Mr. CRAWFORD. I am sure it would be, sir. Our purpose in making the computer this particular size was so that it could be used as a mailing piece and be distributed to our depositors and to others. Senator DOUGLAS. What is the cost of producing this? Mr. CRAWFORD. I believe this sells for about 4 or 5 cents. Is that correct? Mr. COSTIGLIO. It actually costs, in large quantities, in the range from 4.2 to 4.7 cents depending upon the imprinting and the quantity ordered. Senator DOUGLAS. By the way, how many of these have you disposed of? Mr. COSTIGLIO. We have disposed of approximately 115,000 already to our member banks, and we have another 100,000 on order that we are prepared to distribute. Senator DOUGLAS. Would you be willing to send a copy to each Member of the U.S. Senate and each Member of the House if I give you a check for that amount? Mr. COSTIGLIO. We would be very happy to do it at our pleasure without the check. Mr. CRAWFORD. Without the check. I might say, Mr. Chairman, that we believe that savings banks in other States than New York are interested in this device but we have not yet offered it for sale to them. We fully expect to do so in the future. With me today are several persons who are well equipped through training and experience to discuss with you the intricacies of installment credit and the mathematics of the computer. These are persons who acted as consultants to our Committee on Public Information in the technical development of the computer. When I finish this short statement, sir, I would like to introduce each of them. Two of them have statements that they would like to make. The computer is a step in our continuing efforts to encourage thrift and to teach our depositors sound personal financial habits. We stand for wise saving, wise spending, and the wise use of credit. These, in our opinion, are the keys to financial independence for the individual, and to sound economy for the Nation. Thus, development and distribution of the quick credit cost computer is in keeping with the tradition and concept of savings banking. I should like to take this opportunity in my capacity as chairman of the committee on Federal legislation of the National Association of Mutual Savings Banks to express support of the principle of S. 1740 as it applies to loans secured by mortgages on real property, and to reiterate the support accorded S. 2755, 86th Congress last year in testimony presented to this subcommittee by Mr. Earl B. Schwulst, president and chairman of the board of the Bowery Savings Bank, and by Mr. Robert M. Morgan, chairman of our national association's committee on mortgage investments. At its midyear meeting in December 1960, our national association adopted a position again supporting the principle of S. 2755 as it applies to loans secured by real property. While the language of S. 1740 differs somewhat from that in S. 2755, it makes no basic change in the provisions that gained support from Mr. Schwulst and our national association. May I thank the chairman and the subcommittee for this opportunity to give my views on the computer and on this very important area of the economy. May I now, sir, introduce in a little more detail my colleagues at this table. I think I need not introduce at any great length Mr. McKenna, whom you all know, and who is presently the director-counsel of the Washington office of our National Association of Mutual Savings Banks. Next, Prof. Raymond Rodgers, who is professor of banking at the Graduate School of Business Administration, New York University. Professor Rodgers is also on the faculty of the Graduate School of Credit and Financial Management which is conducted by the National Association of Credit Management in cooperation with Dartmouth College. He has taught at many other financial banking institutions. He is the coeditor and author of "Money and Banking" by Foster, Rodgers, Bogen, and Adler, which has been a standard university and college text since 1932. He was the coauthor of "Consumer Credit and Its Uses," a textwhich was published in 1934. On my immediate left is Lawrence U. Costiglio, who is the deputy director of the Savings Banks Association of New York State. Mr. Costiglio is a graduate of Fordham University Law School, admitted to the bar in New York in 1942. In addition to the private practice of the law, Mr. Costiglio served as an Assistant United States Attorney for the Southern District of New York and served in our New York State Banking Department, rising to the positions of acting deputy superintendent of banks and counsel to the banking board. On my immediate right is Dr. Elmer H. Harmon, who is assistant vice president of our bank, the Bowery Savings Bank, and there is in charge of our research and statistics department. He is a graduate of Harvard College and earned his doctor's degree at Columbia University. Immediately prior to joining our bank in 1959 Mr. Harmon served for several years as the secretary of the research council of the American Bankers Association. And on my extreme right, James H. Kohlerman, who is now the educational director of the Life Office