The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1932-03-05
PROPOSED BANK
BILL BENEFITS
SMALL OWNER
Easier Money Policy Aim of
Federal Home Loan
Bank Co.

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 by
the small home owner.
Gavin L. Payne, who appeared
before the United States senate
banking subcommittee at Washing
ton two weeks ago as a representa-
tive of the Indianapolis Real Estate
Board, summarizes the merits of the
proposed bill as follows:
The man with small home, or
proposing to build a small home"
said Payne, lis dependent on prac-
tically two sources for his first
mortgage-through the building and
loan association. or the trust COM
pany or state bank.
For many years, he has found
these facilities adequate in Indian
apolis. Indeed, this city has the
largest building and loan association
in the world-the Railroad Mems,
With fifty million dollars resources.
Resources Are Great
Altogether, the associations in
indianapolis have around one
hundred and fifty millions re-
sources, and when you consider the
trust companies also making loans,
you can see what factor these in
stitutions have been in developing
homes. / do not know how Indian
apolis now ranks, but a few years
ago, with the exception of Phil
adelphia, 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
quality is of vast Importance in the
scheme of urban life.
THE building and loan associa-
tons in Indianapolis are what the
big savings banks are to New York
City.
Until the recent great financial
crisis, the machinery Of these in
stitutions 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 mort
cages, and if they pay off their
stock rapidly, they must do one or
both of two things: Cd Stop max
ing loans and CD insist on people
paying off good maturing loans.
so there would be double
barreled hardship-the man who
wants a loan on his existing home
or a new home can not get it, and
the man who has a maturing loan
on his home must pay at time
when he can not get the money
anywhere.
Designed for Home
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
ridiscount its mortgages with re-
serve institution, just as national
bank can rediScount commercial pa
per with the federal reserve bank,
his fear is more or less obliterated,
and the building and loan associ-
alton can go about the even tenor
of its way, and the man of small
means can get his loan as usual.
"A building and loan association
or trust company, knowing it can
rediscount mortgages any time with
a reserve institution, will not deny
a community good loans.
Again, think people will in
crease their investments in build
ing and loan stock, knowing that
the association has the advantage
of the reserve institution-and so
the benefits of tibet new federal
home loan bill will be twofold.
The chief argument against the
bill is that we will have initiation
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 be-
comes more general, there will be
a shortage of homes, as each fam
lily 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 benefit of the home"