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Mr. GIFFORD. Guaranteed their bonds.

The CHAIRMAN. But it is not now contemplated, as I understand the situation, that the Government is going into the business of lending money on farm land as a permanent proposition at all. That has been done because these land banks were in an emergency to tide them over during the crisis and help them out of the hole and enable them to carry on in their own way as institutions owned by the farmers. The Federal land bank practically owns them, free from Government ownership, not Government owned; we guaranteed the mortgages.

Mr. MARX. As Congressman Kopplemann put it, if there was some agency whereby private lending institutions, whether banks or mortgage companies or building and loan associations, could take some of the ordinary good risks and get loans on real estate, industrial and commercial real estate, and rediscount them at some Government agency, I feel that it will go a long way toward bringing prosperity back.

Mr. GIFFORD. You think that the borrowers would be willing to subscribe 5 percent of their stock in the Corporation through the land commissioner, as you call the borrower, to put up 5 percent of the loan as stock?

Mr. MARX. I feel reasonably sure that they would be willing to do that in order to get their loans.

Mr. FORD. What the gentleman stated as to what is being done for others is true. Those are the facts. We have granted facilities for loaning money to home owners, created facilities for loaning money to farm owners, created facilities for loaning money to railroads and banks and insurance companies, and almost every type of interest in the country has been in some measure helped by the Federal Government. The only class of persons in the United States left out of what the Government has done is the industrial and income property owner of a certain size. We have taken the small property owner, the 2- and 4-family flat, and now we have gone further in some apartments, and given them relief. We have given the home owner a chance. This class have a good sound complaint on the basis of what we have done. We have helped every other class of people in the United States except the owner of industrial, commercial, and income property. We have done that. What Mr. Kopplemann is asking, as I understand this bill, is merely this, that the Government set up a rediscount facility where a bank or a private owner, a mortgage company, may, after making a reasonable loan, take it and have it rediscounted over a period of years.

The CHAIRMAN. That is not offered in this bill.

Mr. FORD. That is the major feature of it.

The CHAIRMAN. You are mistaken about that, if you will read the bill. It does not stop there at all.

Mr. KOPPLEMANN. There were some 1,600 people interested in this legislation, Mr. Ford, that I know about, because of correspondence with them. I tried for the benefit of this committee to select people who had different angles to present as to the effect of this bill, and only one of those angles is now being testified to. There are other features in the bill with regard to loans to industrialists, small industrialists and small business, as well as this one.

Mr. GIFFORD. Page 7.

Mr. FORD. Do you not think it is an intermediate credit bank?

The CHAIRMAN. Read page 7 and you will see how intermediate it is. [Reading:]

To make loans direct to any corporation, partnership, association, or individual, in, or organized under the laws of any State or Territory or the District of Columbia, and composed of a person or persons engaged in producing or marketing goods or services if the notes or other such obligations representing such loans are secured by warehouse receipts, or shipping documents covering such goods, or mortgages upon land, other real estate, plants, warehouses, or equipment, or other evidences of probability of repayment of the loan when due—

And so forth.

Mr. FORD. Here is the point. We have provided $4,880,000,000. We have used $3,300,000,000 for P. W. A. A great part of that money was used for direct aid. If we would take, let us say, onethird of the original, or one-fourth of the plant and put it in shape where a small business that would make a good showing could get a reasonable loan for a reasonable length of time to enable them to operate, is it not just as reasonably probable that those people would employ more labor in the long run than would the plants that we are trying to develop at the present time? I do not know, but we have done these other things. There have been some results. Recovery is gradually on the up and up. We have gone that far. It does seem to me that there is one stratum in society that we have done nothing to help and it does not seem at all unreasonable that we should make an effort to do something for them under these conditions.

The CHAIRMAN. There is not any doubt but what the type of business which is contemplated in this legislation is in need of assistance and needs to be revived. There is not any doubt but that anybody can get credit if the Government and the Treasury is backing them. There is not an individual in the United States whose position cannot be improved if you give him access to the United States Treasury. I could outmatch J. P. Morgan in financial performances if you put the Treasury of the United States back of me.

