debt." So I am sure you will not mind if I get a little sharp with you as we go together through your statement and your book.

We are now holding hearings on a bill which its author calls the truth in lending bill. And as I said this morning, it is my purpose to find the truth in this legislation.

Is that your purpose as a witness?

Mr. BLACK. Of course, sir.

Senator BENNETT. In your statement you described yourself as a reporter who makes his living writing books. As such do you consider it your responsibility to be objective and to accept the truth where you find it even though it may be at odds with your preconceived notions?

Mr. BLACK. May I say, sir, that I started out writing this book with some preconceived notions. I do not think anybody can be completely objective about any subject.

I would also say some of my preconceived notions have been changed as a result of talking to people in the credit industry and other notions were reinforced.

Senator BENNETT. Have they been changed to make you more critical or less critical?

Mr. BLACK. Quite the contrary, less critical.

Senator BENNETT. Less critical of consumer credit?

Mr. BLACK. I am not critical of consumer credit per se. I mean the practices.

Senator BENNETT. Well, let's say less critical of the people who extend consumer credit?

Mr. BLACK. Yes, that would, of course, follow.

Senator BENNETT. Then before you started, "merchants of debt" would have been a very mild expression? You would have found a much more stinging way to describe these people? You are less critical of them now?

Mr. BLACK. I still feel that is an accurate way of describing what they are doing. I think that I pointed out in my statement, sir, if I may say so, debt in itself has become in many instances a business and that people are merchandising debt. I do not think that this can be denied.

Senator BENNETT. This is one of the things we will examine.

You say in your statement in the first paragraph that your main concern in writing this book was, and I am quoting

to examine in human terms the breadth and meaning of on-the-cuff living in the United States, what it is doing to all of us in concert, and how it affects our individual lives and the lives of our children.

Did you have any other significant concerns?

Mr. BLACK. Well, sir, I hoped to write on objective book on what I thought would be an important problem.

Senator BENNETT. It was very interesting to me that, after you have gone through a dozen chapters, each one of which is very critical of a particular phase of consumer credit, you end up with half a dozen recommendations. The first of these is, "Back the Federal consumer credit labeling bill."

Was this one of your concerns when you set out to write the book? Mr. BLACK. To back the Federal bill? No, sir. When I started out to write the book I did not know anything about the subject at all.

As a matter of fact, I personally have never bought on time, if that is a measure of objectivity.

Senator BENNETT. I am not talking about your experience in buying on time. Did you know about last year's bill, S. 2755, and did you draw on the hearings of last year's bill, and was this the point from which you started to write your book?

Mr. BLACK. Oh, no, sir. If you would like the origins of my book I would be more than happy to give them.

Senator BENNETT. I would be interested, because this turns out to be the first recommendation you make in your book.

Mr. BLACK. The origin of the book is this: I had finished another book, and the editor of my publishing house had asked me to look into the subject of consumer credit. What attracted his eye was the story, and it is an unusual one, somewhat unique, not typical of the credit card industry, but the story of the young man who went on a $10,000 credit card spree.

I went to the library. I looked into that. I looked into other things. I came across the figure that at that time there was $52 billion outstanding in consumer credit.

I started to talk to some people. I wrote an outline. This was prior to the hearings on the bill. I believe I knew at that time that there were going to be such hearings. I felt I thought-this would supply material to me.

However, I did not sit down and say to myself, "I am going to write a book that is going to just support the bill, that the purpose of the book is to support this particular bill."

As a matter of fact, I did not know very much about it, and as I was looking into it I was not sure whether it was right or wrong. I just did not know.

After finishing my research and writing the book, I came to the conclusion from what I observed that this was something that I wanted to endorse.

Senator BENNETT. You want to endorse this bill. You want to endorse the other bill to prohibit car manufacturers from financing automobiles. You are willing to support State laws. You suggest supporting a State consumer council. And you suggest joining a credit union wherever possible.

Did your contact with the credit union people occur before or after you arrived at the decision that the wise thing for a potential borrower to do was join a credit union?

Mr. BLACK. This may seem unbelievable, but before I wrote this book I never heard of a credit union in my life.

Senator BENNETT. At what point did you decide you wanted Senator Douglas to write your introduction?

Mr. BLACK. When I finished my book.

Senator BENNETT. Not before?

Mr. BLACK. No, sir.

Senator DOUGLAS. Since this has come up, I may say the first time I ever saw Mr. Black was this morning. I did not know the book was going to appear until the proof sheets were given to me I think in early January or early February. So this was not written on contract for me or at my suggestion at all.

I do congratulate the author on his good sense in recommending passage of this bill and joining a credit union. I think it shows good

sense.

Senator BENNETT. Perhaps the reason you wrote the introduction was because you found this recommendation in the last chapter of his book?

Senator DOUGLAS. It was certainly one of the reasons, yes. When I see a sensible author I naturally want to help him.

Senator BENNETT. Would you say, Mr. Black, that your book covers this field in the spirit of truth and with breadth enough to give a reliable account of the complete picture of the consumer credit situation in this country?

Do you think this is an objective picture of the overall consumer credit problem?

Mr. BLACK. Sir, that is a very difficult question, I think, to ask an author. I think that I would have to say yes, of course, but I think the judgment would have to be made by other people who are experts in the field, including yourself, sir, and other members of this committee, the reviewers, and so on.

I hope that I will always report the truth.

I may add, sir, if I may, that being a free-lance writer and writing books I feel that I have in certain ways more freedom than perhaps some other people may have. This is a special responsibility and it is not one that one uses idly.

I hope I report what is correct.

Senator BENNETT. As I say, I have read the book, and you say this question of how objective it is must be left to the judgment of people, including me. It seems to me the book concentrates and focuses on the very small fraction of the problem represented by abnormal situations and the people who exploit them.

