Mr. JONES. Yes. Gentlemen, I would like to make a further statement for the record, that I have not the slightest objection to the criticism of any Member of Congress, or the administration, of this office. I like it. It is only through criticism that we can know which way we are going.

Mr. KOPPLEMANN. There is a plant in New York, I was advised by a very high official of this Government, in whom you have great confidence, and for whom you have great respect, and it is a concern which had orders-legal, bona fide orders-which it was compelled to turn down because they do not have the money with which to buy the material and pay the workers to set out the job; they could not get a loan. What do you say to that criticism that comes from a very high authority?

Mr. JONES. I do not question it at all.

Mr. KOPPLEMANN. About that criticism that is sound?
Mr. JONES. I say I accept it, but now that-

Mr. KOPPLEMANN. What are you going to do about it?

Mr. JONES. Well, send the man in. I cannot see every one of them.

Mr. KENNEDY. Mr. Jones, getting back to the question of these reports, when a large loan is turned down at a given agency, do you or your board, in making the inspection, ever go over the records to find out how many applications were filed in that office, how many were granted, and how many were refused? Mr. JONES. We have got that record.

Mr. KENNEDY. You do not have an individual report on these cases that are turned down? You have a summary and the numbers? Mr. JONES. We have the summary and the numbers; yes.

Mr. KENNEDY. Has the Board ever gone by those figures? For instance, the New York office receives 10 applications every month and turns down 9. Have you any facilities for inquiry into the reasons for turning down the nine?"

Mr. JONES. Yes; we very often ask our agencies to review the cases that they have declined, with a view to seeing if they cannot be made or put in shape to be made.

Mr. KOPPLEMANN. Going into that question of reviewing those cases-I hope you do not take this as personal.

Mr. JONES. I do not take any of it as personal.

Mr. KOPPLEMANN. All right. Now, yesterday you testified that there were 2,800 cases sent to Washington for review, of which onehalf of them loans were made on. Of course, the facts that I received from your office, that there were something like 1,320 loans. made altogether, throughout the country

Mr. JONES. You think my mathematics are bad, too?

Mr. KOPPLEMANN. Probably you were wrong in those figures. All right, now

Mr. JONES. The number of cases that I cited included the loans that we had made through mortgage companies as well, prior to your law, and I made that statement yesterday. The number that I gave you is right, approximately.

Mr. KOPPLEMANN. Then out of some 1,400 that were loaned in Washington, how many of them had annexed to them recommendations by Members of Congress?

Mr. JONES. I have no way of knowing, and I do not know that we have any recommendations from Congressmen. The most that we used to get from any Member of Congress on either side is: "Please give this application consideration; and if it is entitled to credit, extend it. If not, do not extend it."

Mr. KOPPLEMANN. I know in my own case-and your file would show it—that all loans that I know anything about got that attention because of my intercession in behalf of the applicant. I was wondering, as Mr. Kennedy said a few moments ago, what the chances are for an unfortunate borrower who does not know enough to go to his Congressman or somebody who would be listened to by your Board?

Mr. FORD. Mr. Chairman, I do not think that that is a fair way to put the question.

Mr. KOPPLEMANN. I said to start with that I did not mean it as personal.

Mr. FORD. Personal or otherwise, it is not a fair criticism of the R. F. C.

Mr. KOPPLEMANN. All right; I think it is well for the committee to know in its investigation here, or, rather, in answering the questions of Mr. Jones, how well it is functioning so far as making loans is concerned.

Mr. FORD. That is all very simple.

Mr. KOPPLEMANN. That is the purpose of my question.

Mr. FORD. To make a flat statement of that kind is, in my judgment, going beyond the reasonable interrogation of the witness or of the department itself.

Now, I might say that I have had some experience with the R. F. C., and when a constituent of mine failed to get attention on a loan that he could not get I went to the department and asked them if they would not review the case and see if something could not be done, and in every case I have gotten a very intelligent reply. In all cases I wondered personally why the loan was not made.

Mr. KOPPLEMANN. I have received a reply to all of my requests.
Mr. KENNEDY. Mr. Chairman, may I ask a question?

Mr. REILLY. Yes.

Mr. KENNEDY. Mr. Jones, do you think the situation would be helped if, at the local offices and here in Washington, you selected your people from the civil-service list, from men who passed very rigid examinations as to their ability and qualifications? Do you not think that in that way you would have a better personnel in your office, rather than dealing with the system that is employed of appointing men on purely political recommendations?

Mr. JONES. I think it would be worse.

Mr. KENNEDY. Worse?

Mr. JONES. Yes. If you take a civil-service man, he has got a job, and he is accountable to nobody. We try to run this thing in the office on business lines. If a man does not do his job, he gets fired. Mr. KENNEDY. Do you not think you are likely to get a lot of men who are not competent in their line by doing that?

Mr. JONES. I know in New York we have had a lot of men, and to my knowledge I do not know of any that are outstanding in their particular profession or occupation, and still they are occupying very important jobs in the R. F. C.

Mr. DRISCOLL. Mr. Kennedy, I have been down to the organization of Mr. Jones, and there are not any sinecures down there, and I have been able to get a lot of cooperation. If Mr. Jones were not here, I might say some other things about him.

Mr. FARLEY. In the civil service I have found that the poorest businessman passes the examination best. I think the whole thing is bunk.

