swept away by a flood, unless they had a bankable loan, what would be a bankable loan in reasonable times?

Mr. JONES. Yes; Congress told us to lend for flood relief and fire, and we have had some in New England. We had an earthquake in California. That was the thing you have mentioned. You have just given us a new law because of this flood in New York. We took $3.000.000 of unexpended money under the old act. So we have people waiting to borrow through nonprofit corporations to the extent we have got the money available.

Mr. HOLLISTER. They are, in no sense, under the industrial-loan provision?

Mr. JONES. No; that is a special law.

Mr. WILLIAMS. That is a nonemergency measure, in the sense that you are simply helping them out? They are required to give security?

Mr. JONES. You tell us to take security, and we give them money at 4-percent interest.

Mr. WILLIAMS. And the security required for that, in general, is adequate security?

Mr. JONES. Yes; and all of the loans that we made under those other laws, something like $10,000,000 or $11,000,000, to nonprofit corporations are at 4 percent, and the corporations charge 414 percent, and the loans are all well secured and paying interest.

Mr. HOLLISTER. Does not this whole thing really get down to the difference in the viewpoint between the borrower, who believes he has adequate security, and the R. F. C., who believes he has not? Mr. JONES. That is the crux of it; yes.

Mr. HOLLISTER. When the R. F. C. believes he has adequate security they make the loan, and when they do not believe that they do not make it? That is, adequate security and probability of success?

Mr. JONES. Yes.

Mr. KOPPLEMANN. Now, Mr. Jones, this measure was adopted by Congress you were in on it when it was adopted?

Mr. JONES. Yes.

Mr. KOPPLEMANN. And it was adopted because of the fact that industry and business could not secure loans from other financial institutions; is not that true?

Mr. JONES. I assume so.

Mr. KOPPLEMANN. Well, you were in on it, you say, Mr. Jones? Mr. JONES. I did not pass the law; I testified.

Mr. KOPPLEMANN. You were for the law; you appeared before the committee and told me

Mr. JONES. Yes; reluctantly.

Mr. KOPPLEMANN. You did not tell me reluctantly.

Mr. JONES. Well, I told a good many other people. I could not remember everything I said to you or others, but I was reluctant about it, and said all of the time, and made the statement at the time that, if you passed the law, we would try and do the best we could for a period of time. Now, we have not pleased you, and I am perfectly willing for you to repeal the law.

Mr. KOPPLEMANN. You have not pleased me, and you have not pleased these people who need loans.

Mr. JONES. We have not pleased those who did not get loans. Mr. KOPPLEMANN. Well, I was talking about those who did not get loans.

Mr. JONES. That is what you have been talking about.

Mr. KOPPLEMANN. Well, now, there was an unbiased-an impartial committee of the Department of Commerce had made a vast investigation throughout the country, by a committee of investigators, at the head of which was a man who was imported by a former administration, not by this administration. They reported that there was some 1,900 people who were in need of loans; that 624 of them found that they could not get a loan from other sources, banks, R. F. C., or Federal Reserve System; and Bradstreet & Dun's reports on those 624 showed that only one of them was not entitled to it, or 623 were entitled to credit. What have you to say to that? These are the facts that have been published and recorded and backed up.

Mr. JONES. Well, I think you ought to pass a law and put that committee in charge of it.

Mr. KOPPLEMANN. That is, in a measure, what we are trying to do under this law, to put a committee in charge of it who are sympathetic to aiding business and aiding industry.

Mr. JONES. I do not think there is any need for it.

Mr. KOPPLEMANN. You said that yesterday, that you do not think that there is any need for it.

Mr. JONES. I want to repeat it.

Mr. KOPPLEMANN. Now, in view of the great demand for loans, and in view of this statement I have just made, about 623 concerns out of 624, according to Bradstreet & Dun, do you still say that there is no need for it?

Mr. JONES. I still say that the need that you have in mind cannot properly be met.

Mr. KOPPLEMANN. Now, all right, let us follow that up. They cannot be propertly made?

Mr. JONES. Cannot be properly met.

Mr. KOPPLEMANN. We have the Federal credit farm organization divided up into a great many parts, who make loans to farmers.

