the dark about the annual rate at which he or she is paying on their loan. If this credit and interest problem is taken care of by the State, or States minimum wage laws, our Nation can take its place alongside of the other backward nations of the world. The chamber of commerce and National Association of Automobile Dealers offered the Douglas bill by submitting written testimony, but refused to send witnesses who, by the way, could be cross examined. We do live in a democracy and being as such, I certainly would want a public hearing on the working of our free enterprise system. None of this secret, closed door, hidden facts from the American public. Hon. Senator Robertson, these same people who are yelling, "Protect the American by a free enterprise system," and "Get the Government out of business" are afraid to appear and defend their own beliefs. Given, there is one of two choices-help the American public at the expense of the wealthy minority few, or help the wealthy minority few at the expense of the American public. Hon. Senator Robertson, there are millions of Americans working for cheap labor, paying State sales tax, and being hooked on a deal like this.

The Legislative Committee of Local 459, St. Paul, Minn., Machinists, are asking you as chairman of the Banking and Currency Committee to please help push and vote for the Douglas bill, S. 1740. Let's have some of this "Justice For All."

Thank you Hon. Senator Robertson for your time.
Yours truly,

LEO G. DOMINIC, Chairman, Local 459, Legislative Committee.

(The following newspaper articles were ordered inserted in the record :)

[From the Bend Bulletin, June 26, 1961]

THOSE MYSTERIOUS "CARRYING CHARGES" CAN NEARLY DOUBLE YOUR BILL IN SOME CASES

A man who bought a $300 item found later that installment finance charges added another $187 to his bill. He paid a true interest rate of 622 percent on that purchase.

Then there was the case of the fellow who saw an item advertised at a $550 cash price. He signed a paper and discovered he had let himself in for total payment of $960 over 16 months. His interest rate was 105 percent.

These are not isolated or rare instances but illustrative of many hundreds Illinois Senator Paul Douglas has dug up in support of his argument that most people have little idea how much their installment and other credit purchases really cost them or what interest rate they are paying.

The situation is sufficiently chaotic and clouded that Federal Reserve Board Chairman William McChesney Martin says he can't fathom consumer finance, and a motor company financial expert says the field is so complex as "almost to defy comprehension."

Douglas has a pending bill-cosponsored by 21 other Senators, which would compel sellers and lenders to disclose true interest rates and total service charges on credit purchases.

He says if this were done that interest rates to the customer would drop, and savings in interest charges would come to several billions.

Better business bureaus, legal aid societies, individual lawyers and bankers, credit unions, and others stand in full support of the Douglas bill, which is due for its second round of hearings in July.

Opposition from some finance companies and some types of sellers is hot. It is usually pegged on grounds that the measure interferes with State's rights, or would impose unfair bookkeeping burdens on sellers and lenders.

Such rates are clearly stated in home mortgages, dividend and interest statements from banks, and other small loan company terms. Douglas and many others supporting his proposal do not understand why other dealers in credit should be exempt from telling the buyer how much he is paying, and at what rate of interest annually.

The sponsors don't want to dry up installment buying, now at an astronomic $54 billion. The bill seeks no control over credit. They simply want to protect the unwary, and keep those people out of the easy-money market who can't afford to take on heavy debt.

As example, 9 percent of the workers in a steel plant in a certain month had finance company levies against their wages.

If it makes sense to tell what's in a food can, as the law demands, then why not label the contents of the credit packages we buy? No honest seller or lender can suffer.

[From Labor, July 29, 1961]

BILL STRIKES AT LOAN SHARKS-HIGH INTEREST COSTS DRIVE WORKERS INTO

BANKRUPTCY

An unmarried factory worker in Milwaukee, Wis., bought himself some hunting guns, a TV set, a 1960 stationwagon and a hi-fi set-all on time. With his $111 weekly earnings, he was able to swing the payments all right. But then he was cut back to 4 days work a week. He fell behind on the payments.

"I got all my bills together on one note, like they advise on radio," he said, "but it didn't work." Finally he discovered he was paying out 30 percent interest a year on the payments. But by then he was in bankruptcy court.

