Evening star., 1932-10-18
HOME AID PROBLEM
|SBEL|EVED SOLVED
Fort Makes First Formal Re.
port to Nation in Forum
Address.

credit IN the realty 1ielQ, was Ildue ldoI
night by Chairman Franklin w. Fort
of the new Federal board, in the Ma
tional Radio Forum, arranged by The
Evening Star, and broadcast over q
coast-to-coast network of the National
Broadcasting Co.
After explaining the functions of the
IL regional banks of the system, capital
lied at S134,000,000, Mr.. Fort asserted
that If home lending institutions will
not do their duty now, these banks will
have the power to loan up to 40 per
cent of the value OF the property,
But" he AIDED, I'VE hope and con-
fdentlv believe that now that we are
open for business, the great mutual
lenders will prove their mutuality
of character by doing the job which Is
rightfully theirs-by lifting with the
funds collected from the neighborhood,
the threat to any neighbor.
1--WE do not expect any one to make
bad loans and we shall not do 1t our
selves. But any mortgage on nome
worth $4,000 or less which would have
been procurable in normal times. should
be procurable now"
Selection of Sites Explained
The chairman explained the way the
hoard selected its banks sites and dis
tricts to meet many needs and reach as
MANY agencies as possible. He con-
tinued: -.
AT last the mortgage lending msti-
tutions of America have central reser-
yoir of credit with $l34.000,000 OF capl-
tai and expansion possibilities through
the issuance of bonds which make their
minimum ultimate size at least 81 1,5O0,-
100000
"At last the Federal Reserve System
for commercial banks and the Federal
Land Bank System for farm mortgage
lending institutions have been supple
mented, thanks to President HooVers
vision and persistence, with system 10
supply funds primarily for urban owner
ship
Mr.. Fort said conditions in the mort
gage market had been "deplorable dur
ing the past year." but mo longer does
any excuse exist for continuance OF
this situation" now that the Home Loan
banks are open.
Text of Address.
The text of Mr. Forts address fol-
lows
Nine weeks ago tonight-through the
courtesy then, as now, of the Washing
ton Evening Star Forum stood pe-
fore this same microphone ana eX-
planned to the radio audience the pur-
noses and structure of the Federal Home
Loan Bank System. We were then one
week old. the board having been sworn
in on August g. The system was tnen
a mere prospect and the theme OF my
talk was its legal form and our hopes
for its future Our hopes were hlgh,
our aspirations yet higher. Tonight.
perhaps YOU may be interested in the
story of our 10 weeks work and OF the
nrogress which has been made with the
eaiol1s aid of many Americans.
At the beginning our board was
charged with certain definite duties
which must be performed before the
Home Loan Banks could begin their
operations. First. We must determine
into how many districts We shoulo ol-
vide the Nation. We settled upon ~
Second. we had to define the district
boundaries and settle upon the cities
where the banks should be located. !
had heard of the zeal of officers OF
Chambers of Commerce and other civic
organizations when a chance came TO
advance their city's interests. But 1
had never seen it in such action be1ore
Two delegations arrived by alrplane
the day we swore in One night when
I reached my hotel from the Office at
11:3O, there were q long distance calls
pending from west OF the MISSISSIPPI
River, and all about bank locations.
F1ndllV we gov tllciiA oil w ."'N
alone long enough to settle Where the
banks should be.
Tells of Choosing Districts.
Perhaps you will be interested to
know how we settled on the districts
and the cities It may give you
clearer picture of just how the system
will function if it fulfills our hopes and
those of its sponsors-just what its real
purpose and working structure is.
If a man wants to buy home ne, OF
course, must either have the whole price
in cash or else have part OF it and be
able to borrow the rest on mortgage:
If he is the average American, ne Will
not have it all in cash; certainly not
when he is young So, If the average
American is to buy a home. particu-
larIy if he is to buy it while young,
he must be able to borrow on mort
gage. And we all want young Amerl-
can husbands and wives to have homes
in which to rear their children. as well
as to have older husbands and wives
have a home for the comfort and Sc
curity of their later years.
When President Hoover became Sec
retary of Commerce in 1921, our credit
system consisted of two types OF 1nstl-
tutions. One was the commercial
men on collateral or short-term notes.
For them the Government, in Presl-
dent Wilson's administration, estab-
lished the Federal Reserve System. Its
p,1rpose was to give to commercial
banks a reservoir from which they
could obtain money, when they needed
1t Their needs might be due to heavy
Withdrawals or they might be due to
the fact that business men wanted to
borrow more money to buy materials
or pay labor than the bank had on
hand to lend them. For whenever
purpose they want it, the Federal Re-
serve will always lend them against
adequate security of certain strictly
defined kinds. And. by the way. it is
the duty of a banker to use those Ia
cilities freely whenever he needs money
for either purpose. If he does not, he
will starve his customers who need
credit and injure the business OF his
community. It is most unfortunate
that in the last year or two the pub
lie and bankers alike have come to
have a fear of borrowings by banks
from the Federal Reserve System. 1t
should be regarded as badge of honor
for q bank to be willing to borrow to
help its customers when they need help.
Loan Sources Shown.
the business OF lenQlIlS Ou HOItSdsco
has been chiefly in other hands. The
main sources of mortgage money have
been the mutual thrift organizations
the great mutual life insurance COM
panies, the mutual savings banks, the
mutual building and loan associations.
These organizations have taken the
savings of millions upon millions OF
Americans and invested them largely
in mortgages of one kind or another
chiefly in mortgages on homes. In the
United States as whole. these three
froups of mutual associations own over
$40, ,0O0, 100000 worth of mortgages.
Recognizing the fact that mortgage
lending institutions needed central
reservoir of credit as much as the COM
mercial banks did, Mr. Hoover started
inyestipations into the subject imme-