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No. 4
Vol.2
FEDERAL
HOME LOAN BANK
REVIEW
JANUARY
1936
ISSUED BY
FEDERAL HOME LOAN BANK BOARD
WASHINGTON D.C.
Federal Home Loan Bank Review
TABLE OF CONTENTS
Page
Indexes of small-house-building costs developed by the Federal Home Loan Bank Board..
Ill
Proposal for a home-building service plan
116
The potential demand for new home building
121
Analysis of the Supreme Court's decision on conversion by the General Counsel of the
Board
126
Neighborhood standards as they affect investment risk
129
Effective advertising by Federal savings and loan associations
132
Residential construction activity in the United States
135
Combined statement of condition of the Federal Home Loan Banks
140
Growth and lending operations of the Federal Home Loan Banks
142
Interest rates on advances to member institutions
143
Federal Savings and Loan System
144
Federal Savings and Loan Insurance Corporation
146
Home Owners' Loan Corporation
148
Subscriptions to shares of savings and loan associations
148
Table of applications received and loans closed, by months
148
Summary of operations of the Reconditioning Division
149
Foreclosures authorized and properties acquired
149
Resolution of the Board
150
Directory of member, Federal, and insured institutions added during November-December.
150
SUBSCRIPTION PRICE OF REVIEW
T H E FEDERAL HOME LOAN BANK REVIEW is the Board's medium of communication with member institutions of the Federal Home Loan
Bank System and is the only official organ or periodical publication of the Board. The REVIEW will be sent to all member institutions without
charge. To others the annual subscription price, which covers the cost of paper and printing, is $1. Single copies will be sold at 10 cents. Outside of the United States, Canada, Mexico, and the insular possessions, subscription price is $1.40; single copies, 15 cents. Subscriptions should
be sent to and copies ordered from Superintendent of Documents, Government Printing Office, Washington, D. C.
APPROVED BY THE BUREAU OF THE BUDGET
Federal Home Loan Bank Board
JOHN H. FAHEY, Chairman
WILLIAM F. STEVENSON
T. D . W E B B , Vice Chairman
F. W. CATLETT
H. E . HOAGLAND
OFFICERS OF FEDERAL HOME LOAN BANKS
BOSTON:
B. J. ROTHWELL, Chairman; W. H. NEAVES, President; H. N . FAULKNER, Vice President;
FREDERICK W I N A N T , J R . , Secretary-Treasurer.
NEW
YORK:
GEORGE MACDONALD, Chairman; G. L. BLISS, President; F. G. STICKEL, J R . , Vice President-
General Counsel; ROBERT G. CLARKSON, Vice President-Secretary; DENTON C. LYON, Treasurer.
PITTSBURGH:
E. T. TRIGG, Chairman; R. H. RICHARDS, President; G. R. PARKER, Vice President; H. H. GARBER,
Secretary-Treasurer.
WINSTON-SALEM :
IVAN ALLEN, Chairman; 0 . K. LAROQUE, President-Secretary; G. E . WALSTON, Vice-President-
Treasurer.
CINCINNATI:
H. S. KISSELL, Chairman; H. F. CELLARIUS, President; W. E . JULIUS, Executive Vice President;
H. J. BRODBECK, Second Vice President; W. B . FURGERSON, Treasurer; T. DWIGHT W E B B , J R . ,
Secretary-Comptroller.
INDIANAPOLIS:
F. S. CANNON, Chairman; FRED T. GREENE, President; B. F. BURTLESS, Secretary-Treasurer.
CHICAGO:
H. G. ZANDER, Chairman; A. R. GARDNER, President; HAROLD WILSON, Vice President; E . H.
BURGESS, Treasurer; CONSTANCE M. WRIGHT, Secretary.
DES
MOINES:
C. B . ROBBINS, Chairman; R. J. RICHARDSON, President-Secretary; W. H. LOHMAN, Vice President-Treasurer; J. M. MARTIN, Assistant Secretary; A. E . MUELLER, Assistant Treasurer.
LITTLE ROCK:
J. GILBERT LEIGH, Chairman; B . H. WOOTEN, President; H. D . WALLACE, Vice President; J. C.
CONWAY, Secretary; W. F. TARVIN, Treasurer.
TOPEKA:
C. B . MERRIAM, Chairman; C. A. STERLING, President; W. L. BOWERSOX, Vice President; R. H.
BURTON, Secretary-Treasurer.
PORTLAND:
F. S. MCWILLIAMS, Chairman; C. H. STEWART, President; IRVING BOGARDUS, Vice President-
Treasurer; W. H. CAMPBELL, Secretary; M R S . E . M. SOOYSMITH, Assistant Secretary.
Los ANGELES:
C H . W A D E , Chairman; M. M. HURFORD, President; F. C. NOON, Secretary-Treasurer.
Indexes of Small-House-Building Costs
Developed by the Federal Home
Loan Bank Board
W
ITH the publication of the actual
costs of building the same typical
house in 27 cities, this issue of the REVIEW
inaugurates the first attempt to develop
exact local indexes of the cost of smallhouse construction for cities in all parts of
the country. In view of the vital influence
exercised by construction costs on the volume of home building, and on the value of
existing security for mortgages, the Federal Home Loan Bank Board feels that exact information on costs is essential to all
member institutions and to the entire construction industry.
The 27 cities, for which costs are reported in this article, are situated in 4 of
the 12 Federal Home Loan Bank Districts.
In the next two months similar cost figures
will be published for approximately 40
more cities situated in the 8 other Districts.
Thereafter, each city will report four times
a year and comparisons with previous reports will provide an exact guide to the
trend in home-building costs in each city.
Local factors—such as accessibility of
materials, labor supply, and transportation facilities—play an important part in
the building costs of small houses. A
movement up or down in home-construction costs in the Eastern States may be
important enough to affect the national index but still have no influence on costs in
Pacific Coast States. Therefore, to be of
greatest value, a home-building index must
January 1936
be localized as much as possible. This
consideration determined the Board to
make use of its nation-wide facilities to
obtain accurate local information upon
which local indexes can be built.
The ultimate objective is to have as
nearly as possible every area of uniform
building costs represented and an index
prepared for each area. An area may consist of an entire State or more than one
State or it may consist of only part of a
State where cost conditions are diverse. It
will not be possible to decide these matters
until initial cost figures have been obtained
from a sufficient number of cities.
CHANNEL FOR OBTAINING COST DATA
T H E Board has created, in the Reconditioning Division of the Home Owners' Loan
Corporation, a body of trained men peculiarly well fitted to gather the accurate
information essential to a building-cost index. This field personnel is attached to the
Corporation's Regional, State, and District
offices throughout the country and includes
architects, builders, and engineers experienced in local home-building problems.
Many of them are formally trained in the
compilation of cost data. All are familiar
with local building requirements and practices. To these selected correspondents is
assigned the duty of obtaining the basic
information on which the cost indexes can
be worked out.
111
T H E basic information required is the exact
cost of materials and labor necessary to
construct a specified typical house. The
house is a detached home of 24,000 cubic
feet volume, of good design, containing a
living room, lavatory, dining room and
kitchen on the first floor, and three bedrooms and bath on the second floor. There
is an open attic which may be used for
storage or may be finished into one or two
usable rooms. The cellar or basement is
without partitions and contains the heating
plant and laundry facilities. The exterior
treatment is assumed to be a combination
of wideboard siding, with brick and stucco
as features of design. A one-car attached
garage is included. The plot is assumed to
be approximately level and no unusual soil
conditions have been taken into consideration. The materials and finish and workmanship specified are standard and such as
are commonly employed in all parts of the
country by reputable small-house builders.
The structural design is sufficient to meet
all reasonable requirements of a municipal
building code. Unusual materials or practices, such as prefabrication of walls, have
purposely been avoided. Should they at
any time become common the specifications
for the composite house will be modified to
allow for them. The home might be placed
in the $6,000 class.
" Quote truck load (or mixed truck load)
lots on all items. Delivery point within
one mile. Terms, net 30 days."
The labor factor is similarly handled.
At the same time that he gets the material
cost data, the field correspondent reports
the prevailing hourly wage rate for each of
the principal trades involved in the construction of this house. This labor information is then transmitted to headquarters
where a master labor " take off " is applied.
The number of labor hours required to
build into this house each quantity of the
items contained on the master materials
list has been fixed on the basis of estimates
which are known to be correct within close
limits.
The combined labor price and material
price give an assumed " builder's cost" for
the house. To this total is added a fixed
amount to cover the overhead items—such
as public liability and workmen's compensation insurance, and equipment
charge—and then a profit item of 10 percent is added to the whole, giving a reasonable " builder's estimate" on the house.
(The estimate does not include planting,
gas range, gas water heater, refrigerator,
insect screens, shades, wall decoration, nor
lighting fixtures, as these are usually items
of owner-preference and in many localities
are not usually included in a general contract estimate. Of course, the estimate
does not include land.)
METHOD OF COLLECTING BASIC INFORMATION
ACCURACY OF THE INDEXES
specification of quality and quantity of the material required for such
a house is sent every three months to each
correspondent. He obtains current delivered prices on these listed materials from
leading local dealers (whose cooperation
the REVIEW gratefully acknowledges).
Quantities for each of the major items are
accurately listed just as a supply house
would set up its quotations for builders.
The list carries the following instructions:
on exactly the same list of materials
are obtained from the same supply houses
by the same technical personnel every
three months. Likewise, exactly comparable labor factors are reported every three
months. Thus, in a very simple and direct
manner, an exact record of the movement
up or down in the cost of building a small
house in at least 65 cities will be obtained.
It is obvious that the complexities of the
calculations and the personal factor will
NATURE OF THE BASIC INFORMATION
AN EXACT
112
PRICES
Federal Home Loan Bank
Review
render the data liable to some margin of
error but this should and will be reduced as
the process becomes increasingly familiar
to the personnel. Furthermore, as the
same men get exactly the same information
every three months the dangers of error in
the index for any one city are greatly reduced. Caution must be exercised in making comparisons of actual costs between
cities and between Federal Home Loan
Bank Districts, but comparisons in movements of costs between different cities and
Districts may, for the reasons mentioned
above, be made with little hesitation.
Care must be taken against assuming that
the cost of construction of any given 6-room
house with bath in a reporting city would
be the same as the reported cost of the index house. Any variation in specifications
from those used in the composite typical
house would result in different costs.
What the comparative costs for individual
cities do supply are an exact record of the
trend in home-building costs in each city.
POSSIBLE USES OF THE INDEXES
T H E possible uses of accurate local indexes
of small-house construction costs are
many. The movement of building costs in
relation to rentals contracts or expands the
volume of home construction. It is, therefore, one of the factors that must be known
to all agencies—home-financing institutions, builders, materials dealers, and realestate operators—concerned in the building or financing of homes. This is particularly true if the home is being built to
sell. In addition, current costs of construction determine what the replacement
cost of any existing building would be and
so must be known in the making of any
appraisal.
From the point of view of a national
housing policy, whose purpose is to provide adequate housing for all productive
citizens, accurate information on local
home-building costs and of the trends in
January 1936
home-building costs is essential. Without
such information it is impossible to know
how many families may be expected to
provide their own housing.
Long-continued cost indexes will reveal
what effect, if any, improved materials and
methods of construction are having on
home-building costs. Breakdowns of the
basic data will indicate aspects of the
home-building process in which increases
in efficiency should be effected.
COSTS FROM TWENTY-SEVEN CITIES FOR
JANUARY
T H E accompanying table gives the total cost
and the cubic-foot cost of building the same
house in each of 27 cities, situated in 19
States and the District of Columbia. All
States in four Federal Home Loan Bank
Districts are represented by at least one
city.
It will be noted that the lowest cost—
$4,337 for the house or 18 cents a cubic foot—
is reported from Columbia, South Carolina.
Reported building costs on the same house
vary upwards through a range of more than
$2,000 to a high of $6,442 or 26.8 cents a
cubic foot in Providence, Rhode Island.
The group of Southern States in the
Winston-Salem Bank District report the
lowest average—21.1 cents per cubic foot—
and the two States in the Chicago District
average highest with 25.3 cents. The wide
differences in costs between some cities in
the same State, for example, between Cumberland and Baltimore, Maryland, Montgomery and Birmingham, Alabama, land
Pensacola and West Palm Beach, Florida,
are worthy of note.
It should again be pointed out that these
initial reports are to be accepted cautiously.
It will be wiser to defer the drawing of conclusions until the reporting system has had
time to be perfected and possible errors
largely eliminated. Eventually, the REVIEW
hopes to analyze the factors that explain
the wide difference in reports from different cities and sections.
113
Cities in four Federal Home Loan Bank
Districts report each month and the cycle
is repeated every three months. The following list indicates the Districts, States,
and cities reporting and the months in which
each reports. The numbers in parentheses
behind the States refer to the Bank District
in which the State is found. Attention is
called to the map of Bank Districts on the
inside rear cover of the REVIEW.
Cities Reporting in January, April, July, October
Bank Districts: No. 1, Boston; No. 4, WinstonSalem; No. 7, Chicago; No. 10, Topeka
STATE
Alabama (4)
Colorado (10)
Connecticut (1)
District of Columbia (4)
Florida (4)
Georgia (4)
Illinois (7)
Kansas (10)
Maine (1)
Maryland (4)
Massachusetts (1)
Nebraska (10)
New Hampshire (1)
North Carolina (4)
Oklahoma (10)
Rhode Island (1)
South Carolina (4)
Vermont (1)
Virginia (4)
Wisconsin (7)
114
CITY
Birmingham
Colorado Springs
Hartford
Washington
West Palm Beach, Pensacola
Atlanta
Chicago, Springfield
Wichita
Portland
Baltimore, Cumberland
Boston, Springfield
Omaha
Manchester
Raleigh, Asheville
Oklahoma City
Providence
Columbia
Rutland
Richmond, Roanoke
Oshkosh
Cities Reporting in February, May, August,
November
Bank Districts: No. 2, New York; No. 6, Indianapolis; No. 8, Des Moines; No. 11, Portland
STATE
New York (2)
Idaho (11)
Indiana (6)
Iowa (8)
Michigan (6)
Minnesota (8)
Missouri (8)
Montana (11)
North Dakota (8)
New Jersey (2)
Oregon (11)
South Dakota (8)
Utah (11)
Washington (11)
Wyoming (11)
CITY
White Plains, Albany,
Syracuse
Boise
South Bend, Indianapolis
Des Moines
Detroit
St. Paul
Springfield
Great Falls
Bismarck
Newark, Camden
Portland
Sioux Falls
Salt Lake City
Seattle
Cheyenne
Cities Reporting in March, June, September,
December
Bank Districts: No. 3, Pittsburgh; No. 5, Cincinnati; No. 9, Little Rock; No. 12, Los Angeles
STATE
Arizona (12)
Arkansas (9)
California (12)
Delaware (3)
Kentucky (5)
Louisiana (9)
Mississippi (9)
Nevada (12)
New Mexico (9)
Ohio (5)
Pennsylvania (3)
Tennessee (5)
Texas (9)
West Virginia (3)
CITY
Phoenix
Little Rock
San Francisco, San Diego
Wilmington
Lexington
New Orleans, Shreveport
Jackson
Reno
Albuquerque
Cleveland
Harrisburg, Pittsburgh,
Philadelphia
Memphis
Amarillo, Houston
Charleston
Federal Home Loan Bank
Review
Total costs and cubic-foot costs of building the same typical house in 27 cities in January 1936
[Source: Federal Home Loan Bank Board]
Federal Home Loan Bank Districts, States, and cities
No. 1—Boston:
Connecticut:
Hartford
Maine:
Portland
Massachusetts:
Boston
Springfield
New Hampshire:
Cost per
Total cost cubic foot
$5,846
4,813
.200
5,861
5,963
.244
.248
5,380
,
$0. 244
.224
6,442
.268
5,507
.229
5,696
.237
Rhode Island:
Vermont:
Rutland
District average....
