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Ill' V.«rch 4, 1935 Mr* George J. B&rthold, Vice ?res. i Treas. The Miners and Mechanics Savings 5; Trust Co. Gteubenville, Ohio Dear *4r* Eartholdi I appreciate very much your writing to ae about the manner in which the real estate provisions of the proposed Banking Act of 1935 would effect your bank, and I quite agree with you that the provisions should be altered in order to take care of just such situations as the one you describe. The point is one that I intend to develop fully in ay testimony at the committee hearings on the bill* The Koune Committee began hearings on Title II of the bill this uoraing, but at +iiis session I presented only a prepared introductory statement. In the course of this statement, hammwmtm I suggested that it might be best, in the aatter of real estate loans, to vest in the Federal Reserve Board the authority to prescribe roles and re.;relations, r&ther than for Congress to arite them into the statute* When I take up the detailed iscussion of the section of the bill relating to real estate loans, it is ay intention to show that the provisions as now drawn would work an undue hardship on some of our State zaeaber banks and would also operate in & similar manner against non-aember banks that might presently desire to qualiiy for aembership in the Federal Reserve System* As a matter of fact, it seems to mo that real estate loan restrictions, when incorporated in a statute, are necessarily arbitrary and impractical* 5Jcperience shows, furtherraore, that t^ey are ineffectual in operation, and cannot in any sense be regarded as a substitute for good judgment and o-ood management* The course that I would personally favor, therefore, is t at of removing frora the statute the detailed restrictions on George Barthold - 2 - 5/4/55 real estate loans, and leaving to the Federal Reserve Board the natter of determining such rules and regulations as may be required in the light of the conditions existing at any given time* In this manner, the Board would be able to take account of the state of the real estate market, the mortgage market, and the banking and business coiaaiunity in general* Yours sincerely, M. S. Eccles, Governor
@FedFRASER