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Banks, Too? Big Firm Influence Aired House Approves Redistricting Plan the big out-of-state companies to set up shop more widely in Texas, Reavley said probably so, “especially in the big cities.” Asked if the increased competition might riot force many small-loan companies out of business, Reavley said he doubted if “many” would be squeezed out, but that “if a company has to have several hundred percent interest to stay in business, I don’t know that society is obliged to keep them in business.” Reavley said Hudson must have ill feelings toward him, “but I don’t know why.” As for Hudson’s attack on Clark, that, he said, went back to an old enmity, “something to do with Hudson’s father-in-law, Gov. Moody.” Look Back in Anger The letter mentioning Clark’s part in the loan shark fight was written on the stationery of Dallas law firm Locke, Purnell, Boren, Laney & Neely, signed by J. L. Shook, addressed to “the members of Texas Consumers nance Association,” and told of a day-long meeting of Clark, the lawyers for Household Finance, and an attorney for Beneficial. The meeting was held Nov. 22, 1960. In Hudson’s eyes, Reavley and Clark are continuing teamwork they started last fall with the big loan companies in pushing the constitutional amendmentpushing it in a way which Hudson still describes with anger. Hudson tells it this way: At that time he was president of the Valley Chamber of Commerce. Customarily no C of C group endorses a piece of legislation unless all of the regional organizations do, he said, and Hudson persuaded his Valley group to hold out, not endorsing the constitutional amendment. Then, according to Hudson, last summer while he and his family were in the East vacationing, attorney-lobbyist Clark came to the Valley and talked the chamber directors almost into changing their mindsHudson: warned of what was happening, hurried back and argued the directors into re-changing the course of their thinking. Lacking the endorsement of the Valley Chamber, Hudson said, “Clark, Reavley and Abner McCall \(executive vice-president of name anyway, as though we had endorsed it, in the pamphlet they \(The Texas Committee to Elimi”Well, I telephoned McCall and said we’ll sue you if you don’t withdraw our names, and he was all apology and said they would, but that was only three days before the election and the damage was done.” Whether the pamphlets helped, whether mentioning the Valley Chamber in the pamphlet helped, or not, the constitutional amendment passed. Reavley, contending that the Valley Chamber under its previous president backed their work, shrugs off Hudson’s accusations on this score as of no consequence. While Hudson implies that an alliance with the big loan companies is enough to make a legislator suspect, Cole, author of the bill, is far from offended by their support. In fact, he is heartened by it, and without directly impugning Hudson’s motives, he mentions that “Hudson does come from the same area as Judge Arthur Klein, who in the past has been mighty influential with politicians from that area in regard to pro-loan shark legislation.” Klein is a former district judge turned lobbyist. Hudson heatedly asserts not only his independence of loan sharks but downright opposition to them. “They have always opposed me in my campaigns,” he said. “I fought the repeal of the 10 percent ceiling because I thought the amendment was dishonestly presented. I oppose allowing the sharks 40 percent interest, as this bill would allow them, because that is too much.” Other Protests But Hudson is not the only one who has helped shunt the bill away from a floor debate for more than a month, and his reasons are not the only reasons House Bill 7 is opposed. Other opposition comes from Sen. Charles Herring, Austin, who has never been accused of being a friend of the loan sharks. He told the Observer the bill should not regulate loans of more than “$500 or maybe $750.” It is written to cover loans of up to $3,000. He predicted that banks, which the bill does not now include to benefit by the higher interest rates, would attempt to have themselves included if the loan ceiling in the bill is left at or near $3,000. Banks are indifferent to making small loans. Herring said he would go for the bill if it didn’t cover loans of more than $750, “since it’s really the small lender that gives the attorney general’s office trouble.” Herring said most states have regulations for small loans of under $600. B_ets on It Rep. Cole reluctantly said he might be willing to see the ceiling compromised to $1,500, but he feels it ought to be at least that high to cover the many loans made for used car purchases. Echoing Herring’s sentiments was Sen. Bill Moore of Bryan, who however has at times been accused of -being a friend of the shark. Moore told the Observer: “I’ll bet you a coke the banks are brought under this bill before it leaves the committee.” He said “the biggest banker in this state called a banker in my hometown to