No. 4—Winston-Salem:
Alabama:
Birmingham
District of Columbia:
Washington
Florida:
Pensacola
West Palm Beach
Georgia:
Atlanta
Maryland:
Baltimore
January 1936
5,456
4,359
.227
.181
4,977
.207 j
5,095
5,911
.212
.246
5,367
.223
5,028
6,033
.209
.251
Federal Home Loan Bank Districts, States, and cities
No. 4—Winston-Salem—Con.
North Carolina:
Asheville
Raleigh
South Carolina:
Columbia
Virginia:
Richmond
Roanoke
District average....
Cost per
Total cost cubic foot
$4, 960
5,056
$0. 206
.210
4,337
.180
5,046
4,508
.210
.187
5,087
.211
6,361
6,202
.265
.258
5,703
.237
6,088
.253
5,972
.249
5,386
.224
5,487
.228
5,756
.239
5,650
.235
No. 7—Chicago:
Illinois:
Springfield
Wisconsin:
Oshkosh
District average....
No. 10—Topeka:
Colorado:
Colorado Springs
Kansas:
Wichita
Nebraska:
Omaha
Oklahoma:
Oklahoma City
District average....
115
Proposal For A Home-Building
Service Plan
T
HE wide-spread adoption of the longterm amortized loan has deprived
savings and loan associations of a tremendous competitive advantage they formerly
had. At the same time, many types of
lending institutions are offering such inducements to the borrower as lowered
interest rates, minimum service charges,
the direct-reduction loan, adjustment of
the term of loan to meet the borrower's
capacity to pay, and loans up to a high
percentage of appraised value. With the
establishment of the Federal Housing Administration, these competitive advantages
are available to every type of sound financing institution in the country. Because
home loans offer a desirable outlet to accumulating investable funds, many commercial banks are entering increasingly
into this field of investment. This situation confronts thrift, home-financing institutions, specialized as they are almost
solely for the making of loans on homes,
with a critical sales problem. To get that
share of the most desirable home-financing
business which will enable them to prosper, many of them must find some distinctive appeal to the home-owner borrower.
Such an appeal exists. It is one that has
been tried and found satisfactory by savings and loan associations in Louisiana,
Ohio, Pennsylvania, California, Florida,
and elsewhere. It consists of the protection that a construction supervisory service
offers the home owner. The Louisiana association of which Mr. Philip Lieber, a past
president of the United States Building and
Loan League, is the head, has furnished
116
such a service successfully for 13 years.
What it can do for a savings and loan association is summarized in the following recent statement from an association that has
tried it.
Most of our loans are on new dwellings, as a
result of a thorough and complete construction
loan service which the Association has developed over the past year and a half. These mortgages are generally better security than those
upon older dwellings, both as to the borrowers
and the property. It is believed that we are
handling at least 60 percent of all residential
construction loans taken by lending institutions
in this district. We are told that this construction loan service is the most thorough in this
region, but have no direct means of knowing
whether or not that is true. It gives us a preferred position in obtaining the best loans upon
new properties. . . . The obvious advantages of
this system to the owner, and to contractors and
material concerns, has stimulated a large volume
of new home construction and has almost
swamped us with new business. . . . The Association plan, adequately publicized, has itself
stimulated a large part of the new construction
which it is financing.
VALUE TO THE HOME-OWNER BORROWER
is no mystery about the appeal of
the home-building service plan to borrowers. It offers families of modest means the
first assurance they have ever had of protection against poor housing. The loss to
their owners during the depression of hundreds of thousands of homes has taught
large numbers of people the need for such
protection. They realize that the average
family cannot without competent aid provide itself a well-built, well-designed home
in a protected neighborhood within its caTHERE
Federal Home Loan Bank
Review
pacity to pay for. Accordingly, they are
wary of home ownership and many of them
will not risk it unless they are assured such
protection as the home-building service
plan can give them.
That in a nutshell is why the home-building service plan as already operated by
several savings and loan associations attracts borrowers and even induces families
that would otherwise remain tenants to
undertake home ownership. The plan
makes home ownership economically worth
the risk for the following reasons:
1. It insures lasting value in design, an
efficient plan, standard materials,
and good workmanship.
2. It eliminates excessive costs resulting from waste in using unsuitable
materials, from shoddy workmanship, and immature plans.
3. It reduces future repair bills and
gives longer life to the house.
4. It insures a house suitable to the
neighborhood.
5. It relieves borrowers of both the details and disappointments incidental to home building.
6. It insures more readily marketable
properties.
VALUE OF THE PLAN TO ASSOCIATIONS
T H E decisive appeal of the plan to the savings and loan associations must be its ability to attract new business. As a matter of
fact, the plan has all the sales value of new
goods—new goods that meet a pressing and
universal need. It provides unlimited material for fresh advertising, a new approach
to clients. At the same time, it provides a
new stimulus to the association's staff. It
gives them a new pride in the importance
and value of their product.
From the point of view of sales promotion the home-building service plan offers
the savings and loan business a magnet to
attract the most responsible type of homeowner borrowers. It offers associations
By now, even the most ignorant building and
loan man in the world, and I must confess that
a great many of us have been ignorant, realizes
that this country has suffered from the results of
defective construction methods. We have had
our experience with the developers of real estate who had the one idea of quick profit. The
vast number of properties foreclosed on by all
classes of financial institutions, the necessity to
rebuild, to remodel, to change obsolete houses
of no value into those that the American public
would be willing to live in today should have
taught us lessons that even human nature, so
quick to forget, would remember for a while.
But human memory is so short that I already see
evidences of the desire for volume of business,
throwing caution to the winds, and a repetition
of other practices of the past which created so
much trouble for so many institutions of our
class throughout the country.
The other major advantage to be gained
from the use of a home-building service by
an association is that as the plan increases
the safety of an institution's investments
and as it focuses the community's attention
upon the association, it is bound to attract
increased savings to the associations. For
many associations, this consideration may
well be of decisive importance.
VALUE OF PLAN TO OTHER ELEMENTS OF THE
BUILDING INDUSTRY
T H E home-building service plan in no way
puts the financing institution in competi117
January 1936
38548—36
the opportunity to make themselves the
headquarters for technical advice and
guidance in home construction, home purchase, and all the other problems involved
in home ownership. Once any association's reputation as an advisory institution
is established, prospective home owners
will almost automatically turn to it for
advice and ultimately for a loan.
However, there are two other major considerations that recommend the adoption
of a home-building service plan by savings
and loan associations. One is that the
service will greatly increase the safety of
their investments. Mr. Lieber has the following to say on the subject:
2
tion with nor in control of the architect,
the builder, nor the materials dealer.
Rather, it facilitates their smooth coordination, and they welcome it. This is a
matter of experience. The Reconditioning
Division of the Home Owners' Loan Corporation has financed nearly $65,000,000 of
home reconditioning throughout the country, employing just such a supervisory system as this now recommended to private
institutions. All sound elements of the
building industry have found that the Division's supervisory service actually gives
them additional protection and insures
them fair treatment.
Where the supervisory service has been
tried by individual home-financing agencies, building supply dealers have found it
to be a new safety device which has actual
merchandising value, and have adopted it
as a part of their selling equipment in developing new business.
Finally, for the responsible operative
builder, the supervisory service plan secures benefits which he is quick to recognize and reward by throwing new business
in the way of the financing institution.
The principal benefits to him under the
plan a r e :
1. Technical advice and service at
minimum cost.
2. Certified construction providing
added sales value.
3. Relief from construction problems
of planning, design and supervision, permitting increased freedom of action in the development
of sales phases of his program.
4. Assurance to the prospective home
buyers of minimum financing and
construction costs.
PROPOSAL THAT BOARD MAKE SERVICE AVAILABLE
SEVERAL associations have used a homebuilding service plan and found that it gives
them a great competitive advantage. Because they specialize in home financing, de-
118
voting themselves almost exclusively to that
business, savings and loan associations are
in a most favorable position to operate a
service plan. At the same time, the plan
offers an immediate and practical means to
better housing and safer investment, which
is particularly important now that the country seems on the eve of a great expansion in
housing construction. For these reasons,
the Federal Home Loan Bank Board has
been urged to make available the material
and guidance necessary to install the supervisory service in any member institutions
that may want it. The Board is willing to
undertake this task, provided a sufficient
number of member institutions indicate
their desire to adopt a home-building
service.
The Board is able to offer this aid to
members only because it already has in the
Reconditioning Division of the Home Owners' Loan Corporation the builders, architects, and engineers capable of providing it.
ELEMENTS OF THE PROPOSED HOME-BUILDING
SERVICE
T H E aid that the Board's technical staff
could make available through the 12 Federal Home Loan Banks to their member
institutions may be listed in a brief outline.
I. Explanation of the service.—A simple
statement of what the program is, what it
will accomplish and how it can be put in
operation.
II. Instructions for operating the service,
constituting a Service Guide.—This would
be a manual to assist an association's executives in adapting the plan to the particular
operating conditions of the association.
The Guide will contain in addition to general educational material:
1. Suggested procedure and forms to
be printed by the association.
2. Fundamental construction information.
3. Suggestions for establishing minimum property standards adapted
to local conditions.
Federal Home Loan Bank
Review
4. Method of qualifying contractors.
5. List of publications and books for
reference and distribution to home
owners.
The Service Guide would be supplemented periodically by current material
capable of incorporation in the Guide.
III. Technical
services.—The
Board
would assist member institutions in organizing the technical services required in connection with the construction of a new
house or the reconditioning of an existing
property. The Board is in a position to
provide this assistance solely because technical elements of the home-building industry, particularly the architects, have promised their cooperation if the plan goes
through.
For the first time, the architects as a profession, represented by the American Institute of Architects, have endorsed the
idea of a home-building service plan and
offered to furnish satisfactory architectural service to the home-owner borrower,
through the home-financing institution, at
a fee commensurate with the cost of a
moderate-priced house. Local groups of
architects would be organized through the
67 local chapters of the American Institute
of Architects.
The elements of the service which the
architects agree to provide through the
home-financing institution are the following:
1. Working Drawings and Specifications for a representative variety
of homes costing less than $7,500
adapted to the requirements and
customs of each community
would be made available to each
member institution.
2. Alterations or Changes in Plans for
new construction or special plans
for improvements to existing
property.
3. Technical Advisory
Service.—Either
the architect who prepared the
January 1936
plans or another qualified technician would assist the owner in
selection of a house plan suitable
to the site and to the neighborhood. Technical advice would
similarly be available to the home
owner who wishes to modernize or
improve an existing property.
4. Secure Bids and Award Contracts.—
The architectural adviser or the
association would secure bids
from qualified contractors and assist the owner in awarding the
contract.
5. Supervision and Inspection of Construction Work.—The
construction work would be supervised
and inspected for the owner as a
part of the complete service.
The experience of a local architectural
group which is now providing such service
to home-financing institutions in Buffalo,
New York, and whose plan the American
Institute of Architects has recommended
to all local groups, indicates that the architectural service listed above may be furnished to the home-owner borrower for approximately 2 percent of the construction cost of a new house. Any technical
services in addition to those listed would be
charged for on the basis of $5 for each technical consultation or inspection, or of $2.50
an hour for office work in altering plans.
IV. Authentic information on any aspect
of home building.—A service department
would be maintained in Washington to answer all requests for technical information.
This department would regularly supplement the Service Guide with current information on pertinent phases of home building.
V. Aid in selling the service to the homeowner borrower.
1. Suggested advertising programs to
announce and stimulate interest
in the association's complete
home-building service.
119
2. Copy and layout for various advertising media—to be sent periodically.
3. Models of homes and other display
material of homes. 1
4. Certificate of construction, to be issued to the home owner attesting
architectural merit, construction
by a responsible builder, and
competent technical supervision
during construction.
COSTS OF THE PROPOSED PROGRAM
are two elements of cost in the proposed program: (1) the cost of the homebuilding service furnished by the association to the home owner; (2) the cost of the
Board's technical aid in preparing the material for the service. The cost to the
home owner for plans, specifications, technical advice, and technical supervision of
construction would be, as indicated above,
approximately 2 percent of the cost of the
building.
THERE
*A nominal charge would have to be made to member
institutions desiring these.
120
The cost of preparing the basic material
and of operating the Board's advisory service would depend on how many member
institutions would like to adopt the plan.
In any event, the cost would be nominal.
There has already been considerable discussion of the proposal that the Board
make the home-building service plan generally available to members through the
12 Federal Home Loan Banks, and much
interest has been aroused among other elements of the building industry as well as
home-financing institutions. In order to
determine what interest associations have
in the plan, members are asked to write
their views to their respective District Federal Home Loan Banks.
All that is wanted is an expression of
opinion. A letter will in no way obligate
any member institution. There will never,
of course, be anything compulsory about
the service, nor will its use subject an association to any regulation whatsoever. It
is intended merely as an aid to home owners and lending institutions alike. Any
member institution would be free to modify the service in any way it say fit, or to
drop it at any time.
Federal Home Loan Bank
Review
The Potential Demand For New
Home Building
I
N 1935 twice as many urban family
dwelling units were built as in any year
since 1931. This spectacular improvement
indicates that people are again becoming
able and willing to buy new homes. The
gates have opened to a pent-up demand.
The reality of that demand is certified by
the decrease in vacancies in many cities to
the point where new building must take
place, and by the steady rise in rentals.
For the first time, therefore, it becomes permissible and practical to analyze the nature
and the volume of that demand to see how
many new homes are likely to be built in
1936 and thereafter.
The term " potential demand " as used in
this article means the actual reservoir of
economic demand which has slowly piled
up over the last six years. It does not refer
to an elusive social " need " for more and
better housing, nor to changing basic social
attitudes which make home-ownership desired by greater numbers, nor to economic
developments—such as less expensive
financing—which make it more convenient.
Seven factors contribute to the present
potential demand:
1. Stagnation of building during the
depression.
2. The large marriage reserve.
3. The decreasing size of the average
family.
4. The wide-spread doubling-up of
families.
5. The accumulated obsolescence and
depreciation.
6. The desire of home owners to escape
from run-down neighborhoods.
7. The net population movement from
farms to cities.
January 1936
STAGNATION OF BUILDING DURING THE
DEPRESSION
of building permits in all cities
of 25,000 and more population show a drop
from 411,775 family dwelling units in 1928
to less than 24,000 in 1934.1 In the seven
years, 1921-1927, an average of 446,400
dwelling units were provided each year; in
the succeeding seven years, 1928-1934, the
yearly average dropped to 142,800. In the
worst years, 1932, 1933, and 1934, permits
for new dwelling units dropped to about 7,
6, and 5 percent respectively of the 19211927 average.
