Imágenes de páginas
PDF
EPUB

I relied in part on the testimony that was given at the previous hearings. Mr. Kirk and Miss Hall, of the Union Settlement Association of New York, had made a fairly extensive survey, not too extensive, in their areas.

Further, I went to Columbia University where I was able to examine some material, such as a preliminary survey that is being done on housing projects.

Let me say, Senator, one of the things that has worried me about this book, as in anything I ever write, is whether I covered the subject completely and thoroughly. There are people who have spent a lifetime in this one field. There is an awful lot. You can talk to an awful lot of people.

Senator BENNETT. In your statement you say you talked and corresponded with hundreds of people from every section of the country. Did you talk to anybody from my State? Utah?

Mr. BLACK. No, sir; I did not.

Senator BENNETT. How far west did you get?

Mr. BLACK. Among others, I even wrote to Tahiti to find out what went on there; just perhaps more out of curiosity.

But I wrote letters to credit union people throughout the country. I went to Chicago. I attended a convention held there by the credit industry. I talked to people there. I listened to lectures.

Senator BENNETT. Credit industry or the credit unions?

Mr. BLACK. Credit industry, sir.

Senator BENNETT. How many of the so-called debt sellers did you interview and how did you select them?

Mr. BLACK. Well, sir; there I tried to select them by people who had been in business for a long time, the large ones, the ones that were generally considered reputable.

I was very much interested in trying to get as much as possible their story.

Senator BENNETT. Would they be represented largely by the people whose names appear in your foreword?

Mr. BLACK. In part.

Senator BENNETT. To whom you express thanks?

Mr. BLACK. Yes.

Senator BENNETT. Did you use the material they gave you as fully as you used the material you got from the credit unions and the social workers and the files of this committee so that you had a balanced appraisal of the problem?

Mr. BLACK. That is again a hard question to answer. In some chapters almost all the material I used came from the industry itself. Senator BENNETT. Chapters on what?

Mr. BLACK. Well, let's see. The chapter on the credit cards. The chapter on small loan companies in great part. I would have to look at the book to tell you just which is which. And others were a mixture of both. I frankly never bothered to count it up.

What I tried to do in each chapter was deal with a particular problem or aspect of business, of the industry or whatever the problem was, and the material I used depended upon what the problem was. Senator BENNETT. This is interesting to me, because I have received letters from some of the men whom you interviewed and of whom you said, "I would like to acknowledge the help of the following people

73079-61-8

for the time, guidance, and information which they so freely and

kindly gave.'

The first is a letter from the man who heads the list, Dr. Ernst A. Dauer, director of consumer credit studies, Household Finance Corp. I would like to read this into the record.

(The letter referred to follows:)

Hon. WALLACE F. BENNETT,

U.S. Senate,

Washington, D.C.

HOUSEHOLD FINANCE CORP.,

Chicago, Ill., July 13, 1961.

DEAR SENATOR BENNETT: It has come to my attention that Mr. Hillel Black will be a witness in the hearings to begin on July 17 on S. 1740. Mr. Hillel Black came to our offices in May of 1960, with a letter of introduction from William Morrow & Co. indicating that he was under contract to that company to write a book for the layman on various aspects of consumer credit in the United States. I spent a substantial amount of time with him providing him with factual information both with respect to our company and the consumer finance industry. He gave the impression of sincerely trying to do a factual study of the mass market.

In November of 1960, he submitted a draft of his chapter 10 to me for review. In writing to him at that time I expressed appreciation for having an opportunity to look over the chapter, but I also wrote the following in a letter dated November 11, 1960:

"You certainly have a gift for readable writing. However, I am very disappointed in its content, tone and title. It was my impression that you were intending to write a helpful book on consumer credit-one for the mass market to be sure-but one which would have a real instructive content and be motivated by an intent to enlighten the reader. It is my impression from this chapter, however, that you are trying to tickle the reader's palate with spicy incidents and that it is intended for the sensational market.

"From the wealth of material we gave you, we are sure you realize that this does not represent a fair portrayal of our industry. The entire consumer finance industry will resent the treatment you have given it. Its friends in other financial institutions and elsewhere will do likewise.

"By treating both the loan shark and the present legitimate lenders in a single chapter (with the title "The Shark Has Pearly Teeth') and by failing to clearly differentiate between the two, you are leaving the impression that there is no difference. For example, you have not clearly shown that the consumer finance business had its birth from the efforts of the Russell Sage Foundation to stamp out the loan shark evil and to provide a legitimate and ethical source of credit for the consumer."

I also gave Mr. Black detailed comments page by page pointing out where material was inaccurate or the reader was left with an inaccurate impression. I wish to point out that Mr. Black dealt quite accurately with Household's policies and practices and with its position in the consumer credit field.

