Mr. GEORGE. The experience detailed by Mr. Bergengren of the letter carrier in Iowa could be duplicated hundreds of times throughout the country. In my experience for over 25 years, associating with the postal employees, I have known of a great many such instances, not particularly in Washington but in other cities.

Since the beginning of this credit-union movement in the Postal Service, I have had the pleasure of assisting numerous unfortunate employees to liquidate their other debts in the same manner outlined by Mr. Bergengren, through loans from the credit union, where they could be made on terms and conditions absolutely equitable.

In regard to your question about the conflict between the credit union and the small loans bill, I do not believe there is any conflict whatever. The credit union, of course, will not meet the need of the individual who is not so situated that he can become a member of a credit union, and there are many individuals-because it has been stated the credit union to be successful must be within a certain group-and there are individuals outside of any group of that kind who are practically unable to join with other employees or other individuals similarly situated in the formation of a credit union, and yet they at times are faced with the necessity of securing immediate funds which are not available; and the only place to-day that they can go to get them is from these so-called loan sharks, and I think 20 per cent interest, as was stated here, is about as reasonable as can be expected. I have known of instances-in fact, I know of one particular instance in which I assisted a friend to get out from under, in which on a loan of $30, $136 of interest had been paid and the man still owed the $30; and in order to get a receipt in full it was necessary for me to pay $37 and some cents, and the only way I was able to get it was to threaten to go out and bring in the police, because they told me the loan had so many months to run, and it would have to run those months, so that they would continue to collect that interest. I told them settlement would have to be immediately made or not at all, and they finally consented to a settlement of approximately $37, which brought the total payments to over $160 on an original loan of $30; and, as I say, innumerable instances of that sort may be cited.

That, however, was not in the District of Columbia.

I have not made a study of conditions as regards small loans in the District of Columbia and can not speak from my own experience as to that, but I want to heartily indorse both of these bills both for myself and for my organization.

The CHAIRMAN. What is the law at the present time as to shylock game in this city? Is there any law?

Mr. GEORGE. There is a law in regard to the small loans of some kind. I am not familiar with it. There are certain kinds of small loans that can not be made, but there are some small loans that I believe are legal. Through the practices that are going on in the District of Columbia, however, I do not believe they are legal and that they can be stopped if there was any way to secure the evidence. But, unfortunately, as I think Brother Keeler mentioned, the victim is not in a position to present the evidence.

The CHAIRMAN. Any one else who wishes to be heard on the credit

STATEMENT OF MARGARET HOPKINS WORRELL

Miss WORRELL. I am representing the League of the American Civil Service, a branch of the Government employees. It seems to me as though I am the only one here to raise their voice against this bill, but we believe it is a usurious rate of interest, and all of the Government employees to whom I have talked are against the bill.

We have in the several departments welfare organizations to which Government employees can go and borrow money to the limit of our resources, without paying any interest whatsoever.

We give theater parties and have different ways of getting this money and loaning it out to the people who are in need.

The CHAIRMAN. How many Government employees do you think are in the city now that are able to take advantage of that plan?

Miss WORRELL. Well, I think a very great number do take advantage of that if they are in need. There are others, I believe, that go to the Morris Plan Bank and to the Departmental Bank. Those two banks charge rather large interest, and we think the requirements are great also.

Last year, when we had a hearing on this bill of course, I believe it was 32 per cent last year, and it has been reduced to 22 and 3 per cent, making it about 36 per cent, is it not?

Senator KEAN. This bill?

Miss WORRELL. This bill, isn't it about 36 per cent a year?

Senator KEAN. No.

Miss WORRELL. How much does it amount to?

Senator KEAN. One per cent a month.

Miss WORRELL. Then, I am talking on the wrong bill. I do not oppose that.

The CHAIRMAN. You have no objection to the credit union bill? Miss WORRELL. No; I think that is a good bill.

STATEMENT OF SAMUEL H. FENTON, REPRESENTING THE RAILWAY MAIL SERVICE CREDIT UNION OF WASHINGTON, D. C.

Mr. FENTON. Mr. Chairman, I represent the Railway Mail Service Credit Union of Washington, D. C.

The CHAIRMAN. About how large an organization is that?
Mr. FENTON. We have 83 members.

The CHAIRMAN. How long has it been running?

Mr. FENTON. It was organized the latter part of April. My purpose in speaking is to bring out the feature of overhead. I do not know how it is with other unions, but we have no overhead. We have no paid officers or salaries. We operate about the same plan as called for in the bill.

Senator KEAN. How much do you make a year?

Mr. FENTON. In interest?

Senator KEAN. Yes.

Mr. FENTON. We declared a dividend of 6 per cent.

Senator KEAN. How much did you carry to surplus?

Mr. FENTON. We have a very small surplus. The surplus is derived from initiation fees and fines. There is a 25 cent-not initiation, but entrance fee, which is paid into the surplus account.

Senator KEAN. What do you charge your members for lending money to them?

Mr. FENTON. One per cent a month on the unpaid balance, the same as called for in the bill.

Senator KEAN. If you charge 1 per cent a month, that is 12 per cent a year, and if you use all your money and only pay 6 per cent dividends, you have another 6 per cent out of that.

Mr. FENTON. The money is not out from the time it is received. You see, there would be a lapse in investment. We may receive the money on the first of the month, and it would possibly not be loaned out for two or three weeks.

Senator KEAN. Then, do you put it in a savings bank and draw interest?

Mr. FENTON. We would, if it justified it.

Senator KEAN. What do you do with your money-keep it in your pocket?

Mr. FENTON. No, no. It is turned over just as rapidly as possible. Senator KEAN. Is it not put in some bank?