Mr. FORD. My idea is only to lend him money to enable him to rehabilitate his business and employ more people by purchasing more trucks, and if he can buy four trucks he will purchase more goods and employ more people. It seems to me we have pursued a wise policy in some respects, but if we had gone to work and put some of this money out to these poor devils who are trying to run small businesses and given them an opportunity to expand a little, it would have helped considerably. There is the possibility of doing more business than we have done by some of the methods we have employed.

Mr. GIFFORD. In the year 1934 you recognize there was a tremendously lesser amount of loans granted by banking facilities. The last report shows loans decreased and increased.

Mr. FORD. They have increased something like $117,000,000.

Mr. GIFFORD. This year, but the last report of the Federal Reserve for last month shows they have decreased again. There was an increase in the first few months of this year but last month there was a teriffic decrease in loans.

Mr. FORD. There is no such situation in the figures given out.
Mr. GIFFORD. It would probably increase until September.
Mr. FORD. That was purely business loans.

Mr. KOPPLEMANN. Mr. Gifford's question is very ably answered by a very recent report of the business advisory council of the Department of Commerce, a copy of which we have here. I do not know whether you were here yesterday in the hearing. A copy of it was left here and you can go over it and I hope Mr. Gifford. That is a very recent survey of the situation so far as loans to business and industry throughout the country are concerned. That is valuable information. That is in possession of the committee.

The CHAIRMAN. If there are no further questions of this gentleman, we will call another witness.


Mr. SIMPSON. Our association serves approximately 7,000 wholesale distributors of tobacco, who in turn serve between 7 and 8 hundred thousand retailers of tobacco products through the country, 764,000 to be exact. Inasmuch as I had not heard of this hearing until last Sunday, I have been unable to prepare a brief containing concrete cases of establishments that would be benefitted through the adoption and execution of Mr. Kopplemann's bill. However, if the committee so desires I can have those concrete cases supplied and forwarded to you from New York. Would you care to ask me any questions that would be pertinent to the issue?

The CHAIRMAN. I suggest that you proceed in your own way to discuss the legislation.

Mr. SIMPSON. I daresay that 10 percent of the wholesalers and retailers would be benefitted. I say this because there are cases that I have in mind where small retail establishments, for example, desire to expand and put in new lines of merchandise in their stores who were unable to do so through lack of cooperation of various local banks throughout the country. If it were possible to liquefy credit channels to a normal extent, a reasonable extent that would permit these small retailers and wholesalers to expand and carry on their business in a more up-to-date modern manner, it would be of infinite help to them, create additional employment, and create additional business. Many of them are at present operating with products that are more or less ancient and if they had the money to get new equipment it would undoubtedly react to the prosperity of the country. I think that is about my presentation.

Mr. MEEKS. Of course, these men would not make these loans and would not undertake to borrow money unless they thought their business was going to be improved, being in that respect like any other man borrowing money from the bank to carry on business.

Mr. SIMPSON. That is true. I think the average retailer is a reputable business man. In general he has been in business for quite a number of years and is more or less useful to the community, works between 18 and 20 hours a day, carrying on a small business, and is deserving of help.

Mr. MEEKS. I think all in a small community know the value of retail merchants not only to the community but the general business set up of the country. How would a loan of this kind to John Smith increase his trade?

Mr. SIMPSON. In the first place it would enable him to expand It would enable him to set up a business, a retail establish


ment, that in point of view of appearance alone might be able to compete favorably with the chain store establishments which are beginning to permeate every nook and cranny of the entire country and their set-up obtains a psychological reaction on the part of the public.

Mr. MEEKS. I congratulate you on seeing what I was trying to get at, because I was afraid I did not make it plain enough. You see exactly what I was driving at. In other words, you think the business is there to be had if the ordinary retail merchant is able to so finance his business as to compete with the chains and the larger units.

Mr. SIMPSON. Absolutely. I think the public, if I may say so, especially in the suburban rural communities throughout the country, are more or less anxious to help out the individual small business man rather than to create greater opportunities in the country for chains. While I work in New York I live in Englewood, N. J.

Mr. DRISCOLL. Your statement is absolutely correct.