When one considers how many authorities in all areas of the consumer credit field Black consulted, it is apparent that he could have written a sound book. He has failed to understand and place in true perspective the overall policies and practices both of this industry and of the consumer credit field. One who is aware of the true facts can scarcely escape the conclusion that the book is not objective and is intended to be sensational in character.

Sincerely yours,

ERNST A. DAUER,

Senator BENNETT. This is the reason I asked you the earlier questions.

The other letter is from Mr. Linn K. Twinem who is mentioned in your preface as editor of the Personal Finance Law Quarterly Report but who is identified from a letterhead on which he wrote me on July 13 as chairman of the Section of Corporation, Banking, and Business Law of the American Bar Association. This is what he says:

(The letter referred to follows:)

AMERICAN BAR ASSOCIATION,

SECTION OF CORPORATION, BANKING AND BUSINESS LAW,
CONSUMER BANKRUPTCY COMMITTEE,

Re Senate bill 1740.

July 13, 1961.

Hon. WALLACE F. BENNETT,

U.S. Senator,

Senate Office Building, Washington, D.C.

DEAR SENATOR BENNETT: According to published reports, a Senate subcommittee will conduct a hearing commencing on July 17, 1961, on S. 1740, sometimes referred to as the Douglas "Truth in Lending Bill."

Because Hillel Black mentions me in the preface of his book entitled "Buy Now, Pay Later" it may create the impression that I am in favor of legislation in the nature as would be provided by S. 1740. Such is not the case. I not only believe the legislation to be unwise and unnecessary, but of doubtful validity from a constitutional standpoint.

To clarify the record from the standpoint of Mr. Black's book, I want to state that I did make various materials available to him when he contacted me in the early stages of his "research." Neither the materials that I gave him nor the materials with which I am familiar justify the conclusions that he reached. Many of his opinions and inferences are at variance with mine. I am not in accord with the philosophy that his book seems to preach.

Had I known that he would make a stab at sensationalism in treating such an important subject, I certainly would not have been willing to have any part of it.

As indicated, I write you at this time merely to clarify the record.
Respectfully yours,

LINN K. TWINEM. P.S.-Incidentally, a lot of my friends in the American Bar Association are happy about your courageous stand regarding the Douglas bill. Senator BENNETT. If any letters are received before the hearing ends, I will ask that they too be inserted.

(The following letters were received subsequently :)

BENEFICIAL MANAGEMENT CORP.,

Morristown, N.J., July 24, 1961.

Re Senate bill 1740.

Hon. WALLACE F. BENNETT,

U.S. Senator,

Senate Office Building, Washington, D.C.

DEAR SENATOR BENNETT: I am writing you in reference to hearings on bill 1740, the so-called Douglas truth in lending bill.

In the preface of his book "Buy Now, Pay Later," the author, Hillel Black, mentions my name as a source of "guidance and information" and he quotes me directly twice in the book.

When Mr. Black came to see me, I accepted him at face value as a serious student of consumer credit and gladly made available my 35 years of experience. I opened my files to him. It happened that at the time I was completing the finishing touches on a 600 page manuscript on all phases of consumer credit, which has since been published as "Neifeld's Manual on Consumer Credit." In spite of my long active career in the field of consumer credit, it took me 5 years of writing and rewriting and checking with others to complete it. I gave Mr. Black completed copies of my manuscript and made other materials available. Mr. Black claims in his preface that his "research" was "to investigate in human terms the breadth and meaning of debt living, what it is doing to all of us in concert, and how it affects our individual lives and the lives of our children."

What he has produced is a distorted attack on abuses which is completely out of perspective with the constructive contribution that consumer credit makes to raising our standard of living and to the democratic way of life.

Through his treatment, his language, his emphasis is on the exceptional and the sensational.

To keep the record straight, I wish to be disassociated from any implication that I endorse his conclusions or his emphasis or his suggestions for legislation. I believe that legislation, such as proposed by Senate bill 1740, would disrupt established channels and mechanisms of distribution and would not accomplish the objectives of the bill. The proposed legislation is neither wise, nor necessary, nor practical.

Abuses can be handled by "trade practice legislation" on a State level. There is a substantial body of such protective legislation.

You may use this letter in any way that you find it helpful.
Sincerely yours,

M. R. NEIFELD.

CREDIT BUREAU OF GREATER NEW YORK, INC.,
New York, N.Y., July 26, 1961.

Hon. WALLACE F. BENNETT,

U.S. Senator, Senate Office Building, Washington, D.C.

DEAR SENATOR BENNETT: It has come to my attention that Mr. Hillel Black, author of the book, "Buy Now, Pay Later," recently testified at hearings held by the Senate subcommittee on Senator Douglas' truth-in-lending bill.

Since I was one of the individuals who cooperated with Mr. Black at the time he was preparing material for his book, and my name is mentioned in the acknowledgments and in the text, I should like to express to you my views with respect to the method Mr. Black used to gain our confidence in gathering his material, as well as his competency to testify as an expert in the field of credit. Mr. Black visited my office and introduced himself as a freelance writer who had been commissioned to write a book by William Morrow & Co. on the subject of consumer credit, with a view to helping the American public to educate itself in the sound use of credit. He stated that he would like to include a chapter on credit bureaus and the part they play in helping credit applicants to satisfy their needs, and to point out the pitfalls of consumer credit and how they can be avoided.