This story was told by AFL-CIO legislative director, Andrew J. Biemiller last week as he urged Congress to pass the truth-in-lending bill sponsored by Senator Paul H. Douglas, Democrat of Illinois, and other Senators with the backing of the administration.

"I think it is high time," said Biemiller, "that all borrowers and buyers on time be let in on the secret of how much any given credit commitment is going to cost, both in dollars and cents and in terms of an annual rate."

That's what the truth-in-lending bill would require, Biemiller told a Senate subcommittee headed by Douglas, and that's why the AFL-CIO urges the bill's "prompt enactment."

The truth in lending bill is backed also by the Kennedy administration and by some bankers, last week's testimony showed. But most bankers and finance companies, as well as associations of auto dealers and other merchants, are fighting the bill.

The Milwaukee worker's plight is far from unique, Biemiller stressed. He noted that personal bankruptcies in the United States rose from 25,000 in 1950 to nearly 100,000 last year. Such bankruptcies, he said, are "almost all" of wage earners and often because of "overcommitments on time buying."

Many working families get sucked in, Biemiller said, because quoted finance charges sound "comfortably low," while the real interest rate is far higher. For example, he said, an auto dealer may quote "$8 per $100," a bank may quote "8 percent discount," a loan company may quote "3 percent a month." All these sound less than the real annual interest, Biemiller noted. Thus, 3 percent a month is 36 percent a year.

"If those who oppose this truth-in-lending bill have nothing to hide-as they so often assert-why do they insist on hiding it?" Biemiller demanded.

WHAT "REVOLVING FUNDS" COST

He got part of an answer from Senator Wallace Bennett, Republican of Utah, a member of Douglas' subcommittee and a former president of the National Association of Manufacturers.

"I'm not bragging, but I've been in business," said Bennett. "Business has to have goodwill. If stores had to say their revolving credit fund operated at 18 percent interest per year, what would happen to goodwill? The customer has accepted 12 percent a month."

"If you build business practices on deception you are building a house on sand," Senator Douglas countered.

Meantime, Douglas received a wire from Bernard M. Baruch, noted financier, declaring he "approved most heartily of the truth-in-lending bill." Baruch added: "Millions of people are being taken advantage of by loan sharks. I hope you get a bill through this session-one that will let the borrower know exactly what he has to pay."

[From the Washington Daily News, July 28, 1961]

Senator Paul Douglas has started up new hearings on one of his favorite projects, the so-called truth-in-lending bill which he and a couple of dozen other Senators had in the legislative hopper last year.

By and large, we think there can be too much regulation of private business. It always seems too bad when new controls are needed to protect the public. But protecting the public is a primary purpose of Government.

Interest

The record in this case is on the appalling side. People who borrow or buy on credit don't know how much they are paying in the end, or what for. Most know, usually, that they will pay so much a month for so many months. rates as high as 12 to 36 percent, and sometimes as much as 60, 80 and even 100 percent, have been uncovered. This is ridiculous, shamefully so.

Senator Douglas' bill wouldn't prevent exorbitant interest rates, or any other exorbitant charges. But it would compel those lending money, or selling on the installment plan, to spell out in writing how much is for "finance" or "service" charges, and how much is interest, in terms of an annual rate. In other words, exactly how easy are the "easy" payments.

This seems like simple honesty, and it is a shame a law is needed to enforce it. But that's the way it is.

[From the Birmingham (Ala.) Post-Herald, July 26, 1961]

TO LET THE BORROWER KNOW

Senator Paul Douglas got a "windfall" the other day in the way of unsolicited support for his truth-in-lending bill.

Bernard Baruch, who probably knows as much about borrowing and lending as anyone, sent a telegram backing up the Senator's efforts to get his bill through Congress.

"Millions of people," Mr. Baruch wired, "are being taken advantage of by loan sharks. I hope you will get a good bill through this session-one that will let the borrower know exactly what he has to pay."

That's all the Douglas measure proposes. It would require lenders and dealers selling on the installment plan to set out in writing what the borrower or buyer must pay in finance charges, and interest at annual rates.