Mr. FENTON. Oh, yes. It is in the Union Trust Co.

Senator KEAN. And they allow you interest on it, do they not?

Mr. FENTON. Not on a checking account. We can not put the money in a savings account, because it would not draw interest anyhow, unless it was there for a certain period.

Senator KEAN. Would they allow you interest on it if you agreed to leave it there for more than 15 days.

Mr. FENTON. I think not. It would have to be in there according to the interest period. They pay, as I understand, every six months. Senator KEAN. That is in their savings department. But if you left it there on special deposit, wouldn't they allow you interest on it? Mr. FENTON. As I understand, it would have to be a time deposit for a year.

Senator KEAN. Well, I do not know how they run their business but that is not the way most of them do it.

Mr. FENTON. They issue a time deposit of 4 per cent, but that time deposit would be for a year.

Senator KEAN. Do they not borrow money for less time than a year?

Mr. FENTON. I do not understand you.

Senator KEAN. If you make a deposit in a bank, that is practically loaning the bank so much money. That is the real effect of it. If you lend a bank so much money, and you agree to keep it there for 15 days or 30 days, will they not allow you interest on it?

Mr. FENTON. I would not think so.

Senator KEAN. I wanted to know that. I did not know. I do not know what the banking custom is here.

Mr. FENTON. I can only go by my personal savings account. We are in favor of this bill because it gives us a legal status, and the rate of 1 per cent a month is not exorbitant. We have to consider that there is a possibility that we might have bad debts. We have to build up a surplus to recover those bad debts. Up to the present time we have not experienced any bad debts.

The CHAIRMAN. Your credit union was organized because of the need for relief of some kind for employees who were pressed?

Mr. FENTON. For immediate funds; yes. For instance, a substitute railway postal clerk would be ordered on a run and he would not have the immediate money to tide him over. He would come to us and ask for a loan. That is, if he is a member of the union. And we can loan him enough to tide him over.

Senator KEAN. How many members of the union are there?
Mr. FENTON. In our union?

Senator KEAN. The whole thing. I mean to say those that are eligible to your credit union.

Mr. FENTON. I would estimate about 900 or 1,000 coming into Washington.

Senator KEAN. About a thousand?

Mr. FENTON. Yes, sir.

Senator KEAN. If you had a thousand people in your union, you would practically be the same as a building and loan association, would you not?

Mr. FENTON. Well, I do not know, Senator, for the reason that some of these members are borrowers. They are not all investors, except to the extent of one share. Some are not able to be active investors. That is, they are not able to build up their accounts. Of course, we have only operated eight months, and we do not know from experience just what will happen along that line, but the idea is thrift, and we instill in the borrowers the idea of thrift. That is, when they come to us for a loan and that loan is paid up, we try to direct them in the right way by telling them it would be a good idea to put in $5 a month, if they are able to do it, so that when they need money they can come and withdraw it, if they wish, or get

another loan.

The CHAIRMAN. Do you find your members are being victimized by loan sharks?

Mr. FENTON. No; I have no personal knowledge of it.
The CHAIRMAN. Why was this credit union organized?

Mr. FENTON. Well, it was organized through the activity of Mr. Brehm, the service relations man, who thought it would be a proper thing possibly he had information along that line to combat these loan sharks. I suppose the purpose of it, as I see it, was as much fraternal as anything else.

The CHAIRMAN. Do you believe it is a desirable program?
Mr. FENTON. I think so; yes, sir.

The CHAIRMAN. Much obliged.

STATEMENT OF A. J. DRISCOLL, PRESIDENT MID-CITY CITIZENS

ASSOCIATION

Mr. DRISCOLL. Mr. Chairman, I am very much in favor of this bill. I unfortunately can not come here as representing my association, because it is now in the hands of my executive committee. I believe we will have a favorable report.

The question has been raised here this afternoon, Are there shylocks in Washington in this loan business? I would like to call the attention of the committee to a series of articles that ran recently, I think, in the Washington Post. They pointed out very clearly that there was a condition in Washington along these lines that should

be corrected. The information that we got there was rather astounding. In some instances a person had to pay 100 per cent. In other instances more than 100 per cent. They had to make those payments to liquidate their loans. So I think this bill is a splendid one. I think it would work to the advantage of our people here in Washington and I would like to give it my indorsement.

The CHAIRMAN. Thank you, Mr. Driscoll.

STATEMENT OF MERCER G. JOHNSTON, DIRECTOR, PEOPLE'S LEGISLATIVE SERVICE

The CHAIRMAN. Which measure are you interested in, Mr.

Johnston?

Mr. JOHNSTON. I am interested first in the credit unions, which I very heartily approve.

The CHAIRMAN. You favor the bill?

Mr. JOHNSTON. Thoroughly.

The CHAIRMAN. You think we should have legislation along this line?

Mr. JOHNSTON. Along the line of the credit-union bill.
Senator KEAN. Why do you think so?

Mr. JOHNSTON. For all the reasons that Mr. Bergengren gave, and for a good many others. I am fairly familiar with the credit-union proposition, having read a great deal of the literature on it, and I regard it as a natural house of refuge from the loan shark of every variety. I think that is the natural house of refuge, and I was glad to hear Mr. Newman, of the Federal employees, say that they intended immediately to organize a credit union in each one of their 11 locals. I think it would be a wise thing if every local affiliated with the Central Labor Union in the city of Washington would organize a credit union as soon as they are free to do so. I think they would be somewhat blameable if they did not take advantage of this to make provision for a rather natural place of refuge from people who want to charge them over 1 per cent a month.

The CHAIRMAN. Thank you.

(Whereupon the committee proceeded to a consideration of other business.)