Now, up to a year ago the poorest people in the world were farmers. We made millions of loans to them and saved their farms. We had home owners who were daily losing their homes and we made loans to them. Almost a million homes have had loans made to them. We have others that you are personally acquainted with, who have had loans made to them in the higher brackets.

In all of these cases there have been no losses to the Government, but the farmers have been saved, homes have been saved, banks have been saved, insurance companies have been saved, and railroads have been saved, but the industries have not been saved.

Although this law that you are operating under directed you to make loans to business, you have absolutely and positively refused to make a single loan to a business organization, in spite of the will of Congress, and still you say that you cannot function.

Is not the fault, Mr. Jones, due to your Board and yourself, who are seemingly unwilling-according to your own statement a few minutes ago you are seemingly unwilling that business and industry shall receive any measure of support which they deserve and ought to have; and particularly in view of the fact that 10,000,000 people are out of work, and a large number of that 10,000,000 people are out of work because these small businesses and these small industries are daily being forced out of business, which is throwing people out of employment, or they are unable to use the people that they have, keep them at work, or hire more people, which they could do if they had the money to expand their business?

Mr. JONES. No.

Mr. KENNEDY. Mr. Jones, have you a docket or register in your department whereby the loans are taken up in the order of their receipt?

Mr. JONES. How is that?

Mr. KENNEDY. Have you a docket or register in your department whereby each loan is passed upon in the order of its filing or the date of receipt by your Board?

Mr. JONES. Well, I assume that that is the way it is done.

Mr. KENNEDY. Is not that form of procedure followed that you know of?

Mr. JONES. Naturally, the application that came in first would have first consideration.

Mr. KENNEDY. It should have, but I was wondering if that was the procedure that was followed.

Mr. JONES. Now, if one of you gentlemen came over and asked us to take up a particular case, we would dig it out and try to take it up, and that happens every day. In that way it might get ahead of some other case.

Mr. KENNEDY. Do you not think that is rather unfair to the individual who files an application simply because a Senator or Congressman comes in there that some other case should be taken from the bottom of the file?

Mr. JONES. I would not say that is necessarily unfair.

Mr. KENNEDY. That is certainly giving the other fellow the advantage over the humble citizen who has not a spokesman-who has not a Senator or Congressman spokesman for him.

Mr. JONES. I should not care to decline if you should call me up and ask me about a loan; I would not say to just wait and let the calendar come around.

Mr. KENNEDY. I would not feel justified in asking you, or any other department head, to take a matter out of its regular order.

Mr. JONES. I understand that, but if you have some constituents asking you about a case in which they are interested and you call us about it, you do not want to wait a week or 2 weeks to get an answer. I would get the facts and call you back.

Mr. KENNEDY. I do not believe that is the proper procedure. I would not advise that.

Mr. JONES. I do not think that is serious.

Mr. KENNEDY. Of course I do not agree with your reasoning, but there is one other thing on it, or the report on loan. We were discussing the sympathetic interest of the examiner.

Now, when a final report is made by a regional office, is there any report in the matter of yes or no to the various questions, or is it a report in narrative form, which would indicate that the investigator has gone into all of the facts in the case? Does he have to indicate that in his report to you?

Mr. JONES. He should; yes.

Mr. KENNEDY. Well, for the sake of argument, if we sent the file in one of these cases referred to by Mr. Kopplemann to you, do you think it would indicate just what had happened; that the story attached to it would be true?

Mr. JONES. Yes; I can give you the complete history of the case, every case over there.

Mr. DIRKSEN. Mr. Kopplemann, may I ask you a question?
Mr. KOPPLEMANN. Yes, sir.

Mr. DIRKSEN. Do you have a rural constituency or a semirural?
Mr. KOPPLEMANN. Yes.

Mr. DIRKSEN. Have you had experience with the Farm Credit Administration in getting loans for farmers?

Mr. KOPPLEMANN. Yes.

Mr. DIRKSEN. I do not know whether your experience is similar to mine, but I assume Mr. Meeks' is similar to mine, because we come from the same State, but we know cases where the Farm