It seems, therefore, that new building
failed to keep step even with the increase
in the number of families during these
poorest years—to say nothing of providing
for necessary replacements on account of
demolitions, obsolescence, and depreciation.
ESTIMATES
THE LARGE MARRIAGE RESERVE
ONE of the most significant forces affecting
the demand for homes is the net increase
in the number of families from year to
year. This growth depends on an excess
of new marriages over marriages broken
up. Dissolutions of marriages are caused
by deaths of married persons, divorces, and
separations. None of these is influenced
by the business cycle sufficiently to have an
important influence on the number of families. However, experience proves that the
marriage rate is acutely sensitive to the
ups and downs of general business activity. In periods of prosperity, the marriage
1
Estimates compiled by the Division of Research and
Statistics of the Federal Home Loan Bank Board from permit data reported to the Bureau of Labor Statistics.
121
rate rises and more families are created
than are dissolved by the fairly constant
death and divorce rates. In periods of depression, the marriage rate falls and new
families created tend to fall short of the
dissolutions. Thus, the decline in marriages in 1893 and 1894, 1904, 1908, 1921,
and 1922 undoubtedly reflects the pressure
of the financial depression of those years.
Beginning in 1929 the drop was extremely
rapid, marriages falling on the average of
about 83,600 each year from 1929 to 1932,
or from 10.14 marriages per 1,000 total population in 1929 to 7.87 in 1932, the lowest
number ever reported, and the latest date
for which a Census figure is available. The
small number of marriages from 1929 to
1932 was undoubtedly a major influence in
reducing the demand for homes during that
period.
But the depression only postpones marriages; it does not permanently eliminate
them. For the most part, the couples who
were forced to forego marriage in bad years
will get married in the succeeding good
years. This can be predicted on the basis
of an exhaustive study made by Real Estate
Analysts, Inc., of marriage rates in the
metropolitan St. Louis area going back to
1881. Without fail, each major depression
was accompanied by an exceedingly low
number of marriages, during which period
a marriage " r e s e r v e " accumulated. As
prosperity returned, the marriage rate rose
sufficiently above normal to absorb this
reserve. 1
Real Estate Analysts, Inc., reports a present marriage reserve in metropolitan St.
Louis of about 33,000 couples. Other cities
have been found to have reserves of com1
Provisional estimates made by Dr. Warren S. Thompson of the Scripps Foundation for Research in Population
Problems on information obtained from only 10 States indicate that marriages rose sharply in 1933 to 8.6 per 1,000
total population, and in 1934 to 9.8. This brought the rate
above that in 1931 and even 1930. If more complete data
confirm his estimates, it would seem that the accumulated
deficit was being made up even before the business recovery got well under way. Dr. Thompson's explanation
is that the belief in a better future led many people who
had long postponed marriage to marry even though a job
had not actually been secured.
122
parable size, in proportion to the total number of marriageable adults. On the basis of
these surveys, most cities at present are estimated to have an accumulated reserve of
iy2 times the normal annual number of
marriages. When these delayed marriages
take place, they will greatly increase the demand for new homes. In the opinion of
Real Estate Analysts, Inc., delayed marriages have been the biggest contributing
factor to the building booms which followed
former depressions. 2
THE DECREASING SIZE OF THE AVERAGE FAMILY
also be noted that the average size
of the American family is constantly decreasing and that in the future more dwelling units will be required per 1,000 population than in the past. The Census estimates that the average size of the family
is falling at the rate of about two tenths of
a unit per decade. In 1900 it was 4.60 persons per family, whereas it had dropped to
4.01 in 1930. In other words, 1,000 persons
constituted 217 families in 1900, 250 families in 1930, and upon the basis of the
Census estimate, will constitute 262 families in 1940. This means that 1,000
people required 15.2 percent more dwelling units in 1930 than they did 30 years before, and will probably require 4.8 percent
more in 1940 than in 1930. While this
phenomenon is slow-moving and not likely
to augment measurably the immediate demand for homes, it is a tendency which has
the long-run effect of offsetting the slower
rate of population growth.
In this connection, there seems to be an
increasing tendency in modern life for families to " s p l i t " when they are financially
able. That is, married children cease to live
with their parents, mothers-in-law take
separate quarters, older children set up for
themselves, and roomers move into apartments. Referring to this movement in
England, The Economist (London) of November 2,1935, remarks:
IT MUST
2
The Real Estate Analyst, May 1935.
Federal Home Loan Bank
Review
The Registrar-General estimated an increase of
771,000 " families " in ten years, but there has
been an increase of nearly 1,000,000 in four.
This most significant social phenomenon is explainable only by a widespread tendency for
families to " split" . . . .
These 600,000 or so families that have appeared in England since 1931 in excess of
the number which was predicted on the
basis of birth and marriage rates represent
approximately 6 percent of the total number of families. While we have no statistics to gauge the amount of "splitting"
which normally takes place in this country,
it is reasonable to believe that financial
hardships of the depression years have kept
thousands of families united in single
homes who in better times will take more
than one dwelling unit each.
THE WIDE-SPREAD DOUBLING-UP OF FAMILIES
T H E basic reason that the growth in families during the depression did not express
itself in an increased demand for homes
was the artificial contraction in the use of
housing space resulting from the doubling-up of families. Just as in the case
of delayed marriages, doubling-up keeps
individuals in other people's homes when
they would normally have homes of their
own. A measure of the number of families that used this method to cut down expenses is contained in the findings of the
1934 Real Property Inventory of 64 cities,
representing 14.7 percent of the total national urban population. This Inventory
disclosed that 183,200 families, or 7 percent
of the 2,612,107 families canvassed, were
living with other families and reported a
desire to take separate quarters as soon as
they were able. The greatest doubling-up
was reported in the South Atlantic States
and the least in the Pacific States.
If these 183,200 doubled-up families are
compared with the 187,372 vacant dwellings reported by the Real Property Inventory as fit for use, it appears that there
were only 4,172 excess habitable dwelling
units in 64 cities. These figures must not
January 1936
be taken too literally, for many of these
families will never " undouble". However, a proportion will when they can, and
this will contribute to the housing shortage.
We have now seen that the normal
" new-family " demand for homes has been
constrained in recent years by: (1) a subnormal marriage rate; (2) extensive doubling-up; and (3) reduced splitting-up.
These are all artificial limitations in the
use of housing space which oppose deeply
rooted social desires of our people and for
that reason cannot last forever.
ACCUMULATED OBSOLESCENCE AND DEPRECIATION
of homes during the depression approached zero. Aside from recent
slum-clearance projects, the demolition of
a dwelling to erect another on its site has
been a rare occurrence. Properties were
permitted to decay to such a degree that
new construction is now more advisable in
many cases than repair. Of the 2,633,135
dwelling units included in the Real Property Inventory, 58,747, or 2.2 percent, were
found to be unfit for human use; 405,847,
or 15.4 percent, were in need of major repairs; and 1,167,950, or 44.4 percent, required minor repairs. Only 998,111, or 37.9
percent, were discovered to be in good condition.
While the rate of replacement may be
expected to increase slowly in view of the
wide difference in costs of old and new
properties, accumulated depreciation and
obsolescence have certainly made demolition and rebuilding economic in an increased number of circumstances.
REPLACEMENT
RUN-DOWN NEIGHBORHOODS AND CHANGING
LAND USES
of the neighborhood is just
as real a liability to the home owner as
physical deterioration of the dwelling itself.
The intrusion of uses that make neighborhoods undesirable for residential purposes
is constantly taking place in our cities. In
times of financial distress home owners
123
DETERIORATION
make the best of such a situation, but in
prosperity many can and do move to more
desirable neighborhoods. This desire to
desert run-down neighborhoods is undoubtedly a real part of the pent-up
demand for homes.
Also, in normal years a certain number
of residential sites give way to light-manufacturing plants, filling stations, stores, and
other income-producing enterprises. Old
homes are razed and new ones provided
elsewhere. This evolution in land use has
been largely halted because of industrial
stagnation, thereby creating a potential demand for new homes which will be active
when business expansion restores this trend
in residential land conversion.
THE NET POPULATION MOVEMENT FROM FARMS
TO CITIES
IN 1930 for the first time in our history the
net movement from farms to cities was reversed. Unemployment in large cities
forced thousands to migrate to rural areas
where their chances of making a living were
better. The Bureau of Agricultural Economics of the Department of Agriculture
reports a net movement of 764,000 city
dwellers to farms during the three years,
1930, 1931, and 1932. The demand for
urban housing, of course, suffered accordingly. Today large numbers of these people
are again finding work in factories, mills,
and city shops, and as a result, the cities are
once more attracting more than they send
away. According to the Bureau of Agricultural Economics, there was a net movement
from farms to cities of 227,000 persons in
1933 and of 211,000 in 1934. If industrial
recovery continues, this movement will persist, and thousands of people now making
their homes in rural areas may be counted
as potential occupants of urban dwellings.
LOWER VACANCIES AND HIGHER RENTALS INDICATE RELEASE OF POTENTIAL DEMAND
As ALREADY pointed out, there are two signs
which show when this potential demand is
124
ready to translate itself into new building.
One is a low percentage of vacancies and
the other is a rise in rentals.
According to The Real Estate Analyst,
vacancies for all types of family dwelling
units in St. Louis stood at 3.9 percent in
November 1935. This represented a progressive drop from 5.4 percent in November
1934, 9.1 percent in November 1933, and
from 12.8 percent in November 1932. The
Detroit Real Estate Board's survey of the
housing situation in Detroit reported vacancies and units-for-sale at the end of 1934 of
4.3 percent for single-family dwellings, 2.6
percent for 2-family dwellings, and 2.6 percent for apartment houses. A study made
last spring by the Federal Home Loan Bank
Board, extending to 2,000 savings and loan
associations and mutual savings banks, revealed that the vacancy ratio was falling in
nearly all cities except in New England and
stood at about 5.2 percent. The National
Association of Real Estate Boards, in its
semiannual survey of July 1935, discovered
less than 5 percent vacancies in 69 percent
of the cities included.
It has been the experience of real estate
experts that when the vacancy ratio approaches 3 percent, new construction expands rapidly. Obviously, we are near that
point.
Rentals will naturally go up as vacancies
go down. The National Association of
Real Estate Boards reported rentals on the
up-grade for 1-family houses in 71 percent
of the 251 cities included in its July 1935
semiannual survey; for 2-family houses, in
57 percent; and for apartments, in 65 percent. The National Industrial Conference
Board's index of housing rentals (compiled
on the basis of leasings actually made during the month in 173 cities), based upon
1923-1925 as 100, has risen without a setback
since the depression low of 60.6 percent
registered in January 1934. In November
1935 it stood at 70.6 percent, contrasted to
64.4 in the same month of the previous
year.
Federal Home Loan Bank
Review
HOME BUILDING POSSIBILITIES
NEW building has started, the potential demand for homes is great, the economic factors are increasingly favorable. What,
then, may we expect of 1936 in new building? Estimates vary widely. One forecast
sees 500,000 new dwelling units in 1936; another nearly 1,000,000 in the next two years.
We shall perhaps be safer to follow the
guidance of the industrialists who have
money at stake and so can little afford to
be wrong. Thus, manufacturers of building materials are said to be budgeting an
increase of 75 to 100 percent in home-building activity next spring over 1935. One
manufacturer in a recent address said there
January 1936
38548—36
should be about a 100 percent increase in
1936.
It may be acknowledged that a physical
shortage of homes exists, that increases in
rentals and prices are closing the gap between existing and new construction
values, and that increased national income
and easier financing are improving the Nation's ability to pay for homes. These factors are still somewhat offset by the
continued disequilibrium between construction costs and rentals which tends to
discourage new building.
However, if only the same percentage of
gain is experienced in 1936 as in 1935, the
new year will see over 200,000 homes built.
Compared to the low levels of the last five
years, that will be a boom.
125
3
Court's Decision
Analysis of the Supr<
On Conversion by the General
Counsel of the Board
N December 9, 1935, the United States
Supreme Court decided the case of
Hopkins Federal Savings and Loan Association of Milwaukee versus Peter A. Cleary,
et al, involving the attempt of that Association to convert into a Federal savings and
loan association against the expressed objection of Peter A. Cleary, et al, as the Banking Commission of the State of Wisconsin.
A copy of the 14-page opinion in the case
has been made available to all of the Federal associations, and other interested parties may secure the same in the published
reports of the decisions of the Supreme
Court. In view of the wide-spread interest
in the decision, the General Counsel of the
Federal Home Loan Bank Board has made
the following analysis.
The case involved directly the construction of Subsection (i), Section 5, of Home
Owners' Loan Act of 1933, As Amended.
This Subsection provides for conversion of
members of Federal Home Loan Banks, in
effect, without regard to State law.
O
ARGUMENT OF THE PETITIONERS
THE petitioners took the position, first, that
the United States has constitutional power
to create such associations on 3 counts: (1)
as fiscal agencies; (2) as agencies for the
regulation of the value of money; and (3)
as agencies for the administration of funds
appropriated for the general welfare.
The power of Congress to create fiscal
agencies has been well established in a long
line of bank cases, including the Federal
126
Land Bank case which validated the Farm
Loan Act. The petitioners contended that
Federal savings and loan associations are
reasonably adapted as fiscal agencies of
the Government.
The contention that the Federal Government has power to create agencies for the
regulation of the value of money was based
upon the express grant of authority in Article I, Section 8, Clause 5 of the Constitution
of the United States: " To coin money and
regulate the value thereof." The petitioners argued that the value of money is
directly and substantially affected by expansions and contractions of credit and
that, therefore, the Government has power
to create Federal savings and loan associations in an effort to regulate the value of
money through the stabilization of credit.
The constitutional provision expressly
authorizing appropriations of funds for the
general welfare served as the basis for the
contention that Congress has the power to
create agencies for the administration of
such funds; that the Federal funds made
available for investment in Federal savings
and loan associations represent appropriations for the general welfare; and that the
Federal associations are suitable agencies
for the administration of such funds.
Advancing from the position that Congress has power to create Federal savings
and loan associations, the petitioners next
maintained that Subsection (i), Section 5,
of the Home Owners' Loan Act of 1933, As
Amended, permits conversion without reFederal Home Loan Bank
Review
gard to State law, and that the Government,
having power to act in this field, may act
without regard to State law. This position
was argued on the strength of the National
Banking Act of 1864 and cases thereunder,
converting State banks without regard to
State law.
DECISION OF THE COURT
T H E Court decided that the subsection in
question, properly construed, provided for
conversion without regard to State law;
and that, so construed, in a case where the
State objects, is unconstitutional. The
Court said:
Confining ourselves now to the precise and narrow question presented
upon the records here before us, we
hold that the conversion of petitioners
from state into federal associations is
of no effect when voted against the protest of Wisconsin. Beyond that we do
not go.
The Court's opinion contains some discussion of fields, such as that of interstate
commerce, where the Government has supreme power, and where it may do whatever it finds necessary, provided it stays
within that field. There are, of course,
fields in which the States and the Federal
Government have concurrent power, and
in these cases, the Court said:
For anything here shown, the two
classes of associations, federal and state,
may continue to dwell together in harmony and order.
SIGNIFICANCE OF THE DECISION
the fact that this statute has been before the Court and the Court has not denied the power of Congress concurrent
with the States in this field, my confidence
in the statute authorizing original creation
of Federal savings and loan associations,
and conversion with State consent, is
strengthened. I have no question as to the
power of the Government to create such
agencies, nor do I have any question as to
the validity of the remainder of the
statute.
