STATE REFUSES RAILROADS’ RATE CUT had nothing to do with this case. If you think so, you ask Bill White how many times I’ve ruled against him.” Culberson said he won his last contested race by a wide margin and “I wasn’t under very many obligations for that. I don’t repay my obligations in that manner. As long as I’ve been in this office, I’ve handled these cases by looking down the gun barrel and firing as I saw it.” Asked by the Observer to comment on the theory held in some Austin circles that Commissioners Ernest Thompson and Murray concentrated on oil and gas, regulation, leaving railroad and truck ‘decisions to him, Culberson said “that’s a mistake. You disabuse your mind of the idea that I’m the only one interested in trucks and railroads. This is a three man team, we may not always see eye to eye, but we compromise and that’s good, I think. That’s the essence of good legislation and that’s what we are, reallypseudo-legislators. Oh, I suppose I’m a little more interested in trucks and all than the other commissioners, but I believe the little fellow has a right to a fair day -too. Like in a military unit, I always felt the rookie had as much right to a square meal as the first sergeant.” `I’m Ready’ The Observer had two conversations with Culberson, one before the ruling and one after. In the first meeting, at 11 a.m. Wednesday morning, Culberson offered an explanation of the long delay in the case. “We had to get the transcript typed, and then briefs had to be filed and they weren’t ready before I went to Europe on my vacation. Our rate examiner has the case now and he’ll make a recommendation to the commission and we’ll act on it.” The reporter said he had been told by rate examiner McNamee that the report had been forwarded to the commissioner. \(“It’s out of my hands now, you’ll have to talk to the commissioners,” McNamee had said, “I didn’t make any recommendations, just submitted the files with the facts in son said, “Oh, he has sent it up here? Well, good, I talked to Murray about it yesterday, but General Thompson wasn;t here and we couldn’t act on it. If both General Thompson and Murray are here today, I believe we can act on it. I’m ready to act on it. Been ready since I got back from Europe.” Culberson told the Observer commission meetings were open to the public and the reporter, in leaving, arranged to be notified of the meeting by Culberson’s secretary. The reporter checked at 11:30 and again at 2:30 and was told by the secretary that she hadn’t heard of any plans yet. Arriving at the commission at 3 o’clock, the reporter was told by Murray that the decision had been reached. \\ “Judge Culberson and General Thompson and I got together about noon,” Murray said. He said it had been a “complicated” case and that he and Culberson had gotten together on it two weeks previously, but Thompson had not been available and a ruling was put off. Thompson, commenting that it was an “interesting” case, arranged for the Observer to get a copy of the ruling, then being printed. Culberson’s secretary apologized for not knowing the meeting was taking place and for not notifying the reporter. The Observer then had a second conversation with Culberson. In explaining the Commission’s ruling, Culberson said” “since the railroads have operated at these rates as long as they have, to cut them now would reduce their revenue, and we don’t want to do that.” How long had the rates been in effect? “Oh I couldn’t tell you,” said Culberson. Would the railroads propose a scale that would lose them money? “Yes sir,” grinned Culberson, “that’s what you call cutthroat competition. They drive the trucks out of business.” Culberson said “the picture shapes up like this. The short haul is being handled increasingly by trucks and in order to hold the business, the railroads have proposed rates which the trucks say are not compensatory. The fact of the matter is the railroads priced themselves out of the market. Now in this proposal, they put these reductions in, in the part open to competition, but they don’t put nearly the reductions in, in the long haul part where they don’t have competition.” He said the railroads were being inconsistent. “They asked for the straight increases clear across the board on all items, and even before the case could be heard, they asked for reductions in certain competitive items, notwithstanding they said they had to have straight increases clear across the board to make a profit.” Culberson said the Longhorn \(Continued from stories: “Tex-Mex Loan Service,” Harlingen; “El Rio Loan Service,” La Feria; “Apex Finance,” Dallas; “People’s Finance,” El Paso, and Kilgore, and Houston, and Corsicana; “Good Luck Loan Co.,” Galveston; “Sunnyland Finance,” Houston; “Master Loan Service,” Houston; “Public Credit Co.,” Houston; “Amigo Loan Co.,” Mercedes; “Eagle Loan Co.,” Weslaco; “Joe’s Loan Service,” Mission; “Amicable Discount Corp.,” Dallas; “Friendly Finance,” Port Arthur; “Cordial Finance,” Houston; “Worker’s Finance,” Waco; and “Quick Loan. Service,” San Angelo. Some companies”five or six” in San Antonioappeared to be charging legal rates, Wilson said. `The Slanguage’ Wilson told reporters the day before the visitations that the crackdown was the largest in state history and to his knowledge the largest government effort against loan sharks in the United States since the federal suit against various chains in 1945, in which the government collected $250,000 in fines. “These are the companies we call the high-raters, in the slanguage of it,” Wilson said. When the insurance board reduced credit insurance rates last summer, three-fourths o f the small loan companies were deprived of the state -approved method whereby they had been realizing large returns on their loans; they turned to the brokerage plan, under which they charge the borrower,a fee for getting a third party, “the lender,” to lend him the money he needs. \( The two largest “lenders” sued Wednesday were L. C. Smith of Corpus Christi, who is associated, Jones said, with about 150 companies in Texas, and two firms in Dallas, Suburban Loan Co. and Consumer Discount Corp., which deal with 48 affiliated brokerage outlets. “Of course we maintain. it’s a subterfuge,” Wilson said. One rate proposal was slanted in favor of long-haul shippers. “Self-interest, pure and simple. They’re all that way but the railroads are worse at that than anybody.” He said the case was “gotten to at the very earliest amount of time. We only have two men in the rate division …. Rate making is not an easy job. They’re a matter of a very intricate calculation. And it’s hard to get good men. Salaries are too low.” He said the commission does more work for less money than any agency of the state government and has less people in it than