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In This Week’s Issue: Parole Plea 2 Senate Bid 5 Crusading D.A. 8 The Texpr,,lbserverin Next Week’s Issue: 59th Legislature NaS e $414. At Halfway. , eekty Newspaper 4ke to the South -..:JEAS, MARCH 11, 1961 A Volume 52 Shark Loopholes In 5 Loan Bills? 15c per ‘copy Number 49 Angry Atheist Hunt Red Threat Also Cited In Hearing House Turns Back Safety Measures AUSTIN Despite the pleas of the attorney general’s office and the fervent testimony of two experts in small loan law to the contrary, Rep. Don Kennard of Fort Worth, one of the authors of HB 40, said he favors allowing small loan companies to make profit on credit insurance in addition to the flat interest charged on the loan. Harvey Davis, Southern Methodist University law professor, and Edwin C. Fritz, Dallas, who said he has represented hundreds of clients who were mistreated by loan sharks, told the House banking committee HB 40 and HB 7 be excellent regulations for the small loan business if properly amended. But they said the insurance loophole kills the effectiveness of controls. Fritz even went so far as to warn that the bills would “do more harm than good” and that “passing a bill with a credit insurance loophole is worse than passing no bill at all.” Bob Sherrill Cole told the Observer he would be willing to go along with the recommendation to establish one flat charge for everything, insurance commissions included. This is a new twist to the comparative positions of Cole and the authors of HB 40, chief of whom, Rep. Tony Korioth of Sherman, last his bill would put a ceiling on all charges, and Coles’ would not. Both the Cole and the Korioth bills allow an interest of 36 percent a year maximum. on the first $1.00 or less, with the rate graduated downward for larger amounts; both provide for licensing, regulation, a contract in writing, and fine and jail penalties for violations. But about the insurance loophole in the charge ceiling, characteristic of both bills, Davis remarked: “Any law which permits ‘a variable, or indefinite special charge, over and above the graduated rate schedule, is always exploited by a vast majority of the small loan industry. On the whole, this is not an industry of self-restraint.” Specifically, the feature opposed by these men would allow a loan company to force a borrower to take out credit insurance to protect the lender against loss in case the borrower dies or is hospitalized or becomes unemployed. It is a long established policy and, according to officials in the attorney general’s office, much abused. Martin De Stefano of the attorney. general’s office, using 1959 as the sample year, said loan companies in Texas profited by $26,444,000 from insurance premiums alone and profited another $9,743,000 from commissions. TV Protection “And this was two years after the Insurance commission had cut in half the allowable commission rate,” the said. “Before, the loan sharks would make commissions of 85 or 90 percent. It just shows the rates are still too high, but they would be allowed under the Cole and Korioth bills.” Davis called it “extortion.” De Stefano said one reason the rates are too high is that the sometimes staggering losses incurred by legitimate companies are used by the Insurance Commission to fix the rates for all companies, including the little flyby-nights that incur almost no lAss but benefit by the high insurance rates. Elmer McVey, an assistant attorney general, gave this example of how gimmick insurance charges are used to burden a borrower: A Waco man ‘borrowed $1,800 from a loan company, but got only $1,028 the rest going for the likes of life insurance, $38.88, disability insurance, $259.28, and “inland marine insurane,” $108. He said inland marine insurance had been described to him lay one loan official as “coverage in case your television set gets hit by a hailstone.” “In contrast to such charges, he said, banks and credit unions also supply credit insurance but do so at about 80 cents per $100, a rate that would also be available to most loan companies “if they didn’t simply want to use credit insurance as another way to gouge the borrower.” McVey said he recently talked with a stevedore who had been forced to take out an insurance policy against the risk of his union going on strike. “But his loan was only for six months and his The proprietors of the Texas Observer today announce the beginning of a renewed circulation campaign in an effort to boost subscriptions over 12,000 and place the paper on its own financially. “Our main concern is to put the Observer on a permanent footin,” Willie Morris and Mrs. R. D. Randolph, partners in the enterprise, said in a statement. “But our concern is also with the long-range future. We are convinced that if the Observer becomes a paying proposition, we will have helped prepare for a Texas daily in the St. Louis Post-Dispatch tradition someday.” A subscription drive last fall, conducted with the assistance of -Observer readers throughout Texas, increased readership by approximately 25 percent. “This was sufficiently encouraging to persuade us to continue publication for another year,” the partners said, “but the permanence of the paper remains to be seen.” At an Austin meeting of Observ AUSTIN Warnings of rampant atheism in Texas education and creeping communism in schools and churches were registered before the House state affairs committee this week as three representatives laid out their bill which would rekuire all public school and college teachers to take an oath acknowledging a “Supreme Being.” Reps. Oliver, Dungan, and Chapman testified that the play was being made before “captive audiences” and that atheism and communism are, if not Siamese twins, at least friendly cousins. Willie Morris d Before the long session was over, University of Texas students in the galleries staged a walkout and ministers who testified against the bill were urged “to pray to God to see the light and to ask forgiveness.” Opposition witesses, all clergymen and theologians, argued that the bill is unconstitutional, injurious to good teaching, and in conflict with American traditions of individual conscience and religious liberty. An apparently friendly subcommittee composed of Reps. Dungan, Lewis, and Watson is now considering the measure. “I’m the father of four children,” Rep. W. T. Oliver of Port Neches, a to-sponsor of the bill, said in the opening testimony. “I don’t recall anytime that I’m able to set my children down and hold their minds in a captive state for an hour and a half at any one time” like teachers ‘can. er supporters from all over the state last week, it was decided that the new subscription campaign would last until August 1 and that it would be divided into two, and possibly three stages. 