FROM
January 1936
The decision does not affect the 599 new
Federal savings and loan associations heretofore chartered, nor does it affect the converted associations which have converted
pursuant to State enabling legislation.
Such legislation has been adopted in 37
States. More than 900 of the existing associations are not affected in any way
whatsoever by the decision. The three
Wisconsin associations, parties to these
cases, must remain Wisconsin associations.
The comparatively few converted associations in States having no enabling legislation, or which converted before enabling
legislation, are not directly affected by the
decision, inasmuch as the States have not
objected in these cases. It is worthy of
comment that no stockholder, nor creditor,
nor other interested party has ever objected to any conversion, although conversions have been effected involving more
than $400,000,000 in outstanding resources.
Some of the associations in States now
having enabling legislation, but which converted before such statutes were passed,
may easily comply at this time with such
statutes and remove all question. Eleven
States have no enabling legislation, but the
legislatures of several of these States are
meeting in January and will doubtless have
such legislation before them.
The original draft of this legislation, as
passed, provided for conversion " as provided by the law under which it operates ",
and this position apparently would have
been sustained by the United States Supreme Court. The emergency was so great
and the delays in securing State legislation
were so damaging that, in view of the early
bank conversion cases, the statute was
amended in 1934. It was this amended language providing for conversion under the
Federal statute alone that was held to be
inoperative where the State objects.
To sum up, this decision affects only three
associations directly and only a few converted associations indirectly, and halts
conversion in only 11 States. Nearly all
127
converted associations or those proposing
to convert can go forward without change
of previous plans. This is encouraging as
these Federal associations loaned last
month more than $12,000,000, which repre-
128
sents a percentage of their total assets out
of all proportion to the lending ratios of
other home-financing institutions, and is
one of the principal factors in the present
recovery in real estate and home building.
Federal Home Loan Bank
Review
Neighborhood Standards as They Affect
Investment Risk
This is the sixth in a series of articles defining the neighborhood standards essential to safety of
investment.
P
ARKS and playgrounds are cash assets
to a neighorhood's property holders.
For example, rentals of rooms overlooking
Gramercy Park in New York City are at
least 30 percent higher than of rooms overlooking the avenue around the corner. Mr.
J. C. Nichols, whose development of the
Country Club District in Kansas City, Missouri, has earned him a place among the
country's most successful subdividers, regarded the provision of parks and boulevards as a luxury in his first developments.
Later, to quote his own words, he " paid
enormous prices for the privilege of affording customers these parks."
Public open spaces wer*e an organic part
of America's earliest neighborhoods, as witness the New England green and the Southern courthouse square. They performed an
essential service to homes in these early
communities, and it gives food for thought
to the practical that in many New England
towns the greens have preserved and increased the residential values of the homes
facing on them through the centuries. In
the unregulated haste that has marked the
growth of our cities, and in the hurry of
many of our speculative builders to cash in
and get out, the necessity and value of public open space have been forgotten. As a
result, in large areas of our cities we do not
have neighborhoods but only streets of rundown houses from which the values and the
desirable occupants alike have melted
away. As a result, also, many financing institutions are holding property on which
January 1936
they will never realize their investment and
a goodly number have seen their market for
safe and profitable investment in homes
disappear altogether.
Families want green spaces that give air
and charm to their home areas and above
all they want spaces where their children
can play in safety. That is why the absence of small parks and playgrounds lowers the investment stability of a home
neighborhood. That is, also why adequate
public open spaces form an essential part
of the neighborhood-unit scheme for urban
development which we have been expounding in this series of articles. As
usual, the problem of neighborhood open
spaces must be discussed from 2 angles:
(1) the relatively easy provision of such
spaces in new subdivisions, and (2) their
restoration in built-up neighborhoods
which seemingly have no place for them.
DESIRABLE STANDARDS FOR PUBLIC OPEN SPACE
IN DISCUSSING parks and playgrounds in a
new subdivision we can discuss the ideal.
Obviously, the immediate need for public
open spaces varies with the proportion of
private open space retained about the individual homes. Large yards about homes
provide both essential room for the play
of younger children and the space for trees
and grass which communities of more congested homes must look for in land belonging to the community. Nevertheless, every
urban residential neighborhood needs public play fields for the organized games of
129
children of the school age. Furthermore,
in our country, home areas of spacious
private yards have a way of degenerating
sooner or later into streets of closely
packed homes, housing families of lower
incomes. Side yards and even back yards
give way to dwelling sites. The vacant
lots on which the boys play baseball are
eventually covered by buildings. Then,
when the need for public open spaces is
pressing, the cost of securing and clearing
the sites has become prohibitive. Manhattan's Central Park was created from
rural goat pastures, not by the demolition
of densely packed buildings. Foresight
alone made it possible; hindsight would
have been helpless.
There is only one safe rule for an urban
residential community and that is to assign at the very beginning of its development at least 10 percent of the total area
for public open spaces. The late Mr. W. E.
Harmon, who had a long and successful
experience in the handling of real-estate
subdivisions, believed a dedication of 10
percent to parks and recreational spaces
was a wise business practice. He believed
in it so firmly that he sought legislation to
make it compulsory.
Ten percent of a neighborhood's area
devoted to recreational open spaces is essential to insure the residential desirability
of the neighborhood and so to maintain
investment stability. How that area should
be allotted and distributed through the
community is a problem that must vary
with each neighborhood. Certainly, each
neighborhood unit should contain: (1)
playgrounds for the younger children which
may very well adjoin the elementary
school; (2) baseball, football, and hockey
fields for the older boys and girls; and (3)
commons, greens, and small planted areas.
PUBLIC OPEN SPACES PROVIDED WITHOUT COST
to list these items as essential parts
of every residential neighborhood unit must
sound hopelessly Utopian. That is because
we are so unaccustomed to them that we
MERELY
130
are led to think they must be too costly for
practical purposes. As a matter of fact,
practical developers have shown that in a
scientifically planned subdivision their addition actually produces a net increase in
total value, because of the greater desirability they give to building lots. In addition, most land devoted to parks and playgrounds should be that which is least
desirable for home sites—such as low-lying
land, natural ravines, and rocky soil. To
fill or otherwise prepare such land for
building often costs more than the possible
profit from its sale justifies. Finally, wise
planning of park and playground sites can
eliminate the cost of surrounding them with
streets and other public utilities which cannot be economically used.
The home-financing institution that is
asked to make long-term loans on homes in
new subdivisions cannot afford to ignore
what provision has been made for public
open spaces in determining the desirability
of investment and the degree of risk involved. By exerting its powerful influence
to insist on adequate small parks and playgrounds, it can not only protect its immediate loans but it can help to insure a vorlume of desirable lending business from
succeeding generations of home owners.
OPEN SPACES FOR BUILT-UP NEIGHBORHOODS
T H E truth of this last statement needs no
further emphasis than a glance at existing
overcrowded intown areas (in which many
financing institutions now have troublesome investments) will give. Had investors insisted upon adequate parks and playgrounds when these deteriorated areas
were new subdivisions, many of them
would have continued to be desirable home
neighborhoods and even the blighted ones
would have been much easier to rehabilitate. Such regions are proof that public
open spaces are good business. So insistently have our people demanded playgrounds to protect their children from
death in the streets that the larger cities
have been forced to spend millions in acFederal Home Loan Bank
Review
quiring and transforming expensive building sites into playgrounds. This is a costly
process and yet it is less costly economically and socially than to condemn intown
residential areas to permanent blight by
leaving them without public open spaces.
Complete dependence upon the municipality for initiative and action in all aspects of the restoration of intown neighborhoods, including provision of public
open spaces, is generally futile and in any
event, it involves the maximum expense.
The group that can most efficiently and
cheaply rehabilitate an area is the group
with the most immediate financial interest,
namely, the property owners and the institutions that finance them. Because the
home-financing institutions usually have
the widest interest in an area, they may
very properly be the ones to take the lead
January 1936
in getting land owners in a blighted area
to pool their interests for mutual protection. In certain sections of San Francisco,
Chicago, and El Paso, voluntary pooling of
interests by local property owners is said
to have corrected defective standards in
these sections.
The movement of the National Association of Real Estate Boards to obtain State
legislation authorizing the creation of
Neighborhood Protective and Improvement
Districts merits the closest study by all
those who have a financial interest in
blighted areas. Whatever action is taken—
and some action must be taken to protect
the investment in public services and in
private property in intown areas—the necessity for providing adequate parks and
recreational spaces must not be forgotten.
131
Effective Advertising by Federal Savings
and Loan Associations
T
HE business a savings and loan association obtains will be the business it
creates. Neither investors nor desirable
borrowers will come without active solicitation from soundly managed institutions.
If Federal savings and loan associations
constitute the most active single factor in
the home-financing field at the present time,
it is largely because they are advertising
their product with energy and enthusiasm.
On July 3,1935, a Minnesota building and
loan association, with some $3,700,000 in
assets, converted to Federal charter. Between that time and the end of November
1935, the association made new mortgage
loans totaling $810,000, and increased its
assets by 16 percent. To accomplish this remarkable expansion in its lending business,
this old-established association developed
an advertising program directed especially
to potential home-owner borrowers that is
suggestive in its inclusiveness.
Extending beyond paid newspaper advertisements to the sport pages, the radio, the
housewife's kitchen, the streets, and even
the neighborhood movie, this campaign has
been intelligently planned to win the attention of all classes of people in the area
which it serves. To attract radio listeners,
sport fans, movie audiences, newspaper and
magazine readers, housewives, motorists,
pedestrians, the association developed:
1. A weekly radio program featuring a
popular sports commentator.
2. Two crack bowling teams wearing
the colors of the association, that
appear before large crowds at
least twice a week.
3. A one-minute educational film to
stimulate home building, reconditioning, and refinancing which
132
went the rounds of 80 neighborhood theaters.
4. Informative newspaper and magazine advertisements.
5. Direct mail advertising.
6. Appealing kitchen calendars with
menus, recipes, household and
beauty hints included.
7. Outdoor advertising, including some
illuminated boards.
Extensive as this program appears, the
association reports that it spent only $8,000
for all types of advertising during the fivemonth period. As stated above, the advertising program is directed particularly at
borrowers. In this connection, the president of the association writes as follows:
We are making a concerted drive for loan
business and letting the saving account business, in a measure, take care of itself, as we
know our Federal Home Loan Bank is ready and
willing and very able to supply us with our full
line of credit at the rate of 3 ^ percentum per
annum on 24 hours notice.
We also know that the Home Owners' Loan
Corporation is ready, willing and able to subscribe for our Full-paid Income Shares, and with
these two great institutions to back us up we
have no fear, and are out after loans and can
meet any competition w h i c h spells Increased
Assets for us.
On the following page are reproduced
several of the advertisements run by the
Minnesota association. Attention is called
particularly to the care with which the association avoids any misleading statement
or implication without loss of appeal. Because it exemplifies this same accuracy
of statement and effective appeal, there is
also reproduced a full-page newspaper advertisement recently run by a Federal savings and loan association in a New York
suburban city.
Federal Home Loan Bank
Review
A D V E R T I S E M E N T S USED BY A F E D E R A L SAVINGS A N D LOAN ASSOCIATION
g£J&.-<K-\.
( PuJ
your money on .
Ine ricjht Iracl^ —
>*^?
your ^gj1^*
NOW/
INSURANCE
for your longterm
SAVINGS
WE OFFER A HOME
tOAN that never
comes due because
you pay tt off in small
monthly cash installments.
to
Your savfngs in this Association are fatly in.
suredupto$5,000bytheFederal Savings and Loan
Insurance Corporation,-*™,
instrumentality of the'
Federal Government
6%
The monthly cash payments, reasonable Interest-rotes a n d freedom
from renewals all help
you t o save money and
ovoid worry $n financing
your home
Come in and let us 'tell'
you about ouf'
Installment Thrift Share*
Every month y o « *
u n p a i d mortgage
balance decreases
ynw-nffi
Optional Savings Snares.
Prepaid Shares
It will pay you to consult
^ ,f you have a mortgage
HOVf'S
W f TIM6I
FuH-Poid* Income Shcfret-
SAyeoN
*oaoi*G
R6MOOa./fie
ANNOUNCING
Pay',n2?onvenVerttert«
over a co*
by
The surrender of its State Charter and the acceptance of a
new Charter from, the United States Government issued bv
the Federal Home Loan Bank Board, the MINNESOTA
BUILDING AND LOAN ASSOCIATION gives notice that
it is now operating as the
nome ownership. *
co
<"p/ete
^ f a / n o t / o ^ ^ ' t e b / e . The
S"** more dS- d
4 Reduces *
55. IS?'°°- *
. mode.
- «
-Supervised by the ^
1
eralGovemment.
5o/o
5
,0ons
W beW
Having, met all the requirements of .the Kationat Housing Act. alt
accounts up to $5,000 to any one individual are insured by the Federal
Savings and Loan Corporation of Washington. 1). C. Accounts up to
$10,000 from any one perx>n will be accepted
For Refinancing. Modernization and Construction of homes, ample4
funds arc. available to supply every need of fhis community, at the low
est cost and for" the. longest'term on the monthly payment plan. .
Before you lnr<M+-
***"'**
i Before you.Bmm**
Consult Vt
/ " ]
.
C AS £
\JVA»
//
70
I * before" „ £ , f 0 m p ' « ' » "on
/
\S(eff
-*•
iin
,ess
«me «,„- e P^ncipoi
X£kl™££rCSfr'***-
to 6 * ! * * *
\
Uoon OesiW-
^S^OYearstoPoY
BOBERt AT f t r r a - C E d w 073*
BATOT PAUL, MINNESOTA
Robert otTifrt,
'Saint Paul
January 1936
133
A D V E R T I S E M E N T USED BY A FEDERAL SAVINGS A N D LOAN ASSOCIATION
There is a
SAVINGS PLAN
for
EVERY FAMILY
AND FOR EVERY INCOME
in This Old New Rochelle Institution - ESTABLISHED IN 1888
In September, 1888, as the New
Co-OperaORGANIZEDinstitution, fostered and guidedlocal,Rochelle thrift and
tive Building and Loan Association, this
mutual
home-financing
by New Rochelle citizens, ha* established an enviable record for more than forty-seven
years. In all that time, thousands of thrifty New Rochelleins and
others have u W its facilities to establish a nest-egg, to send their
children to school, to establish business funds, to build or finance a
home and for a hundred and one other uses pertaining to saving*,
Investment and home-building.
ITS long
It
never failed to
divishareholders, has passed through many depressions, and
INdendisto its record of achievementof has soundest thrift pay ahometoday firmly established -as os* the
and
financing institutions in Westchester County.
I N JUNE of this year Us officers and directors recommended to its
membership that advantage be taken of the Federal legislation per-
mitting the establishment of Federal Savings and Loan Associations.
Not satisfied with the many advantages already being offered, it was
felt that still further good could be accomplished for the community
by securing a Federal Charter and its attendant Insurance of Shares
and many other attractive features. Again the association proved it*
merit whta^n face of troublous times in many other financial institutions, h qualified for a Federal Charter and thus became the New
Rochelle Federal Savings and Loan Association.
