The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1932-03-12
PROPOSED BANK
BILL BENEFITS
SMALL OWNER
Easier Money Policy Aim Of
Federal Home Loan
Bank Company.

Although wide publicity has been
given the proposed Federal Home
Loan Bank Company, action on
which now is pending in Washing
ton, very little has been said of the
practical benefits to be realized oy
the small home owner.
Gavin l.. Payne. who appeared DC
fore the United States senate bank
ing subcommittee at Washington
three weeks ago as representative
of the Indianapolis Real Estate
Board, summarizes the merits of the
proposed bill as follows:
The man with a small home, or
proposing to build a small home"
said Payne, is dependent on prac-
tically two sources for his first mort
gage-through the building and loan
association or the trust company or
state bank.
Loan Resources Great
For many years, he has found
these facilities adequate in Indian
apolis. Indeed, this city has the
largest building and loan associa-
ton in the world-the Railroad
Men's-with fifty million dollars re-
sources.
Altogether. the associations in
indianapolis have around one hun
bred and fifty millions resources,
and when you consider the trust
companies also making loans, you
can see what a factor these institu-
lions have been in developing
homes. I do not know how Indian
apolis now ranks, but a few years
ago, with the exception of Philadel-
phia, it led the nation in homes
owned per capita. That was some
thing of which to boast. 1t gave a
quality to our population, and quail
ity is of vast Importance in the
scheme of urban life.
Two Hardships Created
THE building and loan aSsocia-
tions in indianapolis are what the
big savings banks are to New York
City
Until the recent great financial
crisis, the machinery of these insti-
tutions worked beautifully. But
when people are activated by fear,
they all want their money at about
the same time.
Building and loan associations,
in order to pay dividends to stock
holders, or depositors, as they are
sometimes called, must keep their
money we'll loaned out on mortgages
and if they pay off their stock
rapidly, they must do one or both
of two things, either stop making
loans or insist on people paying off
good maturing loans.
80 there would be a double
barreled herdShip-the man who
wants a loan on his existing home
or new home can not get it, and
the man who has maturing loan
on his home must pay at time
when he can not get the money any,
where.
Confidence Is Needed
IF a depositor feels confident he
can get his money when he wants
it, he seldom wants it. If he knows
a building and loan association can
rediscount its mortgages with a re-
serve institution, just as a national
bank can rediscount commercial
paper with the federal reserve bank,
his fear is more or less obliterated,
and the building and loan associa-
ton can go about the even tenor Of
its way, and the man of small means
can get his loan as usual.
"A building association or trust
company, knowing it can rediscount
mortgages any time with a reserve
institution, will not deny a COM
munity good loans.
Again, I think people will in
crease their investments in building
and loan stock, knowing that the as
ISOLATION has the advantage of the
reserve inStitution-and so the bene-
fits of the new federal home loan
bill will be twofold.
Homes Will Be Needed
THE chief argument against the
bill is that we will have imitation
that is, too many homes. AS against
this we maintain that the surplus of
single family dwellings today is due
to the doubling up" of families, and
that when employment becomes
more general, there will be short
age Of homes, as each family will
want a home of its own.
THE new bank can not discount
mortgages of more than $4,000, and
only on one, or two family dwellings,
as it is designed solely for the bene-
fit of the home"