Having previously had a very unsatisfactory experience with a magazine writer who used an interview with executives of our bureau and information supplied to him to create a sensational story alleging that the people of America live in glass houses and their most private secrets may be learned by anyone who is willing to pay a few dollars for a report supplied by a credit bureauand which story was based on a trumped-up incident which he personally fabricated with some small, undisclosed reporting agency and not at all typical of an accredited bureau-I asked Mr. Black whether he intended to write any material in his book which would be derogatory to credit bureaus or the credit profession, in which event I would not care to assist him in any way because of my prior experience. He assured me that the book would be factual and educational, and said it would be written along the same lines as "Madison Avenue, U.S.A.." which was published some time ago concerning advertising agencies.

After checking our files and verifying that Mr. Black's personal credit record was satisfactory and that our files showed him to have been a newspaper reporter for the Associated Press in former years, I permitted him to spend several hours in our bureau interviewing some of our personnel and observing our methods of compiling and investigating credit information on individuals, and disseminating it to the consumer credit organizations in Metropolitan New York.

I heard nothing from Mr. Black until I learned that his book had been published and that review copies were in the hands of retail booksellers, when I purchased one of these copies and was very much surprised to learn that Mr. Black had done precisely what he had assured me he would not do, and that he obviously had used isolated incidents and information taken out of context, to "expose" and derogate the consumer credit industry in its length and breadth, in order to create a sensational story which would achieve wide readership. And, most surprising of all, I found that he had induced Senator Douglas to write a preamble to his book and to lend dignity and authenticity to a warped and superficial critique of the great system of consumer credit which has done so much for the American economy, and which businessmen from progressive nations all over the world are endeavoring to emulate.

I was not given the courtesy by Mr. Black of editing the material he had prepared for his chapter on credit bureaus, much of which I would not have approved if this privilege had been granted to me, nor was I favored with a copy

of the book or announcement of its publication. Not having received back the material I had lent him, I wrote to Mr. Black and asked its return, and he dropped it off personally, at which time I told him that I felt he had gone back on his word, and that I would try to make it clear to anyone who asked me in the future, that I disagree with the method he used in preparing this work, in the conclusions he has arrived at, in the characterization of an important segment of our industry as "debt merchants," and the association of Senator Douglas' effort to pass why my 30 years' experience in credit management and credit bureau management tells me is a highly impractical and unrealistic truth-inlending law, with his own dubious literary work.

Sincerely yours,

R. M. SEVERA, Executive Manager.

Senator DOUGLAS. Will the Senator yield?

Senator BENNETT. Yes. I have one more minute left.

Senator DOUGLAS. All right.

Senator BENNETT. Maybe I should give that minute to Mr. Black to comment on the material that I have read.

Mr. BLACK. Thank you very much, Senator.

May I point out, No. 1, that I am happy that Dr. Dauer, who I feel is again one of the prime representatives of the credit industry, said that what I had written about Household Finance was accurate.

As far as his complaint that he did not like the title of the chapter, "The Shark Has Pearly Teeth," because it lumped together loan sharks as he put it and the consumer finance companies, I tried to stress that the battle against the loan sharks in large part was carried on by the consumer finance companies.

When Dr. Dauer pointed out that he felt this was not emphasized enough, and I felt that since this was the point I was trying to make I wanted to make sure that it was clear, I did make a number of corrections before this book was published to see that this was emphasized.

If one will read that chapter, one will find this is the case.

I certainly hope that the people whom I acknowledge do not feel by my acknowledgement I have said that they support the bill. I had hoped that this was what would be a courteous way of saying thank you for their cooperation and kindness. They were most cooperative, as these two gentlemen pointed out, and I appreciate it. That was my only intention there.

Senator BENNETT. My time is exhausted, Mr. Chairman.

Senator DOUGLAS. Before we call on Senator Proxmire, since Household Finance Corp. has been referred to may I say that we have sent two telegrams to Dr. Dauer, inviting him to testify before this committee, telling him that it is important that he should be here. If he does not respond, we will consider the question of a subpena.

(A letter was subsequently received from Dr. Dauer, see p. 950.) Senator BENNETT. For the record, Mr. Chairman, is it not necessary for the whole subcommittee to act before a subpena can be issued?

Senator DOUGLAS. Yes, I think that is true. I simply said we will consider the matter of a subpena.

May I say that last year I put into the record a publication of Household Finance Corp., copyright 1957, which stated "The true interest rate method is the only accurate way to compare installment credit cost," and then they gave a consumer credit computer, how to compute true interest rates on loans and installments on purchases

« AnteriorContinuar »