Management Association in New York City. Mr. Kohlerman is a graduate of the University of Delaware with degrees in chemical engineering and chemistry. He is adjunct professor of management in the Graduate School of Business Administration at New York University and formerly assistant professor of general mathematics at New York University. Mr. Chairman, if it is agreeable with the committee, I would like to ask Professor Rodgers to make a brief statement, to be followed by a statement and some demonstrations by Mr. Kohlerman. Senator DOUGLAS. Professor Rodgers, will you go ahead? STATEMENT OF RAYMOND RODGERS, PROFESSOR OF BANKIN GRADUATE SCHOOL OF BUSINESS ADMINISTRATION, NEW YOR UNIVERSITY Professor RODGERS. Mr. Chairman, members of the subcommittee, for more than 30 years I have taught, written, and told public audiences that, "Consumer credit is the credit of the future; we have little more than scratched the surface of its potentialities." This statement still holds true. May I emphasize that I believe in consumer credit, and it is because of this belief that I appear before this committee today. From the earliest days, statement of the rate of charges has been a troublesome problem as the charges for retail credit are necessarily higher than for wholesale credit; moreover, these charges must cover many services rendered by the consumer credit lender which the larger lenders do not render, or, if they do, an additional charge is levied over and above the interest charge. Nonetheless, the user of consumer credit has always needed some measure by which comparisons can be made with the many alternative opportunities open to him. Shall he borrow and pay cash? Or, shall he utilize sales finance? Or, if he uses sales finance, shall he patronize a commercial bank or one of the many financial intermediaries, such as our highly developed sales-finance companies? Or, shall he save, and buy later? If he does that-and in view of our need for saving to finance the economic growth we must have to counter Russia in the cold war and to help create the millions of jobs needed because of automation and our growing population—he knows exactly the rate he will get for that saving. But, heretofore, he has had no yardstick for measuring the additional cost of the consumer credit, if he should decide to borrow. He now has such a yardstick in the quick credit cost computer, devised by the Savings Banks Association of New York State. May I too emphasize that it is a yardstick and not a micrometer. National ingenuity has devised plans for which it will give only approximate answers. Moreover, it certainly will not give precise answers to all of the rate questions consumer credit operating executives need to know about the various phases of their business. Nonetheless, it will enable consumers to weigh the advantages of consumer credit with its immediate purchasing power against its costs in terms of a common denominator. Whether this is interest or charges is beside the point. It is a cost. Comparisons can be made between various alternatives by means of this quick credit cost computer. Such knowledge of the costs in the terms of a common denominator will enable the consumer to make an intelligent decision as to whether to borrow or to save; and if he decides to borrow, he can weigh the services of each lender against a common denominator. From a social standpoint, it seems beyond question to me that the consumer has a right to know. Actuated by this premise, I favor any measure which will give consumers more information on which to make the vitally important decisions of borrowing, saving, and spending. I say to you, gentlemen, that this is a vital decision so far as this country, our economy, and employment are concerned. Nothing is more important than the capital creation necessary to the achieving of the New Frontier that we seek and must have because of our unemployment problem. Knowledge of the facts as to the costs of spending and the rewards of saving, I repeat, will contribute to that capital creation and thus aid in the creation of jobs; and nothing could be more important than that. I thank the committee very much for their attention. Senator DOUGLAS. Thank you very much, Professor Rodgers. Mr. CRAWFORD. Now, if I may, I would like to ask Mr. Kohlerman to give us a chart presentation. Senator DOUGLAS. I wonder if he could come nearer the microphone, or if the microphone could be moved up there. Mr. CRAWFORD. Yes, indeed. STATEMENT OF JAMES H. KOHLERMAN, EDUCATIONAL DIRECTOR, LIFE OFFICE MANAGEMENT ASSOCIATION, NEW YORK, N.Y. Dr. KOHLERMAN. Mr. Chairman. Mr. Chairman, members of the committee, my assignment here is to discuss how this computer works and why it works. It seems that the most direct approach to this is to use some actual charts of real transactions that occur every day in lending. Chart 1, as you recognize, is an automobile deal. (The chart referred to follows:) CHART 1 AUTOMOBILE STANDARD SIZE FOUR DOOR SEDAN CASH PRICE $2,500 YOU PAY 20% DOWN AND HAVE $2,000 TO YOU PAY BACK $2,360 OVER 3 YEARS, OR SET $65.56 UNDER $2,000 ON TOP 73079 0-61-12 |