be as to whether or not those bills clash in any way. Personally I do not think they do, and Mr. Hushing, I hope, will speak, because he represents the American Federation of Labor, and while I am not sure, I think he feels there is no point of positive contact between the two bills.

The CHAIRMAN. I would like to first.find out whether anyone else is particularly interested in the credit union bill and wants to make a statement.

STATEMENT OF A. D. SARTWELL, REPRESENTING LOCAL 262, FEDERAL EMPLOYEES UNION

Mr. SARTWELL. I represent Local 262 of the Federal Employees Union, the Treasury branch. I have been instructed to come here and register our approval of that bill. We at the present time are operating an association which is running on under the name of credit union, which is an incorporated body, operating under exactly the same set of by-laws that are provided in this bill.

The CHAIRMAN. How long have you been operating it?

Mr. SARTWELL. About eight months.

The CHAIRMAN. Are you having some success?

Mr. SARTWELL. Yes, sir; we are. We started as a result of appeals made to the officers of the union in times of sickness and death, and things of that sort, when people were down to bedrock, and it was necessary for them to get some money. They came up to the union headquarters and thought perhaps we would have some way of providing funds, but, of course, we can not take any surplus funds of the union and lend to those people. There was no provision for that in our constitution, and when we heard of the credit union, we got some of the literature and proceeded to form this association, which has been operating, as I say, for about eight months.

During that time we have been, as I think, quite successful. We made loans of about $1,800, and have taken care of several cases which have been right needy. Of course, we intend to incorporate just as soon as the bill is passed, as we believe it will be.

The CHAIRMAN. Did you come across instances where your members were being imposed upon by loan sharks?

Mr. SARTWELL. Yes, sir; we have.

The CHAIRMAN. Where they were exacting exorbitant rates of interest?

Mr. SARTWELL. Yes, sir. There is one particular case of a young lady, who came to me and told me of a loan that she had made of $300, and she had the loan approximately a year and had paid it down in that year to about $100, and they were pressing her for a balance of $100. She came to us in order to get $50, which was the maximum we could loan-due to just starting we can not make larger loans—and she told me that they informed her that if she would pay that up they would make her a new loan of $100, and after she paid it up, they refused to make the new loan and she told me during that year's time she had paid $128 interest on that loan. There was $300 originally, and during the year she had paid it down to $100. That would be an average of about $200.

The CHAIRMAN. You think that is quite common in the District of Columbia?

Mr. SARTWELL. I am not in a position to say how common it is, Senator. I know it does happen, and I know the Federal employees in our group that have looked into this are very much impressed with it, and we feel, it being a sort of cooperative affair, even though the borrower pays 1 per cent per month he gets a part of that back in the form of dividends, and it makes in the end a very reasonable rate of interest.

Senator KEAN. I would like to ask you a question. You say that you have not incorporated?

Mr. SARTWELL. No, sir.

Senator KEAN. Do you not know that every member of your association, if you have not incorporated, is liable for any debts or anything that happens?

Mr. SARTWELL. We do; yes, sir.

Senator KEAN. That is a pretty serious situation.

Mr. SARTWELL. We do not feel it is.

Senator KEAN. Well, I would.

Mr. SARTWELL. We think we know who we are making the loans to, Senator.

Senator KEAN. I know. That is all right, but it is a serious situation.

The CHAIRMAN. You are working on a strictly mutual basis?
Mr. SARTWELL. Yes, sir.

Senator KEAN. Of course, there is a great opportunity in the District. These employees of the Government undoubtedly would be glad to borrow from any institution and pay 12 per cent. I do not think we will have much difficulty in lending them the money, from what I know of employees of the District.

Mr. SARTWELL. That has been our experience.

Senator KEAN. And I do not think, while somebody may not agree with me, that you can run a small loan business for less than the amount specified here. The overhead is so great. That is your experience, too, that the overhead is so great that for a small loan business you can not operate it for much less than 1 per cent per month? Mr. SARTWELL. I do not know about that. I doubt that they could operate at that if they ran it as a business. This is not a business, and is not contemplated as a business. It is a cooperative affair. It simply legalizes it.

The CHAIRMAN. There is no question in your mind about the need for legislation of this character?

Mr. SARTWELL. No, sir; I think it is needed very badly.

STATEMENT OF LEO E. GEORGE, PRESIDENT NATIONAL FEDERATION OF POST OFFICE CLERKS

Mr. GEORGE. Mr. Chairman, there is not a great deal that I can say in addition to what Mr. Bergengren has already said. However, I want to register my approval and the approval of my organization of this legislation.

I think in the testimony of Mr. Brehm he made a slight slip of the tongue when he said he tried to limit the dividends to a minimum of 7 per cent. I believe he meant maximum.

Mr. BREHM. It should have been maximum.

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 bill?

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 21⁄2 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?