Now it's easy enough to say that a borrower or buyer ought to know, before he borrows or buys, how much extra he is paying over the principal of his loan or the price of the auto or accessory. But he doesn't know and sometimes an accountant couldn't figure out these charges. And you can't outlaw suckers.

But if there isn't a gyp involved in some of these transactions why are some companies so much opposed to telling exactly what these charges are? If there is nothing unfair about the charges there is no need for making them mysterious. Up to now, all the arguments against the Douglas bill have been on the flimsy side too much bookkeeping, or something about States rights. This is hokum. Let's have the bill, and if it puts a crimp in loan sharks, as Mr. Baruch suggests, who is going to cry about that, except the loan sharks?

[From the Record, Silver Spring, Md., July 27, 1961]

EASY CREDIT IS NOT THAT EASY

(By Alys Spealman)

People have the right to a choice before they decide whether or not to make darned fools of themselves.

In most consumer credit transactions today the actual amount of interest the buyer is paying is very well camouflaged by fancy terms and by misleading statements. The consumer is misled into paying at exorbitant rates, making a fool of himself unwittingly.

The shame of it is that this happens to those who must use credit buying most-those of limited income.

When you shop for an article, you compare around. When you shop for a service, you compare. When you try to shop for credit, comparison is well-nigh impossible.

Until such time, as is proposed by the Douglas truth-in-lending bill, that concerns "in the business of extending credit" are required to disclose in terms of simple annual interest, in writing, and at the time of transaction, the entire cost of financing, credit will continue to be pretty much of a racket.

It was in 1959 that Senator Douglas first proposed truth-in-lending legislation. And it was late in the 1959 session that Peg Schweinhaut introduced a similar

measure in the Maryland Legislature. Because there wasn't time for the necessary study and hearings, she agreed to refer the bill to the legislative council, where, to make a long story short, it still remains, apparently buried.

As for the Douglas bill, the Senate Banking and Currency Subcommittee is now holding hearings on the 1961 version.

The proposal has 20 cosponsors, and to date the testimony has developed (1) that the public is often hoodwinked by credit practices, (2) that some big business feels it cannot possibly compute credit costs in terms of simple annual interest, and (3) that other business groups feel that it is a relatively simple matter to do just that.

Even a partial lineup on the bill is significant.

For the administration, the President's Council of Economic Advisers, better business bureaus, labor, mutual savings banks, credit unions, the Federal Reserve Board (just so they don't have to administer it).

Against: National Association of Manufacturers, U.S. Chamber of Commerce (vacillated on this one several times, finally decided to pay lipservice through objecting because it "can't be done"), building associations, automobile dealers, concerns offering revolving credit accounts.

The Douglas measure in no way interferes with credit, nor does it seek to stop credit transactions. All it does is to insist that the consumer has the right to know at what rate of interest he's paying, and it would require disclosure of this in a simple, standard way.

Its impact would be interstate and intrastate (most goods do cross a State line somewhere along the way). It is a Federal standard type bill, which means that at such time that standards set in individual States meet the Federal standards, the State can take over the implementation.

Opposition is centered around the two statements "We can't do it" and "Let the States do it." "We have nothing to hide," they all say. "It's just that the simple annual interest rate is impossible to determine.

It is fascinating to see those who have nothing to hide continue to oppose the proposal, certainly in a way that would indicate that they want to hide something. As Mrs. Schweinhaut points out, "It is difficult for me to agree that the mind capable and agile enough to set up these vastly complicated systems of credit cannot, at the same time, work out the simple annual interest involved."

If the support and cooperation given the Schweinhaut bill is any indication of what might happen at the State level, then big business opposing truth in lending is right in trying to toss the whole thing back home. State legislators cannot withstand, as can Senators sitting in the more remote regions of Washington, the closeness to the retailer. A few alert and public-oriented legislators like Peg can do it, but it stands to political reason that this type of protective legislation belongs with the Federal Government.

It's difficult to mention all the facets involved in this debate in one short column. It would be a shame to omit, however, recent testimony by a business representative to the effect that (and this is not verbatim) "We've got the public educated to accept our rate of 12 percent per month. If we told them that this amounts to 18 percent a year, they'd get scared."