You have not told us stories of people who use their credit wisely, who use their credit to produce comfort and contentment and happiness. You have only told us the stories of the people who allowed their credit to get them into trouble.

Is that not right?

Mr. BLACK. I would say that is right up to a point. I would also say in the summing up I devote a number of pages to the positive uses of credit, point out, among other things, that there are a number of credit sellers who are selling credit for people who want to go to school, which is very helpful.

I point out the necessity of credit as far as our economy is concerned.

I also point out that ethically credit is good and can be helpful to people.

I think this is a simple fact. I don't think one has to use numerous anecdotes.

I think I also go into pointing out that the high rates the so-called small-loan industry charges are justifiable.

I think I go into the history of the loan sharks and show where the small-loan industry over a long period of time, because they have been in this longer, in part have helped to get good legislation. They were on the side of good legislation, in many ways on the side of the con

sumer.

I feel that there are certain criticisms to be made of the small-loan industry, and I think I point these out too.

And I might add that this is sort of a topic where everybody says, "This is usurious." And I think this is a misconception about what usury is. I think that they have to charge more than 6 percent and it is necessary for parts of the industry to charge it to exist.

I think I gave what I hope was an objective report.
Senator BENNETT. Just one last question. My time is up.

Can you show me in your book any character or any person to whom you refer to match the fictitious character of the Homers on the other side of the situation showing the people who were made happy? You show the Homers who are made thoroughly miserable.

Mr. BLACK. No, sir, there is no such character.

Senator BENNETT. There is no offsetting example?

Mr. Chairman, I have marked my questions at this point, and I yield the floor until my turn comes again.

Senator DOUGLAS. Senator Proxmire?

Senator PROXMIRE. Mr. Black, I want to congratulate you on what I think is a splendid book and a very, very useful book. It is a book which I am sure is going to save many people a great deal of money and awaken them for the first time to the fact that interest rates are high and that there are no gains without pains and that if you want something today you have to pay for it.

I think that too many of us forget that, and, of course, we are all lullabied to sleep by attractive messages of advertisers and sellers of all kinds.

I think that your book is extremely useful in all kinds of ways.

I am delighted that you are as good a witness as you are an author. I think that your reluctance to claim that you were being objective, completely objective, and so forth, is very wise. None of us is objective, of course, and nobody can write, it seems to me, any kind of an article with complete objectivity. If he thinks he is doing that he is just deceiving himself.

But I thought that your book was about as fair as it could be under all the circumstances. I think it does a fine job of alerting us to a situation in which we are likely to find ourselves without really recognizing it as we go along.

I would like to ask you a couple of factual questions. You quote a study published in the Journal of Marketing, October 1955, in which the author, Jean Due, says although the respondents readily answered questions relating to the amount of credit contracted, two-thirds of the users of installment credit did not know the amount of the carrying charges or interest rate.

I understood one of the members of the committee this morning to say people always know the carrying charge. Perhaps I misunderstood that assertion.

But I think many of us may feel that way.

Do you find that in the rest of your investigation this is a typical situation in which people not only do not know the annual interest but they do not even know the carrying charge? That is, the amount of their payment for a particular commodity which relates to the financing costs of it?

Mr. BLACK. Well, sir, if I may answer that by saying this, I think that this is sort of a two-edged sword. On the one hand, it is true an

awful lot of people-and a number of surveys point this up-are interested in many, many instances in what the monthly charge is. And, therefore, people say that, "Well, since that is all they are interested in, why tell them any more?"

But the thing is that in many instances that is all they are told. So that perhaps it is a question of education.

Senator PROXMIRE. I understand that. But what I want to nail down here is whether in your judgment, on the basis of your experience and you have devoted obviously a tremendous amount of time to this; you are one of the outstanding experts now in the country on this subject-it is true that far more than a majority, apparently twothirds, of the people do not even know what the carrying charge is let alone what the annual interest is.

Mr. BLACK. Well, sir, I can only say in this instance according to that survey.

Senator PROXMIRE. Yes, I know that, but I just wanted to see if we could project that survey, if that survey is typical.

You cite it in your testimony here, and I am wondering if you think this is exceptional, or if

Mr. BLACK. No, I do not think it is exceptional.
Senator PROXMIRE. You think that is typical?
Mr. BLACK. I think this is true in many, many-
Senator DOUGLAS. Will the Senator yield?
Senator PROXMIRE. I yield.

Senator DOUGLAS. Champaign-Urbana happens to be a university

town.

Senator PROXMIRE. Yes, I know. The University of Illinois.
Senator DOUGLAS. That is right.

Senator PROXMIRE. So I presume the level of intelligence and information and understanding-is at least as high as the average and probably a great deal higher than everywhere except maybe Madison, Wis.

Senator BENNETT. I was just going to observe, since the chairman is from the University of Chicago, his comment might have had a different meaning.

Sentor DOUGLAS. Not at all. Not at all. A town of highly intelligent people.

Senator PROXMIRE. You say that garnishments in Chicago alone in 1959 amounted to over 58,000.

I am wondering the extent to which this could be projected. The population of Chicago is about 21/2 or 3 percent of that of the Nation, and if we project it on that basis it would be 112 to 2 million garnishment actions through the country in a year.

I do not want to go too far

Mr. BLACK. Sir, I would hesitate to project that for the simple reason that garnishment laws vary from State to State. Four States do not permit garnishments at all.

I would say in Illinois I understand that there is some reform legislation coming up. But their laws, shall we say, are not as good as the law in New York State, which only allows a credit grantor to garnishee, I believe, 10 percent of a debtor's wage.

Where the laws are lax, as I understand it, there may be a greater amount of garnishment suits filed.