EELING that its full advantages may not be entirely understood
by soms in the community, its officers and directors offer JjereTI ith a few of its salient features. More complete information is avail*
able through printed pamphlets whkh will be sent upon request
More welcome still will be a call at the office of the association where
on* of our officers will answer any and all questions.
F
IHREE CLASSES OF SHARES TO SUIT YOUR NEEDS
ALL INSURED UP TO &M0M
BY THE FEDERAL SAVINGS & LOAN INSURANCE* CORPORATION
SYSTEMATIC
SAVING
LUMP-SUM
INVESTMENT
SXYE-AS-YOU-WILl
Installment Thrift Shares
Full-Paid Income Shares
t H s type of federal Serines aa* Losa after*)
<* designed for the convenience of individuals who
•re able to eave money only aa rrseguiar amounts.
and at Irregular times. Bach abates can be purchased gradually, by payments «f verymg sums
9t money, m say amount from $1 upward. They
•re especially suited to professional men—doctors.
lawyers, architects aad merchants and other aonsalaried people, whose Incomes fluctuate from
monthv to month, metkla* it difficult for them to
save a regular, fixed amouat each raoath.
Optional Savings Shares are likewise useful tor
avestors.who are carrying out a regular monthly
savings plaa through Federal Savings and Lo»»
Installment Thrift Sbarea. but who wish to have
Most people find- that the easiest way to tar*
I
1
1
1
1
,
cbely this type of Investor. Thty can be boufht by
each month for each share subscribed for. Thus.
anyone who la able to save $3 a month would »uba-month savings plan would call for the purchas*
of SO shares on a alngle subscription.
j
A-special bonus is whether hi* regular payment Thrift shareholderprovided for every lasts*
ment la as little as 90 cents, or aa much ae $1,000
• month. When hie payments are made regularly.
One time, and without repurchase by the Aasocla• year when his shares reach their maturity value
* $100 a share.
Thus one share matures at $100—5* shares at
Build financial independence on the installment
Among the three types of shares which
the New Rochelle Federal offers to the
public, the one which meets the needs of
investors who wish U> have dividends paid
to them regularly in cash is the Full-Paid
Income Share.
This type of share has a par value of
$100, and can be purchased Only by lump
sum payment of the full value. Dividends
upon such shares are paid in cash semiannually. The rate paid depends upon
the earnings of the Association, which in
turn vary with general business conditions.
Optional-Savings Shares
j
and above the definite sum which they set aside
«e a Sxed monthly Installment lor their mala
tnancial reserve. AO payments made prior to
3M tenth of each month begin to participate In the
earnings of the Association from the Brat of that
months - '
MONEY TO BUILD OR REFINANCE YOUR HOME
AMPLE FUNDS NOW AVAILABLE TO RESPONSIBLE CITIZENS DESIRING TO BUILD
A FEW OF THE ADVANTAGES OF OUR PLAN
1. First mortgages on one, two or three family dwellings within
Westchester County.
2. Loans from $500 to 920,000.
3. Monthly amortization payments paying off loans together
. ^ith interest in terms from five to twenty years. Length of
term arranged to suit your needs and th.o risk involved.
' OSTROB?
O. B. HARVXT
Asutafssr Seerersry
PAUL SAUER
134
ORREFINANCB
4. Building loans for those wishing- to build a home. 1
advanced as work on house progresses.
5. No loan made for- more than W % of appraised vali
pending on risk involved.
6. Moderate financing charges.
7. Quick action and courteous service).
8. Competent advice on your building plans.
NEW ROCHELLE FEDERAL
SAVINGS 8C LOAN ASSOCIATION
254 HUGUENOT STREET
CORNER LAWTON
Federal Home Loan Bank
Review
Residential Construction Activity in the
United States
B
Y THE middle of the month, December threatened to break all construction records for the year 1935. Based on
the F. W. Dodge Corporation's reports
from 37 Eastern States for the first 15 days
of December, the estimated average daily
value of residential contracts awarded was
$2,087,000 (table 1). This may be compared with an average daily value of
$2,041,000 for October, which was the
year's previous peak month. Compared
with the usual seasonal drop from November to December of about 22 percent, the
estimated daily average for December 1935
represents an increase of 26 percent over
November. This contra-seasonal upward
movement is shown clearly in chart 3.
Chart 1 reveals graphically how far the
$25,040,000 of total residential construction
contracts awarded exceeded the totals for
the comparable period in the preceding
three years.
The first half of December registered an
even greater expansion in nonresidential
than in residential construction (table 1).
Nonresidential contracts awarded during
the period totaled $113,343,000, an increase
of 225 percent over December 1-15, 1934.
As a result of greater activity in the last
few months, total nonresidential construction for the year to December 15 was almost equal to the 1934 total for the same
period, and all construction was 12.3 percent greater.
The November index of rentals (as compiled by the National Industrial Conference
Board) stood at 70.6 percent of the 19231925 base level, compared with 70.3 percent
the month before, and 64.4 percent in November 1934. The index of the cost of
V A L U E OF R E S I D E N T I A L CONSTRUCTION CONTRACTS AWARDED IN 1932-35
(Based on F. W. Dodge Reports for 37 Eastern States)
CHART-I
Millions of
Dollars
30 r
DEC. I - 1 5 *
* Comparable Periods of 12 Business Days
CHART - Z
Millions of
Dollars
1 30
JAR t - DEQ. t&
Millions of
Dollars
—1500
Millions of
Dollars
500.
25
400
20
a-i
200
1933
January 1936
1934
1932
^
1933
M
1934
i
•
•
300
200
100
135
CHART 3 . — A V E R A G E DAILY VALUE OF RESIDENTIAL CONSTRUCTION CONTRACTS AWARDED IN 1935 COMPARED
W I T H SELECTED PERIODS
(Based on P.W.Dodge Report* for 3? Eastern States^
dex of residential construction stood at 24
percent, and total construction at 46 percent, of the same base. The industrial production index represented a rise of 25
points over November 1934, while the residential construction index had climbed
only 13 points, and total construction 18
points, during the year.
W H E R E HOME BUILDING TOOK PLACE IN 1935
DEC.
JAN.
FEB
MAR.
APR.
MAY
JUNE JULY
AUG.
6EPT
OCT.
NOV
0EC.
p»Preliminary
building (as compiled by the Federal Reserve Bank of New York) fell from 89.3
percent of the 1923-1925 base in October to
89.1 percent in November. However, it
still remained almost 1 percent higher than
November 1934.
The Federal Reserve Board's preliminary
November index of industrial production
stood at 97 percent of the 1923-1925 base
period, whereas the Board's unadjusted inTABLE
T H E New York, Winston-Salem, and Los
Angeles Bank Districts led in the number
of new family dwelling units for which
permits were granted during the first 11
months of 1935 (table 2). For all cities
over 10,000 population in the United States,
estimated permits issued for the year to the
end of November provided for 75,084 dwelling units, as compared with 29,323 during
the corresponding 1934 period.
Single-family dwelling units, totaling
49,170, accounted for 65 percent and units
in buildings holding 3 or more families
made up 29.7 percent of all units authorized
during the first 11 months of 1935. In 1934,
the percentages were 70 for the 1-family
units and 23 for the multifamily. The increase in the proportion of income-produc-
1.—Value of construction contracts awarded in 37 eastern States and percentage changes for comparative periods
[Source: F. W. Dodge Corporation]
Total for the period
Dec. 1-15
Average daily *
Jan. 1-Dec. 15
(000 omitted)
Percent change
Type
(000 omitted)
1935
1934
(000 omitted)
Percent
change
1935
1934
Percent
change
2
Dec
1935
Nov.
1935
Dec.
1934
Dec.
1935
from
Nov.
1935
Dec.
from
Nov.
3-year
average 3
Dec.
1935
from
Dec.
1934
Residential. . . . $25, 040 $8, 805 + 184.4 $458, 743 $243, 096 + 88.7 $2, 087 $1, 654 $582 + 2 6 . 2 - 2 1 . 8 + 258.6
Nonresidential 4 . 113, 343 34, 830 + 225.4 1, 260, 004 1, 287, 991 - 2 . 2
9,445 6,186 3,125 + 52.7 - 5 . 0 + 202.2
T o t a l . . . 138, 383 43, 635 + 2 1 7 . 1 1, 718, 747 1, 531, 087 + 12.3 11, 532 7,840 3,707 + 4 7 . 1
1
Based on the following number of business days: December 1935—12; November 1935—24;
2
Based on preliminary reports for the first 15 days (12 business days).
3
Represents the geometric average of the percent change in December from November for the
4
Includes contracts for commercial buildings, public works, and utilities.
136
- 7 . 7 + 211.1
December 1934—25.
3 years, 1932-34.
Federal Home Loan Bank
*
Review
ing home units built in 1935 evidences a revival of the real-estate market. Fifty-seven
percent of the total number of multifamily
units authorized in 1935 were in the New
York District, and 42.3 percent of all units
provided in that District were of the multifamily type.
NEW RESIDENTIAL CONSTRUCTION BY STATES IN
THE FEDERAL HOME LOAN BANK DISTRICTS
DURING the month of November, the estimated cost of all new residential construction for which permits were granted in
cities of 10,000 or more population
amounted to $32,211,000 (table 4). This
represents a decline of slightly more than
$4,000,000 from building activity in October,
but was almost $22,000,000, or 203 percent
greater than the estimated cost of residential construction in November 1934.
Large increases in new residential building over November 1934 were shown in
each of the Federal Home Loan Bank Districts, with the exception of Topeka where
an increase of only 15 percent was registered. Declines in residential construction
activity were reported by New Hampshire,
Delaware, North Dakota, and Oklahoma in
November 1935 as compared with November of last year.
NUMBER OF FAMILIES FOR WHICH NEW DWELLING UNITS WERE PROVIDED IN NOVEMBER
FOR the month of November 1935, the estimated number of all new dwelling units
provided by building permits issued in all
cities with 10,000 or more inhabitants, was
8,463 (table 3). With the exception of
October, this was the largest volume of
dwelling units provided in any month during the past 3-year period.
The average cost of all 1-family dwelling
units for which permits were issued in November was $4,201, or 8.9 percent higher
than the average cost of $3,857 in November 1934 (table 3).
2.—Estimated number of family dwelling units provided during thefirsteleven months of 193k and
1935 in lall cities of 10,000 population or over in the United States and each Federal Home Loan Bank
District
TABLE
[Source: Federal Home Loan Bank Board. Compiled from building permit reports to U. S. Department of Labor]
Number of family dwelling units by type of dwelling
Federal Home Loan
Bank District
Total residential
1-family
Joint home 2
and
business
2-family
1935
UNITED STATES
1—Boston
2—New York
3—Pittsburgh
5—Cincinnati
6—Indianapolis
7—Chicago
8—Des Moines
9—Little Rock
10—Topeka
11—Portland
12—Los Angeles
1934
1935
1934
1935
1934
75, 084
29, 323
49, 170
20, 350
3,952
3,938
20, 048
3,177
11, 966
4,894
4,073
2,712
4,305
6, 303
I 2,266
2, 124
I 9,278
2,640
9,075
1,379
3,246
1,254
923
919
1,763
2,790
866
934
3,534
3,605
7,078
2,579
7,405
2,650
2,810
2,421
4,017
5,277
1,993
1,948
7,387
2,435
3,028
999
2,707
1,148
889
792
1,695
2,296
745
815
2,801
200
660
154
630
120
110
144
178
654
92
82
928
Multifamily
1935
1934
1935
1934
1,908
446
256
21, 516
6,809
128
486
128
236
46
16
52
40
328
36
26
386
49
81
95
22
11
27
36
20
33
51
1
20
25
68
29
25
13
6
12
8
28
3
15
24
84
12, 229
349
3,909
2,113
1,126
111
90
339
130
93
943
52
5,493
223
278
47
12
63
20
138
82
78
323
1
Estimate is based on reports from communities having approximately 95 percent of the population of all cities
with population of 10,000 or over.
2
Includes 1- and 2-family dwellings with business property attached.
January 1936
137
TABLE
3.—Number and estimated cost of new housekeeping dwelling units for which permits were issued in
all cities of 10,000 population or over in the United States in November 1935 1
[Source: Federal Home Loan Bank Board.
Compiled from reports to U. S. Department of Labor]
Average cost of family
units
Total cost of units
(000 omitted)
Number of family units
provided
Type of structure
Percent Nov. 1935 Nov. 1934 Percent
change
change
Nov.
1935
All housekeeping dwellings..
Total 1- and 2-family dwellings
1-family dwellings
2-family dwellings
Joint home and business 2 . . .
Multifamily dwellings
Nov.
1934
8,463
2,346 + 119.7 $21, 059. 5
2,108 + 122.8 19, 725. 9
212 + 92.5
1,102. 3
26 + 88.5
231.3
671 + 393.3
$4, 086
4,201
2,702
4,720
Percent
change
Nov.
1934
$3, 720
3,857
2,385
3,477
3,017 + 180.5
5,153
4,696
408
49
3,310
Nov.
1935
$8, 726. 9
8,130. 8
505.7
90.4
+
+
+
+
141.3
142.6
118.0
155.9
+ 9.8
+ 8.9
+ 13.3
+ 35.7
1
Estimate is based on reports from communities having approximately 95 percent of the population of all cities with
population of 10,000 or over.
2
Includes 1- and 2-family dwellings with business property attached.
TABLE
4.—Estimated cost of new residential buildings for which permits were issued in all cities of 10,000
population or over, in November 1935, by Federal Home Loan Bank Districts and by Statesl
[Source: Federal Home Loan Bank Board.
Compiled from reports to U. S. Department of Labor]
Cost of all new residential
building (000 omitted)
Cost of all 1- and 2-family
dwellings (000 omitted)
Federal Home Loan Bank Districts and States
November November
1934
1935
UNITED STATES
No. 1—Boston
Percent
change
$32, 211. 0 $10, 636. 5
+ 202. 8 $21, 059. 5
November November
1935
1934
Percent
change
$8, 726. 9
+ 141.3
2, 373. 3
1,133. 2
+ 109.4
2, 351. 4
1,120. 2
+109. 9
609.7
85.4
1, 441. 7
33.7
179.3
23.5
272.5
50i3
593.5
52.1
145.8
19.0
+ 123.7
+ 69.8
+ 142.9
-35.3
+ 23.0
+ 23.7
609.7
63.5
1, 441. 7
33.7
179.3
23.5
267.5
50.3
585.5
52.1
145.8
19.0
+ 127.9
+ 26.2
+ 146.2
— 35.3
+ 23.0
+23.7
10, 117. 0
3,117. 3
+ 224.5
3, 541. 2
1, 519. 6
+133. 0
1, 364. 8
8, 752. 2
399.7
2, 717. 6
+ 24.5
+ 222. 1
1, 271. 6
2, 269. 6
395. a
1,124. 3
+ 221.7
+ 101.9
No. 3—Pittsburgh
1, 305. 7
611.3
+ 113.6
1, 258. 7
611.3
+ 105.9
Delaware
Pennsylvania
West Virginia
18.0
1,170. 4
117.3
50.3
507.4
53.6
-64.2
+ 130.7
+ 118.8
18.0
1, 141. 4
99.3
50.3
507.4
53.6
— 64 2
+ 125.0
+ 85.3
No. 4—Winston-Salem
3, 260. 3
1, 324. 2
+ 146.2
2, 406. 6
1, 214. 2
+ 98.2
Connecticut
Maine
Massachusetts
New Hampshire
Rhode Island
Vermont
No. 2—New York
New Jersey
New York
Alabama
District of Columbia
Florida
Georgia
Maryland
48.2
10.1
+ 377.2
48.2
10.1
+ 96.2
1, 263.1
595.6
643.9
550.9
+ 163.2
637.1
623.1
242.1
227.1
+ 378.7
264.7
186.6
55.3
55.3
+ 178.1
248.6
238.2
89.4
89.4
1
Estimate is based on reports from communities having approximately 95 percent of the population of
with population of 10,000 or over.