when he joined the commission in 1941. He said the commission was frequently in the middle on rate questions and never could please anyone. When he gets criticism, he said he remembers a story his mother used to tell him. “If the paint is good, the mud-ball will fall off; but if the paint is bad, the wall will be better off because the mud, in falling off, will take the paint with it, leaving a clean spot that reveals what is underneath–4akes the pretense off and leaves the bare wood.” The Arguments The hearing in April lasted two days. Presiding was the commission’s rate examiner, McNamee. Two applications were filed, one by the railroads and one by the Longhorn Portland Cement Company, which ships its product over chart indicated Wednesday the “lender” gets 84 cents for handling a three-month $50 loan; the “broker” gets $16.95 on the same loan. Wilson was not unaware of the implications of his crackdown for his probable gubernatorial candidacy in 1960. A press release from his office began, “The long arm of Atty. Gen. Will Wilson reached the length and breadth of Texas …” and referred to his shutting down of Galveston vice in 1957 and his crackdown on 400 “quack doctors” last winter. The Attorney General advocated a state agency to supervise the lending industry. “We need a whole corps of auditor-type investigators with the power to go over all the transactions and administratively enforce the usury laws,” he said. “This is a terrifically hard way of enforcing the law, with HOUSTON, AUSTIN Back f r o m the Democratic National Committee meeting in Washington at which chairman Paul Butler and his militant civil rights stand were endorsed 84-18, Mrs. R. D. Randolph, national committeewoman from Texas, who sided with Butler on every vote, told the Observer: “The whole thing was based on this feeling that . the Democratic Party must become a liberal party. I think . there’s a great feeling in that direction a good bit of determination that the party’s not going to be controlled by this conservative group from the South, and it’s going to be a liberal party.” Byron Skelton, the committeeman from Texas, voted opposite from Mrs. Randolph on Butler. He voted to send the resolution to a subcommittee, seconded and spoke for a motion to delete the endorsement of Butler’s civil rights stand and, this failing, passed on the vote long hauls. The Longhorn proposal called for slight reductions in hort-haul rates \(up to 250-270 long haul rates. Appearing for the railroads, J. F. Jones, chairman of the TexasLouisiana Freight Bureau, ‘said “there has actually been a severe drop in tonnage handled by rail.” C. R. Edmonds, freight traffic manager of the Ft. Worth & Denver Railway, said the percentage of cement hauled by railroads compared to trucks dropped from 74 percent in 1952 to 57 per cent in 1956. J. P. Davie, Division Traffic Manager for Lone Star Cement Corp., testified that “at this time, preferential rates apply from competitive companies located in the state of Oklahoma and Colorado on shipments into Texas. There also exists a considerable lower scale of rates on intrastate traffic within the states bordering on Texas … we are unable to understand the justification for such preferential rates being offered on interstate shipments as compared to rates now applying intrastate in Texas.” Gene Ebersole, executive vicepresident of the Lumbermen’s Association. of Texas, the briefest witness, said, “The lumber dealers of Texas would love to see freight rates on cement reduced and I am appearing on their behalf.” Harry E. North of Southwestern Portland Cement Co. of El Paso, a injunction suits.” But, he said the clay before the visitations, “We oughta give ’em a knockout blow.” He emphasized that companies against which injunctions are granted might then be liable for private suits by debtors for double the amount of usury they have collected from borrowers. Wilson has also brought suit against three large firms, Household Finance, Community Finance and Thrift, and Pacific Finance, which use the “investment certificate” plan of lending and realize about 21 percent a year. His purpose, he said, is to test the constitutionality of t h e plan, which he says is unconstitutional. He also promises not to sue other users of the plan until the courts rule finally on its legality; he regards it as a “bridge” for the period between the closing of the credit insurance and brokerage commending Butler. He said he approves Butler “generally” but not his civil rights stand. Asking the committee members “to reason together as sensible men sand women,” Skelton warned that the party may “cut itself to pieces” on civil rights. “He’s still sittin’ on the rail,” Mrs. Randolph said of Skelton. Mrs. Randolph said Sen. Johnson’s influence was felt “very little at the meeting.” Skelton and Mrs. Randolph voted together against the Southern attempt to replace Louisiana committeeman Camille Gravel, a moderate on race, with Jett Talbot, a substitute named by the Louisiana state committee and. represented on the issue by the attorney for the Louisiana white citizens’ council. .Skelton said he voted for Gravel because a case was not made for Talbot. The next day in Wazhington, the Democratic Advisory Council adopted a 24-point program for the next Congress which con long-haul shipper, said he favored the Longhorn “long-haul” ‘scale “primarily because it produces a lower spread in rates beyond 300 proposal.” The case for the contractors and ready mix concrete companies was presented by lawyer Martin H. Clark of the Gifford-Hill Co., Dallas. Clark said “we are receivers of cement and we are the people that pay the freight rate. We want to endorse the railroad scale …” Harris, speaking for the contractor’s association, said “we are of the opinion the increased volume in the shipment of cement occasioned by the accelerated program of highway construction will more than make up any difference between the existing rate and the lower rate.” F. H. Lynch, manager of the Common Carriers Motor Freight Assn., summed up the truckers’ views: “Our position is that there has been no justification for a reduction in the rates on cement. We feel, however, if the commission should find there is any need for a reduction, that no reduction should be made for distances of 270 miles or less.” Lynch said he did not endorse either rate reduction proposal but if forced to make “Hobson’s choice” would prefer the Longhorn scale because it would result in “lesser reductions” than the railroad proposal. plans and enactment of legislative remedies. He said he does not now contemplate action against auto finance companies. Jones added that the constitutionality of -the “time-price theory” under which
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