1. In a “single-shot” attempt to double circulation, Observer readers are now apprised that they will receive in the regular mail not one, but two copies of the April 15 issue, with the request that each subscriber use the extra paper either to sell one additional subscription or to subscribe for a friend. The April 15 issue will have a large subscription blank on the front page. “Each reader is asked to begin thinking now, one month in advance, of the possible source of one extra subscription,” Morris said. “If every subscriber will come through, we will have doubled our circulation overnight.” 2.Beginning in late April, in an attempt to boost sales further, the paper will obtain the services of a circulation manager on an experimental basis. Although he will handle all phases of the statewide drive, he will be based mainly in one city, either Houston or Austin. He will be hired through the month of June. 3.As a possible third phase of the campaign, the community committees established by former editor Ronnie Dugger last fall would be re-activated for one final push. If the 12,000 figure is not reached by August 1, an appraisal would then be made to decide whether the Observer will continue to publish. At the Austin meeting, held in the Driskill, delegates reported that “personal contacts and telephone calls” were the most effective means of obtaining additional subscriptions in the last drive. Solicitations at political dinners and meetings were particularly fruitful, it was reported. Along with the April 15 issue of the Observer, letters will be mailed to members of the community committees asking their assistance in getting each subscriber to find another. Rep. W. T. Oliver of Port Neches argued, “All we’re doing here is letting the state step down and, if you please, meddle with our county governments.” The bill would confer upon a fire marshal “a tremendous amount of power,” Oliver complained. Other opponents contended that the measure would duplicate the present fire marshal law and that the duties of local fire departments would be superseded. Eckhardt argued that the bill had been trimmed down to meet reasonable criticism, that it was permissive and gave city fire chiefs the power to allow the county marshal to operate within city boundaries, and that the present law specifically excluded a county marshal from operating within incorporated limits, “which Obscenity Bill `Modernized’ By James AUSTIN Rep. Tom James of Dallas this week reached back to the now famous Samuel Roth case for guidance in shaping a bill that he thinks will be an appeal-proof weapon to use against hucksters of pornography. Via House Bill 441, the language of Article 527 of the penal code is brought up to date, with such terms as “lewd and lascivious” and “indecent” and “depraved” changed uniformly to “obscene.” Why? “We have taken out the duplicitous terms that have not been tested by the Supreme Court and sustituted ‘obscene,’ which has made the long trip to the preme Court successfully,” said James. While James and his co-authors have also expanded the coverage of the pornography law in a minor way, to include lewd phonograph records, it is aimed primarily at book and magazine distributors, “to make them police themselves,” he said. The impetus for self-policing was made stronger by the inclusion of stronger penalties, with a second offense for selling pornography “up to two years in the penitentiary and a $10,000 fine.” The case from which James drew his guide wording began in 1955 when Roth was indicted on 26 counts of trafficking in obscene literature through the mails and ended on June 24, 1957, when the Supreme Court handed down its verdict upholding this conviction on the grounds that the material. he sold could be judged obscene, that is, “to the average person, applying contemporary community standards, the dominant theme of the material taken \(Continued on Page AUSTIN A bill by Rep. Bob Eckhardt of Houston permitting counties to create the office of county fire marshal and another by Rep. Joe Cannon strengthening court action against air pollution were dismembered and defeated in the House this week. A stringently amended version of the Cannon measure was sent into a likely deep-freeze to the criminal jurisprudence commit’ tee, but Eckhardt won his only victory on a motion to lay his bill on the table, subject to 24 hour call. After the day’s voting, which provoked a heated exchange in a meeting of Harris County delegates later, backers of Rep. Charles Hughes’ industrial safety bill, another part of the session’s “safety package,” were pessimistic of ‘its chances on the floor. Eckhardt argued that his bill would be an indispensible safety measure in highly industrialized areas. The Houston ship channel is “sitting on a powder-keg,” he warned: “This is merely a means of providing cities perched’ on a tinder-box” the machinery to better fight disasters, he said. In the course of the House debate the Houston representative made ‘concessions on amendments, the final version providing that a county might be permitted, though not required, to hire a fire marshal with jurisdiction to establish and coordinate a county safety program and to investigate disasters. As originally offered, the measure would have empowered fire marshals to investigate possible disaster areas, but Eckhardt accepted an amendment providing for inspection only after fires and explosions occurred. OBSERVER BEGINS CAMPAIGN