138
+ 377.2
+ 8.1
+ 174.4
+ 237.4
+ 166.4
all cities
Federal Home Loan Bank Review
4.—Estimated cost of new residential buildings for which permits were issued in all cities of 10,000
population or over, in November 1935, by Federal Home Loan Bank Districts and by States—Continued
TABLE
Cost of all 1- and 2-family
dwellings (000 omitted)
Cost of all new residential
building (000 omitted)
Federal Home Loan Bank Districts and States
November November
1934
1935
No. 4—Winston-Salem—Continued.
North Carolina
South Carolina
Virginia
Percent
change
November November
1934
1935
Percent
change
$308.4
194.1
296.1
$88.9
71.4
123.1
+ 246.9
+ 171.8
+ 140.5
$279.4
156.1
279.4
$86.9
71.4
123.1
+ 221.5
+ 118.6
+ 127.0
No. 5—Cincinnati
4, 302. 3
484.0
+ 788.9
1,232.6
469.0
+ 162.8
Kentucky
Ohio
Tennessee
132.5
4,119. 8
50.0
82.9
370.4
30.7
+ 59.8
(2)
+ 62. 9
132.5
1,050.1
50.0
67.9
370.4
30.7
+ 95.1
+ 183.5
+ 62.9
No. 6—Indianapolis
1, 777. 6
386.3
+ 360.2
1,719.0
386.3
+ 345.0
282.8
1, 494. 8
43.5
342.8
+ 550.1
+ 336.1 \
280.7
1,438.3
43.5
342.8
+ 545.3
+ 319.6
1, 331. 8
465.7
+ 186.0
1,261.0
365.7
+ 244. 8
724.6
607.2
277.3
188.4
+ 161.3
+ 222.3
675.1
585.9
177.3
188.4
+280. 8
+ 211.0
1, 287. 2
626.3
+ 105.5
1,283.6
626.3
+ 104.9
Iowa
Minnesota
Missouri
North Dakota
South Dakota
253.4
555.8
409.1
6.6
62.3
144.0
126.9
311.9
9.0
34.5
+ 76.0
+ 338.0
+ 31.2
-26.7
+ 80.6
144.0
126. 9
311.9
9.0
34.5
+ 76.0
+ 338.0
+ 31.2
— 26.7
+ 70.1
No. 9—Little Rock
1, 402. 7
635.8
+ 120.6
1, 347. 6
626.3
+ 115.2
52.9
179.5
112.4
23.5
1, 034. 4
2.3
72.1
15.1
1.3
545.0
()
+ 149.0
+ 644.4
(2)
+ 89.8
31.5
179.5
112.4
23.5
1, 000. 7
2.3
65.6
15.1
1.3
542.0
602.5
524.2
+ 14.9
594.0
505.7
+ 17.5
144.2
160.9
117.9
179.5
106.0
28.2
37.3
352.7
+ 36.0
+ 470. 6
+ 216.1
-49.1
144.2
152.4
117.9
179.5
92.0
28.2
32.8
352.7
+56.7
+440.4
+ 259.5
—49.1
547.8
128.1
+ 327.6
523.8
118.3
+ 342. 8
43.5
50.5
102.0
104.6
211.2
36.0
5.6
22.3
11.3
27.3
51.2
10.4
+
+
+
+
+
+
25.5
50.5
102. 0
98.6
211.2
36.0
5.6
22.3
11.3
27.3
51.2
0.6
+ 355.4
+ 126.5
+802. 7
+ 261.2
+ 312.5
3, 902. 8
1, 200.1
3, 540. 0
1,164. 0
+ 204.1
28.5
3, 849. 8
24.5
+ 260.8
7.9
1,184. 6 I + 2 2 5 . 0
+ 222.4
7.6
28.5
7.9
3, 487. 0
1,148. 5
24.5 !
7.6
+ 260.8
+ 203.6
+222.4
Indiana
Michigan
No. 7—Chicago
Illinois
Wisconsin
No. 8—Des Moines
Arkansas
Louisiana
Mississippi
New Mexico
Texas
No. 10—Topeka
Colorado
Kansas
Nebraska
Oklahoma
No. 11—Portland
Idaho
Montana
Oregon
Utah
Washington
Wyoming
No. 12—Los Angeles
Arizona
California
Nevada
2
2
676.8
126.5
802.7
283.2
312.5 i
246.2
+ 225.2
253.4
555.8
409.1 1
6.6
58.7
(2)
+ 173.6
+ 644.4
(2)
+ 84.6
(2)
Increase of 1,000 percent or over.
January 1936
139
FEDERAL HOME
Combined statement of
Winston-Salem
Boston
New York
$7, 482. 79
3, 224, 466. 26
$500. 00
99, 393. 29
0
$500, 631. 31
$1, 000. 00
121, 569. 96
1, 642, 699.12
2, 600, 000. 00
1, 288, 597. 42
0
0
172,117. 42
0
400, 000. 00
99, 811. 42
60, 000. 00
0
16, 895.18
3,982.25
8, 763, 245. 59
272, 010. 71
1, 000, 442. 73
199, 465.14
545,907.71 1
97, 084, 614. 26
4, 017. 09
3, 062,175. 61
0
15, 234,117. 64
0
11, 282, 555. 21
0
7,353,774.70
0
97, 088, 631. 35
3, 062,175. 61
15, 234,117. 64
11, 282, 555. 21
7,353,774.70 |
432, 559. 94
4,197. 25
141, 405. 47
1, 354. 20
12, 607. 46
136. 99
36, 313. 44
0
67, 076. 75
657. 53
964. 03
0
54, 957. 58
0
886. 67
0
Combined
Pittsburgh
ASSETS
Cash:
On deposit with U. S. Treasurer, members demand
On deposit with other Federal Home Loan B a n k s . . .
Loans outstanding:
Other
Accrued interest receivable:
Other
$10.00
541, 915. 46
36,703.45
11,842.21
0
579, 516. 86
Other
55, 844. 25
48,545.66
159, 606. 25
3, 865. 50
22, 400. 00
137, 900. 00
111. 16
20, 200. 00
1,481,932.09
6, 357. 50
12, 369. 38
3, 289. 83
1, 657. 50
1, 503. 77
0
0
0
1, 937. 50
0
1, 858. 79
0
1,807.50
3,161. 27
1, 937. 50
1, 858. 79
1,826.50
5,102. 70
1,131. 01
Other assets:
68, 698. 31
4, 350, 000. 00
0
26,125. 00
22, 016. 71
Deferred charges:
Prepaid assessment, F. H. L. B. B
Other
7
49, 057. 89
18, 609, 250. 02
4, 634. 41
287, 450. 00
0
0
0
0
0
0
599.86
250.00
25,325.00
19.00
6, 233. 71
0
0
0
849.86
125, 360, 978. 65
7, 762, 530. 48
16, 491, 067. 93
11, 697, 934. 55
9,458,161.52
2, 306, 369. 22
1, 642, 699.12
205, 649. 87
2, 600, 000. 00
550, 399. 99
0
1,125. 00
0
100, 000. 00
0
32,124. 87
0
0
60, 000. 00
38, 550. 00
0
4,700.00
0
6, 754, 718. 21
4,141.12
4, 452. 94
5, 142. 50
551, 524. 99
2,113. 40
0
0
132,124. 87
256.16
39.76
0
98, 550. 00
0
0
5,142. 50
4,700.00
6, 768, 454. 77
553, 638. 39
132, 420. 79
103, 692. 50
4,700.00
LIABILITIES AND CAPITAL
Liabilities:
Deposits:
Total liabilities
Capital:
Capital stock, issued and outstanding:
Fully paid:
0
Partially paid:
23, 938, 900. 00
2, 036, 900. 00
3, 370, 200. 00
1, 732,100. 00
1,972,900.00
124, 741, 000. 00
34, 045, 300. 00
12, 467, 500. 00
7, 467, 500. 00
18, 963, 200. 00
6, 463, 200. 00
11,146, 300. 00
1, 646, 300. 00
9, 208, 200. 00
2, 008, 200. 00
90, 695, 700. 00
U. S. Government:
5, 000, 000. 00
12, 500, 000. 00
9, 500, 000. 00
7, 200, 000. 00
563, 500. 00
46, 200. 00
50,100. 00
41, 900. 00
38, 600. 00
15, 920, 300. 00
11, 274, 000. 00
9, 211, 500. 00
148, 496. 32
289, 850. 82
121, 492. 45
198, 749. 60
75,181.27
166, 780. 25
115,198,100. 00
Surplus:
Reserves: #
Surplus, unallocated
1,133, 732. 48
2, 260, 691. 40
7, 083,100. 00
54, 846. 37
70, 945. 72
Total surplus
3, 394, 423. 88
125, 792. 09
438, 347.14
320, 242. 05
241,961.52
Total capital
118, 592, 523. 88
7, 208, 892. 09
16, 358, 647.14
11, 594, 242. 05
9,453,461.52
Total liabilities and capital
125, 360, 978. 65
7, 762, 530. 48
16, 491, 067. 93
11, 697, 934. 55
9,458,161.52 1
140
Federal Home Loan Bank Review
LOAN BANKS
condition as at Nov. 30, 1935
Cincinnati
Indianapolis
Chicago
0
$1,100.56
466,045.28
Des Moines
Little Rock
Topeka
Portland
Los Angeles
$202,423.98
$4,287.23
337,926.22
$25.00
406, 705. 84
$25. 00
10,165. 21
$25. 00
329, 907. 00
0
$165, 011. 81
$510. 00
42, 770. 90
439,660.92
63,617.23
1,200,000.00
317,820.71
100,878.92
24,603.28
112, 656. 88
0
0
28, 313. 77
0
11, 265. 29
69,161. 50
1, 000, 000. 00
67, 000. 00
62, 965. 92
0
34, 562. 03
2,152,790.58
1,783,861.92
443,092.37
431,334.12
122, 847. 09
369, 511. 06
1, 301,173. 31
140, 808. 85
17, 657,144. 84
0
4,503,789.30
0
15, 983, 045. 63
0
4, 660, 560. 43
0
6, 006, 542.48
0
4, 551, 821. 25
0
2, 802, 731. 89
0
3, 986, 355. 28
4, 017. 09
1 17, 657,144. 84
4, 503, 789. 30
15, 983, 045. 63
4, 660, 560. 43
6, 006, 542. 48
4, 551, 821. 25
2, 802, 731. 89
3, 990, 372. 37
60, 417. 50
o
24, 390. 95
2,115. 07
15, 576.10
1, 327. 78
79, 245. 00
0
714. 59
0
26,162. 79
0
14, 857. 51
0
21, 519.12
0
14, 719. 60
0
20, 303. 02
0
9, 291. 67
0
11, 011. 54
1, 287. 66
4, 064. 41
0
18,164. 78
0
9, 321. 08
26.42
43, 409. 90
79, 959. 59
41, 020. 30
36, 238. 72
29, 594. 69
16, 363. 61
27, 512. 28
3, 031, 982. 90
1.00
108, 750. 00
1, 987, 636. 68
162. 95
5,100. 00
156, 611.18
156. 75
36, 975. 00
1, 985, 676. 23
87.91
4, 000. 00
2, 416, 725. 00
1.00
10, 600. 00
1, 053, 046. 88
147. 94
16, 425. 00
710, 075. 00
1.00
2, 075. 00
1,138, 057. 81
99.20
9,475. 00
1, 858. 00
833. 33
0
0
0
2, 892. 50
895. 27
0
0
1,450. 68
0
0
1, 920. 03
0
0
1, 516. 30
0
0
0
0
0
1, 406. 30
500. 00
2, 691. 33
0
3, 787. 77
1, 450. 68
1, 920. 03
1, 516. 30
0
1, 906. 30
148. 90
0
64.00
0
0
881. 01
0
0
2.00
0
0
0
0
0
4, 287. 94
0
2.00
1,245,983.82
J
22, 854.16
0
83, 271. 66
J
148.90
64.00
881. 01
0
0
0
4, 287. 94
1 23, 036, 781. 21
8, 324, 024. 75
16, 704, 509. 30
7,124,129. 67
8, 594, 876. 32
6, 022, 063.12
4, 832, 419. 81
5, 312, 519. 75
295, 000. 00
1, 245, 983. 82
36,125. 00
2, 600, 000. 00
26, 778. 77
63, 617. 23
18, 925. 00
0
1,108,190. 46
0
18, 700. 00
0
226, 000. 00
0
5, 425. 00
0
0
112, 656. 88
4, 450. 00
0
0
28, 313. 77
5, 000. 00
0
0
69,161. 50
550. 00
0
0
62,965. 92
39, 975. 00
0
1
4,177,108. 82
143. 83
0
0
109, 321. 00
0
1.00
0
1,126, 890. 46
1, 610. 33
300. 00
0
231, 425. 00
17.40
1, 500. 00
0
117,106. 88
0
0
0
33, 313. 77
0
0
0
69, 711. 50
0
0
0
102, 940. 92
0
2, 651. 94
0
J
4,177, 252. 65
109, 322. 00
1,128, 800. 79
232, 942. 40
117,106. 88
33, 313. 77
69, 711. 50
105, 592. 86
|
5, 215,100. 00
1, 989, 400. 00
2, 464, 700. 00
1,101, 900. 00
1, 363, 000. 00
1, 019, 400. 00
522, 900. 00
1,150, 400. 00
12, 775, 700. 00
0
6, 577, 400. 00
577, 400. 00
14,173, 900. 00
1, 673, 900. 00
7, 394, 900. 00
1, 794, 900. 00
8, 772, 400. 00
1, 872, 400. 00
5, 960, 000. 00
1, 800, 000. 00
9, 967, 900. 00
6,107, 900. 00
12, 775, 700. 00
6, 000, 000. 00
12, 500, 000. 00
5, 600, 000. 00
6, 900, 000. 00
7, 333, 600. 00
2, 633, 600. 00
4, 700, 000. 00
4,160, 000. 00
3, 860, 000. 00
232, 600. 00
9, 800. 00
62, 900. 00
7, 800. 00
23, 700. 00
32, 400. 00
4, 400. 00
13,100. 00
1 18, 223, 400. 00
7,999, 200. 00
15, 027, 600. 00
6, 709, 700. 00
8, 286, 700. 00
5, 751, 800. 00
4, 687, 300. 00
5, 023, 500. 00
1
1
236, 755. 27
399, 373. 29 1
92, 322. 43
123,180. 32
153, 200. 43
394, 908. 08
55, 865. 92
125, 621. 35
88, 520. 05
102, 549. 39
40, 835. 62
196,113. 73
29, 934. 38
45,473. 93
36,281 97
147,144. 92
1
636,128. 56 1
215, 502. 75
548,108. 51
181, 487. 27
191, 069. 44
236,949.35
75, 408. 31
183, 426. 89
18, 859, 528. 56
8, 214, 702. 75
15, 575, 708. 51
6, 891,187. 27
8, 477, 769. 44
5,988, 749. 35
4, 762, 708. 31
5, 206, 926. 89
23, 036, 781. 2 1 _
8, 324, 024. 75
16, 704, 509. 30
7,124,129. 67
8, 594, 876. 32
6, 022, 063.12
4, 832, 419. 81
5, 312, 519. 75
|
January 1936
141
Growth and Lending Operations of the
Federal Home Loan Banks
C
LIMBING at the rate of $1,000,000 a
week during the first two weeks of
December, the 12 Federal Home Loan
Banks' combined balance of advances outstanding stood at $99,036,000 on December
14, 1935, according to preliminary reports
from the Banks. The increase in balance
outstanding during the first half of December was greater than occurred during the
entire month of November. It represents a
return to the summer and fall rate, and is
not to be expected at this season of the year.