Mr. JONES. I would like to reply to what Mr. Kennedy said, that is when you lend money, you must require experience and must understand about credits, and a lot of things. Now, in New York City it is pretty difficult to hire men to do those jobs with the salary limits that we have got. A junior officer in a bank in New York gets a good deal more salary than our managers. Junior officers are not allowed to lend money, and I think we have done-regardless of anyone else's opinion to the contrary-I think we have had a remarkable record with the limitations that are placed upon us in that respect. I do not defend our mistakes, and I know that we do not always get 100-percent efficiency. I know we have employed some people by reason of political recommendation, but not all of them. We do try, however, to get men that can do the job. It is our business to know the good points and the weak points of a man, and we find them out. In our organization we know the agencies that click best and those that click worst, and we know the weak spots, and we continue to try to improve them. We cannot always straighten them out, but that is our job, and we are after it all of the time.

Mr. KENNEDY. Mr. Jones, under the civil service provisions, you would get men who are capable and would owe their jobs to their ability to pass the test, whereas the man who was appointed on political recommendations might be influenced by his political boss in the handling of these matters.

Mr. JONES. We try to see through those things, and we work together all of the time, and we think we know of a good credit man and those that are not so good. We think we know those that are generous and those that are reliable, and we take all that into

account.

Mr. KENNEDY. For instance, if you notice that a certain group of law firms presented 95 percent of the applications, you would make an effort to inquire into the reason, would you not?

Mr. JONES. We do not like for lawyers to present them. We have advertised and put in our circulars that it is not necessary to employ anybody.

Mr. KENNEDY. Well, of course I had no authority for this statement, but it is generally rumored around New York that a certain group are the proper people to put in any of these applications.

Mr. JONES. You get that gossip every place in the world, and our ability to say "no", I think, has saved us a great deal of imposition from that source. Mr. Kopplemann will testify to our ability to

say no.

Mr. KOPPLEMANN. I will. Do you know the Austin Automobile Co.-the small-sized automobile?

Mr. JONES. I have heard of it.

Mr. KOPPLEMANN. You do not know anything about it, generally? Mr. JONES. No.

Mr. REILLY. Mr. Driscoll, do you want to ask a question?

Mr. DRISCOLL. I was going to make an observation; I do not think it needs a reply. We are wandering far afield from where we started. We seem to overlook one thing, and I think Mr. Jones will agree with me in this: That is, in handing out money to the deserving and needy citizens, you are somewhat concerned in the way that the Government gets it back?

Mr. JONES. We are.

Mr. DRISCOLL. That is a quite important concern?

Mr. JONES. It is not only our disposition, but it is in the law.

Mr. DRISCOLL. That is brought to my attention by some correspondence that I have had with one of my constituents, who was very much surprised that she would be expected to pay back the money that she got from the Government.

Mr. KOPPLEMANN. Now, to further your observation, the Home Owners' Loan Corporation, with whom I have discussed the repayment of their loans a great many people talk about those foreclosures, and I have had to get myself interested, because some of my constituents are interested in it, so I went into that question with the Home Owners' Loan Corporation. They said they expected a great many foreclosures, but they also say that they will not lose any money to the Government, that is, the people of this country will not lose any money, because the difference between the charges that they make for the money and what they get will amply protect the Government, and at the same time give the privilege and power to be sympathetic in making loans to save homes for those people who want to be saved.

Mr. DRISCOLL. The Government borrowed $2,500,000,000 at 2 percent, and loans at 6 percent.

Mr. KOPPLEMAN. Under this bill of mine, H. R. 5918, the same thing happens.

Mr. FORD. I do not think that is quite fair. The Government does not expect, when it forecloses on a piece of property, to do anything by disposing of that property but to protect its loan.

Mr. KOPPLEMANN. Yes; and that is another way to protect the people against losses.

Mr. FORD. I would not want to take a Government loan and pay 5 percent on it, on the theory that 2 percent was going to pay off the loans of people would would not pay it back. That would not be the philosophy of the Home Loan plan.

Mr. DIRKSEN. Mr. Kopplemann, may I ask a question? To go back to your bill, it seems to me that the gist of your contention. which is advanced as the reason for adopting this bill is that the Reconstruction Finance Corporation has not been sufficiently liberal or sympathetic in its treatment of these loans?

Mr. KOPPLEMANN. Yes.

Mr. DIRKSEN. There is no denial that they have the authority to make these loans; it is just a question

Mr. KOPPLEMANN. There are some things here about this bill that are different from the law as it is at present.

Mr. DIRKSEN. That is, they have pretty near all of the authority to make the loans that is contained in this bill?

Mr. KOPPLEMANN. In a very large measure; and it was supposed, when the original bill was passed in 1934, that business and industry would be taken care of reasonably well.

Mr. DIRKSEN. So that it is a question of not having the proper sympathy for the loans?

Mr. KOPPLEMANN. That is one of them.

Mr. DIRKSEN. In view of the fact that the R. F. C. is appointed by the President and the board to be set up under this bill will be appointed by the President, the substance of what you hope to achieve might be obtained by simply asking the President to relieve Mr. Jones and the members of the R. F. C. board who are entirely responsible, and find a board of directors who are more liberal? Mr. KOPPLEMANN. That is one of the things this bill of mine asks for.

Mr. DIRKSEN. Would that achieve it?

Mr. KOPPLEMANN. As far as any man can prove it, I would say "yes." Now, I call your attention, on top of page 3, to paragraph (b): "Members to be appointed by the President shall be by experience or training qualified in the field of intermediate or long-term commercial and industrial credits."

Mr. DIRKSEN. Mr. Jones has just testified that he has men of experience who could handle that.

Mr. KOPPLEMANN. But he has also testified that he does not make loans to any business.

Mr. REILLY. Let this be off the record.

(Here followed discussion off the record.)

(Thereupon the committee adjourned until 10:30 o'clock Thursday, Aug. 1, 1935.)