And with the high moral tone of that lingering in your mind, you might want to try to figure what rate of simple annual interest you're actually paying on that new car, or on whatever it is you're presently buying on time. All the costs like service charge, etc., should be included-they're interest.

Write to the Bowery Savings Bank, New York, N.Y. Ask for their quick credit cost computer. With that, and knowing the constants of the amount you're borrowed, the amount of your regular monthly payment, and the time involved, you'll be able to find a realistic figure. (This doesn't work for revolving credit accounts, trickier and generally considered more vicious.)

Then if you want to be foolish, or because of circumstance you have to be foolish, paying at an exorbitant rate of interest, it's more nearly your choice.

[From the Baltimore Sun, Aug. 1, 1961]

BORROWING COSTS

John Doe borrowed $100 of his friend Richard Doe. Richard told John he could have the money for 6 percent, $6. He also told John he wanted the hundred paid back in monthly installments, the first due in 30 days. John went home

happy with his bargain. He didn't realize that he had the use of the $100 not for the full year, but only for the first month. The credit he actually commanded over the year averaged out at around $50. The $6 fee was not at the rate of 6 percent but closer to 12 percent.

This was one of the simpler examples of small-loan and installment buying abuses cited by Senator Douglas, of Illinois, in recent testimony on his truth in lending bill now pending in the Senate. The Senator wants a Federal law requiring full credit information for every small loan borrower or installment buyer. The borrower would know the sum advanced or the cash or delivered price of the article purchased. He would know the amount to be credited as down payment or trade-in. He would know the cost of any insurance required, or any financed by credit. He would have the total finance charge stated first in dollars and cents and again in terms of an annual interest rate on the total amount to be financed.

Twenty-one other Senators join Mr. Douglas in backing the bill and it has substantial support from the administration. State bankers and credit officials are also recorded in its favor. Some States have vigilant credit laws. Maryland among them, with statutes covering both small loans and installment buying. Other States lack these protections and consumer credit, that characteristic American financial invention, is now at a volume with real impact on national economic trends. For instance, payment on installment debt in 1960 totaled $46.9 billion, or over 13 percent of disposable personal income-and this wholly apart from the $15.4 billion paid that year on home mortgages.

Of course there are people for whom the Douglas bill would offer less than complete protection. One witness related the lugubrious story of a young man at $111 a week who made time purchases of some hunting guns, a 1960 station wagon, a TV set, and a hi-fi set-and then got cutback to 4 working days a week. A man as reckless as this in piling up principal might not be deterred by the fullest disclosure of mere interest rates. But the general argument in behalf of telling borrowers the true costs of borrowing is sound.

[From the American Banker, June 22, 1961]

CONSUMER INSTALLMENT CREDIT DESK

AN OPEN LETTER TO SENATOR DOUGLAS

Hon. PAUL H. DOUGLAS,

U.S. Senate, Washington, D.C.

DEAR MR. DOUGLAS: I am a simple person and I am confused. I have lived with one condition for some time but adding confusion to it is disturbing, I hope you can explain some of the points that are disturbing.

What is a simple annual interest rate How is it figured and how will it protect me? I have taken a down-to-earth approach to this business of paying on time. I always thought it was a fool-proof method. I made it a point to ask, "How much will it cost me?" It seemed like a pretty sound way of doing it. If it was going to cost me more than I wanted to pay for the privilege of buying on time, I didn't do business.

What protection will I receive from having the cost of buying on time detailed on a contract for me and then have these figures converted into a percentage figure which has no meaning? Will it change the amount of money the service costs?

When did consumers assume two different personalities? We are applauded for exercising keen judgment at the polls when we elect representatives. Yet we seem to lose these faculties and needed protection shortly afterward.

Have State officials been missing the boat when they passed laws to regulate buying on time? They have not required the cost of financing to be expressed in terms of simple annual interest.

How would the interest, if that is the right word, be figured? Maybe it might be better to ask, How could it be figured?

Obviously, I am very confused. Is this cost of financing paid for the use of the money invested? Or would it be charged for services rendered?

It was fortunate for me that I was able to get a copy of a book written by Robert W. Johnson, professor of financial administration in the Graduate School