Presumably, the continued demand for
loans from responsible home owners
coupled with the extremely favorable rates
on long-term advances offered by the Federal Home Loan Banks led to this contraseasonal increase in the use of the credit
facilities of the Banks. In any event, it
augurs well for the vitality of home-building and home-buying activity and for a
rapid expansion therein with the return of
more favorable weather for building.
Growth, trend of lending operations, line of credit, and unused credit of the Federal Home Loan Banks
Members
Month
Number
December
June
December
Assets *
(000
omitted)
Line of
credit
(cumulative) (000
omitted)
1932
Loans
advanced
(cumulative) (000
omitted)
Loans Repay- Balance Unused
outadments
line of
vanced (month- standing! credit2
at end
(month- ly) (000 |of month| (000
ly).(000
(000
omitted)! omitted) omitted) omitted)
118
$23, 630
$837
$837
1,337
2,086
1, 846, 775
2, 607, 307
146, 849
211, 224
48, 817
90, 835
8,825
7,102
2,579
3,072
1933
$216, 613
3, 027, 999
3, 305, 088
232, 926
254, 085
111, 767
129, 545
3,326
3,340
3,371
3,395
3,416
3,443
3, 201, 671
3,185, 822
3, 213, 556
3,149, 515
3,123,161
3,125, 291
260, 726
260, 984
262, 410
262, 786
263, 722
265,448
148, 450
153, 523
160, 496
166, 865
174, 932
180,261
$837
$22, 793
$270
859
47, 600
85,442
99, 249
125, 782
2,950
2,904
3,143
3,360
85,148
86, 658
147, 778
167,426
5,353
5,074
6,972
6,370
8,067
5,329
1,957
3,429
1,823
1,963
2,904
3,836
79, 233
80, 877
86, 025
90,432
95, 595
97, 089
181,493
180,107
176, 385
172, 354
168,127
168, 359
1934
June
December
June
July
August
September
October
November
1935
1
Where declines occur they are due to adjustments based on current reports from State building and loan commissioners.
In this connection it should be stated that assets of member institutions are reported when they join the System and are
subsequently brought up to date once a year as periodic reports are received either from the institutions or from State
building and loan supervisors.
2
Derived by deducting the balance outstanding from the line of credit.
NOTE.—All figures, except loans advanced (monthly) and repayments, are as of the end of month.
142
Federal Home Loan Bank
Review
INTEREST RATES ON ADVANCES TO MEMBER
INSTITUTIONS
T H E only change in interest rates charged
by the Banks on advances to members is a
reduction from 4 percent to 3y2 percent in
the effective rate on all loans by the Win-
ston-Salem Bank. The new rate went into
effect on January 1. All advances for one
year or less are to be written at 3y2 percent.
All advances for more than one year are
written at 4y2 percent, but interest is to be
collected at a 3%-percent rate until the
Bank's Board of Directors orders otherwise.
Interest rates, Federal Home Loan Banks: rates on advances to member institutions3
Federal Home Loan
Bank
1. Boston
2. New York
Rate in
effect on
Jan. 1
Percent
3
3. Pittsburgh
4
3^
4. Winston-Salem
3^
5. Cincinnati
3
3
3K
3^
3K
6. Indianapolis...
7. Chicago
8. Des Moines...
9. Little Rock,
10. Topeka
11. Portland...
3K
3K-4
3
3
3
3#
12. Los Angeles
Type of loan
All advances.
All advances for 1 year or less, and amortized within that time.
All other advances.
All advances for 1 year or less. All advances for more than 1 year are to be written
at 4 percent, but until further notice credit will be given on all outstanding advances for the difference between the written rates of 5, 4J4, or 4 percent and 3>£
percentum per annum.
All advances for 1 year or less. All advances for more than 1 year are written at
kyi percent, but interest collected at 3K-percent rate until further notice.
All advances.
All secured advances for 1 year or less.
All unsecured advances, none of which may be made for more than 6 months.
All secured advances for more than 1 year.
All advances written for 1 year or less. All advances for more than 1 year are to be
written at 4>£ percent, but billed at 3K percent during the period in which shortterm advances carry this rate.
All advances for 1 year or less.
All new advances for more than 1 year shall be written at 3>£-percent interest rate
for the first year and 4 percent for subsequent years. However, the rate of interest
collectible quarterly after the first year shall be the same as the then effective
rate on short-term advances. On all existing advances written at 4J^ percent only
4 percent will be collected on and after May 1, 1935 so long as these lower rates
remain in effect. Further, all advances outstanding at May 1, 1935, written in
excess of 3>£ percent will, on Dec. 31, 1935, and semiannually thereafter, receive
a refund of such portion of the interest collected above 3K percent as the Board
of Directors shall deem justifiable. Such refund will be granted only on loans
on which no payments in advance of maturity are made.
All advances.
Do.
All advances to members secured by mortgages insured under Title II of National
Housing Act.
All advances for 1 year or less. All advances for more than 1 year to be written at
4 percent, but interest collected at 3>£ percent so long as short-term advances
carry this rate.
All advances.
1
On May 29, 1935, the Board passed a resolution to the effect that all advances to nonmember institutions upon the
security of insured mortgages, insured under Title II of the National Housing Act, "shall bear interest at rates of interest
one half of 1 per centum per annum in excess of the current rates of interest prevailing for member institutions."
January 1936
143
Federal Savings and Loan System
D
URING November 1935, 851 new and
converted Federal savings and loan
associations made home-mortgage loans
totaling $10,746,000 (table 1). This was
only $1,396,000 or 11 percent less than they
loaned during the very active month of
October. There seems no question that
the Federal savings and loan associations
are supplying more than their share of the
energy to the revival of real-estate and
home-construction activity.
The distribution of mortgage loans made
by the Federals during November remained about the same as in October, with
new construction and purchase of homes
representing about 51 percent of all loans.
Refinancing accounted for 42 percent and
reconditioning for the remaining 7 percent.
Private investors increased their payments on shares in 503 reporting new Federal associations by $1,700,000 during November. Due to the bookkeeping adjustments attendant on shifting from the shareaccount sinking-fund plan to the direct-reduction plan of loan amortization on the
part of many newly converted associations,
the apparent private share payments to the
reporting 348 converted Federals registered
only a slight increase.
Both new and converted associations reduced slightly the combined volume of
their borrowings from the Federal Home
Loan Banks. It is encouraging to note
that reduction in advances from sources
other than the Banks were at a higher rate.
The associations' major sources of funds
for their heavy volume of loans to home
owners during November were investments
in their shares by the Treasury and the
Home Owners' Loan\ Corporation. During
the month, the 851 associations reporting
received $5,227,000 in share investments
144
from the Federal Government. From the
table on monthly investments in all savings
and loan associations made by the Home
Owners' Loan Corporation on page 148, it
will be seen that all Federals received
$7,608,000 during November.
The number of Federal savings and loan
associations—new
and
converted—has
passed the thousand mark (table 2). With
an addition of nine new and 14 converted
associations during the month, the total
rose to 1,002. These Federal associations
reported resources of $456,404,143 at the
end of November.
INVESTMENT APPEAL OF FEDERAL SHARES
T H E degree of safety, which insurance and
Federal supervision assure, coupled with
the relatively high return is attracting investment in shares of Federal savings and
loan associations from many unexpected
quarters. The following self-explanatory
letter was recently received by a Western
field representative of the Savings and
Loan Division from a man charged with
the investment of institutional funds.
The representative reports that the sender
of the letter has already built accounts up
to $5,000 in several Federal associations in
his territory.
Please send me the names of the Federal savings and loan associations that you have organized as well as the names of the new ones, as
you organize them, here in . . ., as I wish to
invest as a beginning $500 with each one.
Being of Scotch descent, I have always favored
diversified sound investments with reasonable
returns in preference to questionable investments
with supposingly large returns.
Having studied the careful plan on which the
Federal savings and loan association must operate, I can't help but feel that my investments in
the various loan associations will be safe ones.
Federal Home Loan Bank
Review
TABLE
1.—Federal Savings and Loan System—Combined summary of operations for November 1935 as
compared with October 1935 for associations reporting in both months
348 converted associations
503 new associations
November
Share liability at end of month:
Private share accounts (number). . .
Change
October
to November
October
74,157
72, 469
Paid on private subscriptions
$25, 540,144 $23,841,491
Treasury and H. 0 . L. C. subscriptions
26, 781, 200 24, 393, 200
Total
52, 321, 3441 48, 234, 691
Average paid on private subscriptions...
Repurchases during month
349, 453
Percent
-.6
351, 443
+ 7.1 $257,119, 732 $256, 958,150
+ .1
+ 9.8
28, 794, 300
25, 955, 800
+ 10.9
+ 8.5
285, 914, 032
282, 913, 950
+ 1.1
+4.9
-21.2
735
2, 923, 087
732
3, 414, 738
-1.4
+.4
345
285, 218
329
357, 019
321, 046
1, 830, 573
1, 777, 293
824, 302
393, 482
1, 810, 284
1, 850, 882
850, 006
-18.5
+ 1.1
-4.0
-3.0
406, 057
1, 506,493
2, 746, 500
1, 334,156
536, 655
1, 695, 307
2, 993, 843
2, 012, 031
-24.4
-11.1
-8.3
-33.7
4, 753, 214 4, 904, 654
54, 703, 322 50, 361, 772
-3.1
+ 8.6
5, 993, 206
240, 776, 785
7, 237, 836
239, 262, 804
-17.2
fen
Mortgage loans made during month:
a. Reconditioning
b. New construction
c. Refinancing
d. Purchase of homes
Total for month
Loans outstanding end of month *
Borrowed money as of end of month:
From Federal Home Loan Banks...
From other sources
+ .6
5, 626, 552
107, 975
5, 911, 821
120, 750
-4.8
-10.6
19,198, 912
3, 383, 632
19, 221, 514
3, 493, 450
-.1
-3.2
5, 734, 527
Total
1
Percent
+2.2
Change
October
to November
October
November
6, 032, 571
-4.9
22, 582, 544
22, 714, 964
-.6
These totals include loans made for other purposes than those listed.
TABLE
2.—Progress in number and assets of the Federal Savings and Loan System
Number at 6-month intervals
Assets
Number
Dec. 31, June 30, Dec. 31, June 30, Oct. 31, Nov. 30,
1933
1934
1934
1935
1935
1935
New
Converted
Total
January 1936
Oct. 31,
1935
Nov. 30,
1935
57
2
321
49
481
158
554
297
590
389
599
403
$57, 972, 995
389, 395, 253
$59, 338, 401
397, 065, 742
59
370
639
851
979
1,002
447, 368, 248
456,404,143
145
Federal Savings and Loan Insurance
Corporation
T
HE safety of insured shares has obtained for insured savings and loan
associations in Pennsylvania, South Carolina, and Tennessee a distinct advantage
among thrift institutions for savings. By
recent action of the legislatures of these
three States, shares of savings and loan associations which are insured with the Federal Savings and Loan Insurance Corporation are made legal investments for trust
funds. For the first time in these States,
this renders savings and loan associations—provided only that they are insured—eligible to receive participation in
the large sums of investable funds in the
hands of administrators, guardians, conservators, and other fiduciaries. Unquestionably, this step will result gradually in
a diversion of some of this important volume of funds to these insured institutions
and so into the long-term home-financing
field.
Four other States—Florida, California,
Ohio, and Texas—have specific statutes
authorizing investment of trust funds in
shares issued by Federal savings and loan
associations, a fact which also acknowledges the safety of share insurance which
all federally chartered associations must
carry.
While many trusts created by will or
agreement are not subject to general laws
relating to the investment of trust funds,
it is to be noted that fiduciaries are specifically permitted by law to invest in shares
of all types of building and loan associa-
146
tions in Arkansas, if the association is
capitalized at $100,000 or more; in Florida,
under certain prescribed conditions; in
North Carolina and Oregon, on order of a
proper court; and in Texas, Virginia, and
Wisconsin, subject to restrictions as to the
percentage of the trust so invested.
PROGRESS OF THE INSURANCE CORPORATION
T H E steady expansion in number of savings
and loan associations insured continued
with an addition of 41 during the monthly
period November 16 to December 14, 1935.
Of this number, 19 were State-chartered
associations and 10 were associations formerly under State charter that had converted to Federal charter. For some
months the number of old-established savings and loan associations obtaining insurance of shares has exceeded the number of
newly organized Federal associations.
On December 14,1935, 912,394 shareholders were receiving the protection of insurance granted to 1,085 associations. These
institutions—120 State-chartered, 397 converted, and 568 new Federals—owned combined assets (as of date of insurance) of
$626,780,404. On the same date, 1,376 associations of all types (counting those insured), with resources of more than a
billion dollars, had made application for
share insurance. Nineteen State-chartered
and 19 converted associations made application during the period November 16 to
December 14, as compared with 12 newly
organized Federals.
Federal Home Loan Bank
Review
Progress of the Federal Savings and Loan Insurance Corporation—Applications received and institutions
insured
APPLICATIONS RECEIVED
Number and assets at 6-month intervals
Dec. 31, June 30,
1934
1935
State-chartered asConverted F. S. and
L. A
NewF. S. andL.A.
134
393
360
517
Total
580
1,065
Dec. 31,
1934
Assets (as ui uate ui
application)
Number
Assets (as of date of
application)
Number
June 30,
1935
Nov. 16, Dec. 14,
1935
1935
Nov. 16,
1935
Dec. 14,
1935
188 $110, 681, 409 $361, 023, 238
53
319
338 $588, 308, 550
$601, 316, 635
128, 907, 073
7, 578, 870
348, 317, 418
8, 836, 390
447
562
466
572
442, 043,119
10,437, 763
459, 065, 558
10, 741,152
247,167, 352
718,177, 046
1,328
1,376 1,040,789,432 1, 071,123, 345
INSTITUTIONS INSURED
Number at 6-month
intervals
Number of
shareholders
(as of date of
insurance)
Number
Assets (as of
date of
insurance)
Share and
creditor
liabilities
(as of date of
insurance)
Dec. 14, 1935
Dec. 31,
1934
State-chartered associations
Converted F. S. and
L. A
NewF. S. and L. A . . .