Mr. KOPPLEMANN. Aside from the velocity of business that would naturally result from loans to those 10 percent of the 764,000 you spoke of throughout the Nation, I am interested in knowing your opinion as to what would it mean from your knowledge of what effect the availability of intermediate credit assistance provided through this bill would have on employment. I ask your opinion because of your knowledge gained through your position on the code authority.

Mr. SIMPSON. I think that your employment would be in a direct ratio to the extension of the individual business establishment if he could expand and create in his establishment the feeling that is generated in most of the chain-store establishments, that is, the utter cleanliness that is at least seemingly apparent and the bright lights, paying a little bit more for his overhead, if necessary, carry a larger stock, and he would undoubtedly be able, instead of having himself and his wife and one or two children working all hours of the day and night, to employ practically as many people as the chain establishment employs.

Mr. KOPPLEMANN. Have you had because of your position as the head of these establishments complaints from them of their inability to secure financing so that they may run their business as it should be run?

Mr. SIMPSON. Complaints of that nature are rampant throughout the country.

Mr. KOPPLEMANN. You have had instances?

Mr. SIMPSON. Yes; I have received complaints of that nature. Mr. MEEKS. What kind of security do these people have to offer for loans of that character?

Mr. SIMPSON. I think the majority of these loans would run between $500 and $5,000.

Mr. MEEKS. That is the amount of the loan. What security would they offer?

Mr. SIMPSON. Security is to be predicated upon the three C's of credit, character, capacity, and capital. You will find 99 percent of the retailers throughout the country gave 100 percent of the first two C's, and insofar as capital is concerned they will be able to give you collateral probably approximating better than 100 percent of the loan.

Mr. MEEKS. Do they find it impossible to get credit at the banks?

Mr. SIMPSON. For some reason the credit, as to the banks I come in contact with, is absolutely frozen, as far as small retailers and the small industrialists are concerned.

Mr. MEEKS. You think these folks ought to have credit to enable them to place loan applications on a commercial basis of short terms? Mr. SIMPSON. You cannot get a commercial bank to give shortterm credits for things like that. Where they are expanding their business it should be a long-term credit.

Mr. MEEKS. You are talking about capital loans?


Mr. MEEKS. You gave us a figure a while ago of 700,000 retailers throughout the country.

Mr. SIMPSON. Yes; 764,000 retailers and approximately 7,000 wholesalers.

Mr. MEEKS. As to these retailers, what proportion of them do you think desire to borrow money for the purposes you have mentioned? Mr. SIMPSON. Between 70,000 and 80,000 immediately.

Mr. MEEKS. In any cases that you know of, is there inability to get credit due to the lack of good management?

Mr. SIMPSON. That point would enter into it undoubtedly.

Mr. MEEKS. The reason I asked that is that I have had an opportunity for observation in that line, and it is true in other lines, not only in this field but it is true of almost any field I know anything about. There are those who think if they had more money from some source that they could get along all right.

Mr. SIMPSON. What would be good management in New York would be poor management in Oshkosh.

Mr. MEEKS. Poor management where?

Mr. SIMPSON. In some urban communities where the tempo of life is entirely different than it is in the large commercial centers such as New York, Detroit, or Chicago.

Mr. KOPPLEMANN. Do you know that this intends to set up offices in various parts of the country?

The CHAIRMAN. If there are no further questions, we will ask Mr. Moss if he desires to be heard at this time.


Mr. Moss. I have been in the general mercantile business for the past 17 years, in Virginia, in the same location. Mr. Chairman and gentlemen of the committee, in reference to what I am going to say to you I have every reason to believe that I am expressing the sentiments and opinions of practically all the small merchants throughout this country. Extensive correspondence and numberless personal interviews have convinced me of this fact:

In reference to that I will say that I happen to be tied up with one of the veterans' organizations and am called upon from time to time. to go to various sections of the country, and naturally while there I take up and talk over with them the situation with the retail merchants around different sections.

In the year 1929 we merchants, that is, those of us who were conducting our businesses in safe, sane, and business-like manner, were making reasonable and satisfactory profits, and were hopefully looking into the future without fear of financial stress. Soon thereafter, as business became dull and money tight, we carried on in the

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