Total
January 1936
June 30,
1935
Nov. 16,
1935
Dec. 14,
1935
Dec. 14, 1935
Dec. 14, 1935
4
45
101
120
274, 256
$222, 312, 665
108
339
283
512
387
556
397
568
599,194
38, 944
393, 987,107 }
10,480, 632
369,479,821
451
840
1,044
1,085
912, 394
626, 780, 404
570, 402, 804
$200, 922, 983
147
Home Owners' Loan Corporation
H. 0. L. C. subscriptions to shares of savings and loan associations—Requests and subscriptions
Uninsured State-chartered members of
the F.H.L.B. System
Number
(cumulative)
Requests:
Sept. 30, 1935
Oct. 31, 1935
Nov. 30, 1935
Dec. 20, 1935
Subscriptions:
Sept. 30, 1935
Oct. 31, 1935
Nov. 30, 1935
Dec. 20, 1935
Amount
(cumulative)
Insured State-chartered associations
Number
(cumulative)
Amount
(cumulative)
Federal savings and
loan associations
Number
(cumulative)
Amount
(cumulative)
Total
Number
(cumulative)
Amount
(cumulative)
7
12
21
28
$465, 800
615, 800
1,087, 500
1,186, 700
6
13
21
29
$525, 000
1, 205, 000
1, 875, 000
2, 375, 000
11
229
407
508
$1, 301, 000
8,888,500
16, 062,000
19, 711, 500
24
254
449
565
$2, 291, 800
10, 709, 300
19, 024, 500
23, 273, 200
1
3
4
50, 000
115, 000
165, 000
2
7
15
18
100, 000
900, 000
1, 460, 000
1, 660, 000
130
305
433
3, 888, 500
11, 496, 500
16, 500, 000
2
138
323
455
100, 000
4, 838, 500
13, 071, 500
18, 325,000
Applications received and loans closed by months ]
Period
Applications
received
(number)
Loans closed
Number
Amount
1933
403,114
319, 682
593
36, 656
$1, 688, 787
104, 231, 556
790, 836
227,156
307, 651
381, 341
933, 082,197
1,157, 985, 268
143, 634
155, 214
13,413
14, 623
12, 892
16, 259
15,634
7,125
463, 689, 204
41, 569, 800
44, 775, 321
41,180, 881
49, 882, 769
47, 927, 454
22, 504, 591
1, 884,422
961,401
2, 908, 517, 828
From date of opening through Sept. 30..
From Oct. 1 through Dec. 31
From Jan. 1 through June 30.
From July 1 through Dec. 31.
From Jan. 1 through June 30.
July
August
September
October
November
Dec. 1 to Dec. 12
1934
2
1935
Grand total to Dec. 12, 1935.
1
2
These figures are subject to adjustment.
' Receipt of applications stopped Nov. 13, 1934, and was resumed for a 30-day period beginning May 28, 1935.
• '
ed~
"
148
Federal Home Loan Bank
Review
Reconditioning Division—Summary of all reconditioning operations through Dec. 12, 1935
Total jobs completed
Number of
applications
received for
reconditioning loans
Period
June 1, 1934 through Nov. 14, 1935 1 2
Nov. 15, 1935 through Dec. 12, 1935
Grand total through Dec. 12, 1935
Total contracts executed
646, 613
7,744
306, 641 $58, 518, 316
9,464
2, 261, 556
278, 393
10, 555
$51, 063, 349
2, 369, 028
654, 357
316,105
288, 948
53, 432, 377
Number
Amount
60, 779, 872
Number
Amount
1
The totals for this period differ from those published in the December REVIEW due to subsequent corrections.
The figures for this period are subject to correction.
NOTE.—Prior to the organization of the Reconditioning Division on June 1, 1934, the Corporation had completed
52,269 reconditioning jobs amounting to approximately $6,800,000.
2
Foreclosures authorized and properties acquired by the Home Owners' Loan Corporation*
Period
Prior to 1935
Foreclosures
authorized
Foreclosures
stopped 2
Properties
acquired by
voluntary
deed and
foreclosure
30
1935
January
February
March
April
May
June
July
August
September
October
November
Grand total to Nov. 30,1935. .
39
30
59
100
153
155
341
546
370
687
950
0
1
2
2
1
1
5
7
23
36
66
3,460
144
6
1
6
8
24
27
64
50
91
180
587
» 1, 050
1
2
8
All figures are as of the month they were received by the Corporation.
Due to payment of delinquencies by borrowers after foreclosure proceedings had been entered.
The 1,050 properties acquired include 196 properties bought in by H. O. L. C. at foreclosure sale but awaitmg
expiration of the redemption period before title and possession can be obtained.
In addition to this total of 1,050 completed cases, 6 properties were sold at foreclosure sale to parties other than
H. O. L. C.
January 1936
149
Resolution of the Board
I.^AMENDING THE RULES AND REGULATIONS FOR FEDERAL SAVINGS
AND LOAN ASSOCIATIONS CONCERNING REAL ESTATE CARRIED
ON THE ROOKS
The Roard adopted
lution on December 6,
Be it resolved that the
for Federal Savings and
the following reso1935:
Rules and Regulations
Loan Associations be
amended by the addition of a new section, as
follows:
"Section 56. No real estate shall be carried
upon the books of an association for a sum in
excess of the total amount invested by the association on account of such real estate, including
advances, costs and improvements but excluding
accrued but uncollected interest, nor shall any
real estate be carried upon the books of an
association at a sum in excess of its value as
appraised by the association at the time of
acquisition, plus actual cost of original reconditioning."
Directory of Member, Federal, and
Insured Institutions
Added during November-December
I. INSTITUTIONS ADMITTED TO MEMBERSHIP IN THE FEDERAL HOME LOAN BANK
SYSTEM BETWEEN NOVEMBER 18, 1935,
AND DECEMBER 14, 1935 1
(Listed b y Federal Home Loan Bank Districts, States, and
cities)
DISTRICT NO. 1
DISTRICT NO. 5
KENTUCKY:
Middlesboro:
Middlesboro Savings & Building Association.
OHIO:
Kenton:
Home Savings & Loan Company of Kenton, Ohio,
116 North Detroit Street.
Piqua:
Third Savings & Loan Company, 215 North Wayne
Street.
Tippecanoe City:
Monroe Building & Loan Association.
MASSACHUSETTS :
DISTRICT NO. 6
Boston:
Home Owners Co-operative Bank.
INDIANA :
Evansville:
Howell Building & Loan Association.
DISTRICT NO. 2
N E W JERSEY:
Wortendyke:
Wortendyke Building & Loan Association.
N E W YOBK:
Brooklyn:
South Brooklyn Savings & Loan Association, 44
Willoughby Street.
DISTRICT NO. 3
DISTRICT NO. 7
ILLINOIS :
Lombard:
Lombard Building & Loan Association of DuPage
County.
DISTRICT NO. 9
LOUISIANA :
Covington:
St. Tammany Homestead
Hampshire Street.
PENNSYLVANIA :
Millvale:
Grant Building < Loan Association of Millvale, 322
&
Grant Avenue.
Somerton:
Somerton Building & Loan Association.
Association,
311
New
DISTRICT NO. 11
WASHINGTON :
Tacoma:
State Savings & Loan Association.
DISTRICT NO. 12
CALIFORNIA :
1
During this period 12 Federal savings and loan associations were admitted to membership i n the System.
150
Claremont:
Claremont Building & Loan Association.
Federal Home Loan Bank Review
WITHDRAWALS FROM THE FEDERAL HOME LOAN
BANK SYSTEM BETWEEN NOVEMBER 18,
1935,
AND DECEMBER 14, 1935
MASSACHUSETTS :
Springfield:
Hampden Co-operative Bank, 7 William Street.
PENNSYLVANIA :
St. Marys:
St. Marys Savings & Investment Association.
IL FEDERAL SAVINGS AND LOAN ASSOCIATIONS CHARTERED BETWEEN NOVEMBER
18, 1935, AND DECEMBER 18, 1935
{Listed by Federal Home Loan Bank Districts, States, and
cities)
DISTRICT NO. 1
CONNECTICUT :
East Hartford:
East Hartford Federal Savings & Loan Association,
1112 Main Street (converted from East Hartford
Building & Loan Association, Incorporated).
Windsor:
Windsor Federal Savings & Loan Association.
MAINE :
Lewiston:
First Federal Savings & Loan Association, 138 Lisbon Street.
OHIO:
Cincinnati:
Avondale Federal Savings & Loan Association of
Cincinnati, 300 Melish Avenue (converted from
Highland Avenue Loan & Building Company of
Cincinnati, Ohio).
Cleveland:
Park View Federal Savings & Loan Association of
Cleveland, 3199 East Ninety-third Street (converted from Park View Savings & Loan Association) .
Van Wert:
First Federal Savings & Loan Association of Van
Wert, 118 West Main Street (converted from
Fraternal Building, Loan & Savings Company).
West Milton:
Milton Federal Savings & Loan Association, 102
North Miami Street (converted from Milton Loan
& Savings Association).
TENNESSEE :
Trenton:
Trenton Federal Savings & Loan Association.
DISTRICT NO. 6
MICHIGAN :
Grand Rapids:
Mutual Home Federal Savings & Loan Association, 88 Market Avenue, Northwest (converted
from Mutual Home & Savings Association).
DISTRICT NO. 7
DISTRICT NO. 2
N E W YORK:
New York:
Lincoln Federal Savings & Loan Association of
Ridgewood, 160-14 Eighty-fourth Road.
Walden:
Walden Federal Savings & Loan Association, 1
Orange Avenue (converted from Walden Building, Savings & Loan Association).
DISTRICT NO. 3
PENNSYLVANIA:
Brentwood:
First Federal Savings & Loan Association of Brentwood, 304 East Garden Road.
Philadelphia:
Celtic Federal Savings & Loan Association of Philadelphia, 5213 North Sixteenth Street (converted
from Celtic Building & Loan Association of
Philadelphia.
Irish American Federal Savings & Loan Association
of Philadelphia, 5144 North Fifteenth Street
(converted from Irish American Building & Loan
Association).
Michael Davitt Federal Savings & Loan Association of Philadelphia, 848 Corinthian Avenue
(converted from Michael Davitt Building & Loan
Association).
T. J. Keohane Federal Savings & Loan Association
of Philadelphia, 5213 North Sixteenth Street
(converted from T. J. Keohane Building & Loan
Association).
DISTRICT NO. 5
KENTUCKY:
Morehead:
Morehead Federal Savings & Loan Association.
January 1936
ILLINOIS :
Chicago:
Hegewisch Federal Savings & Loan Association of
Chicago, 13330 Baltimore Avenue
(converted
from Hegewisch Building & Loan Association).
Momence:
Momence Federal Savings & Loan Association, 128
East Washington Street (converted from Momence Building & Loan Association).
Peru:
Peru Federal Savings & Loan Association, First
National Bank (converted from Workmen's Loan
Association of Peru).
WISCONSIN :
Milwaukee:
City Federal Savings & Loan Association, 726 North
Forty-ninth Street.
Empire Federal Savings & Loan Association, 703
Caswell Block.
Milwaukee Federal Savings & Loan Association,
416 Caswell Block.
DISTRICT NO. 8
MINNESOTA :
Minneapolis:
Peoples Federal Savings & Loan Association of
Minneapolis, 123 South Seventh, Street (converted from Equitable Building & Loan Association).
MISSOURI :
St. L o u i s :
St. Louis Federal Savings & Loan Association, 209
North Eighth Street (converted from St. Louis
Building & Loan Association).
Springfield:
Guaranty Federal Savings & Loan Association of
Springfield, 427 St. Louis Street (converted from
Guaranty Savings & Loan Association).
151
DISTRICT NO'. 9
PENNSYLVANIA—Continued.
ARKANSAS :
Little Rock:
Commonwealth Federal Savings & Loan Association, 212 Louisiana Street (converted from Commonwealth Building & Loan Association).
TEXAS:
DISTRICT NO. 4
NORTH CAROLINA:
San Antonio:
First Federal Savings & Loan Association of San
Antonio.
DISTRICT NO. 10
COLORADO:
Denver:
Colorado Federal Savings < : Loan
$
1608 Welton Street.
Association,
DISTRICT NO. 12
CALIFORNIA :
Escondido:
Escondido Federal Savings & Loan Association,
111 North Broadway (converted from Escondido
Mutual Building & Loan Association).
San Diego:
La Jolla Federal Savings & Loan Association, 1051
Wall Street (converted from La Jolla BuildingLoan Association).
CANCELATIONS
OF
FEDERAL
SAVINGS
AND
LOAN
ASSOCIATION CHARTERS BETWEEN NOVEMBER
1935,
Philadelphia:
National Security Building Association, 507 East
Tulpehocken Street.
AND DECEMBER 18,
1935
of
OHIO:
Columbus:
Columbus Federal Savings & Loan Association, 150
East State Street.
Medina:
First Federal Savings & Loan Association of
Medina.
SOUTH CAROLINA:
Allendale:
Mutual Federal Savings & Loan Association of
Allendale.
TEXAS:
Association
of
III. INSTITUTIONS INSURED BY THE FEDERAL SAVINGS AND LOAN INSURANCE
CORPORATION BETWEEN NOVEMBER 23,
1935, AND DECEMBER 19, 1935 *
(Listed by Federal Home Loan Bank Districts, States, and
cities)
DISTRICT NO. 3
PENNSYLVANIA :
Ellwood City:
Ellwood City Building & Loan Association, 635
Lawrence Avenue.
1
During this period 19 Federal savings and loan associations were insured.
152
Cleveland:
Peoples Savings &
Ohio, 4401 Clark
Cleveland Heights:
Heights Savings &
Road.
Uniontown:
Uniontown Savings
Loan Association of Cleveland,
Avenue.
Loan Company, 1856 Coventry
& Loan Association.
DISTRICT NO. 6
INDIANA:
Vallejo:
First Federal Savings & Loan Association
Vallejo, 831 Sonoma Street.
& Loan
DISTRICT NO. 5
OHIO:
18,
CALIFORNIA :
Abilene:
First Federal Savings
Abilene, Box 349.
Gastonia:
Gastonia Mutual Building & Loan Association, 195
West Main Street.
High Point:
High Point Perpetual Building & Loan Association,
203 South Main Street.
Mount Gilead:
People's Mutual Building & Loan Association.
Wilmington:
Peoples Building & Loan Association, 112 Princess
Street.
Goodland:
Newton County Loan & Savings Association of
Indiana.
Oakland City:
Peoples State Building & Loan Association of Oakland City, Indiana.
Spencer:
Owen County Savings & Loan Association, Corner
Market & Main Streets.
Terre Haute:
Indiana Savings, Loan & Building Association, 31
South Seventh Street.
Yigo County Loan & Savings Association, 28 South
Eighth Street.
Zionsville:
Zionsville Building & Loan Association.
DISTRICT NO. 10
KANSAS :
Hiawatha:
Hiawatha Savings & Loan Association.
Lyons:
Lyons Building & Loan Association, 112 East
Avenue, South.
DISTRICT NO. 11
WASHINGTON :
Olympia:
Capital Savings & Loan Association, Fifth Avenue
& Washington Street.
Shelton:
Mason County Savings & Loan Association, 126
Railroad Avenue.
DISTRICT NO. 12
CALIFORNIA :
Claremont:
Claremont Building & Loan Association.
Federal Home Loan Bank Review
@FedFRASER