pressure me into getting them included.” He also thought the bill should not regulate loans of more than “$500 or $600.” Moore charged, “This bill was written by the loan sharks.” Elmer McVey, head of the small loan division of the attorney general’s office, was asked what he thought of Herring’s complaint. He said: Liberties Union Barred from School HOUSTON The Houston School Board, taking its cue directly from the American Legion publication, “Firing Line,” refused this week to let the American Civil Liberties Union use a school auditorium for a speech by Patrick Murphy Malin, executive director of ACLU. The motion approved by the board was to deny the use of school facilities to any organization “whose thinking is not in keeping with that of Houstonians.” Leon H. Schofield, chairman of the central council of the American Legion posts in the Houston area, said the school board had acted wisely. Ben Levy, president of the Houston chapter ACLU and an attorney, said he might file a taxpayer’s suit to force the board to let his group use the school facilities, but Malin said he was against it. “There is a good argument for that. I feel confident they’ll change that provision in the Senate. Hazen \(Laredo senator and me he was going to propose a $1,000 regulatory ceiling. I said to him, why not leave it at $3,000 but leave the Interest rate at 10 percent for loans over $1,000. I want the big lenders in there too, so we can go in and look at their books and regulate them. We don’t have as much trouble from them, but they need regulating.” As for Moore’s protest, McVey smiled. “Have you seen the loan shark bill Moore is proposing? Have you seen his Senate Bill 421? Not counting all the various loopholes it offers the loan companies, not counting all the fringe benefits, it would allow an interest rate of 72.6 percent a year on a $100 loan carried a year. On a $10 loan, paid back at the rate of $3.50 a week, his bill would permit a per annum interest rate of 770.30 percent.” Prediits Shock While Cole’s interest rate comes nowhere close to that allowed by Moore’s bill, it is still enough to prompt the Corpus Christi CallerTimes to editorialize this week: “Most uninformed Texans are going to be shocked if small loan legislation now under consideration by the 57th Legislature is enacted into law. They will not know that an effective rate of 20 per cent a month on a loan of $10 and 40 per cent a year on a loan of $100 is being proposed. … At best it will but legalize what has long been recognized as ‘usury under the Texas Constitution.” McVey, whose men will bear the brunt of enforcing whatever law is passed, is not so pessinilstic. “Well, it’s not exactly the bill I’d like, but it’s a good beginning.” The central quarrel in all this is again whether or not the “winner” in the bill that is finally passed will be, or should be, companies specializing in loans of $5 to $100 or the companies specializing in loans of $100 up. Although three out of four of the legislators interviewed by the Observer don’t know what’s in the bill, all of them know this much about the loan shark fight. Two Licenses The division is pretty clear. As with Cole, Rep. Malcolm McGergor, El Paso,’ who helped draft the bill, also concedes the big companies favor the type of regulation featured by HB 7and he includes both in-state big companies and out-of-state big companies that want to come into the state. It is to “save” the little companies from crushing competition that Kazen has a couple of amendments ready to slap on the bill. One of his amendments would set up two licenses, one for companies making loans of more than :1;100, the other license for companies making $5 to $100 loans, and prohibiting a company from having both types of licenses. The present bill would require only one license for any size loan-makin g. The small-small loan companies thrive on their Latin American customers in Kazen’s district. Companies specializing in loans of under $100 contend they can not survive on an interest rate as low as that offered by the Cole bill. Says McVey: “I know. I’ve heard that sad story. I know they think they need several hundred per cent interest to stay in business. But the fact of the matter is, this bill allows about the same interest allowed in more than other states, and loan companies in those states stay open.” ple will start leaving like people abandoning a sinking ship. Just as certain as two and two are lour, the efficiency will. decrease, riots will be a daily threat, and the cost of one or both will far exceed ‘the additional money requested.” The’ House refused to revive the escheats bill despite Daniel’s threat of a special session if the measure is not passed. The vote was 72-60. Hughes, a perennial sponsor of the frequently defeated legislation, asked that the earlier 79-69 defeat of the bill be reconsidered. “I am not asking for another vote on the bill,” Hughes said. “I just want to call back the other vote and put it on the calendar where we can consider it another day.” The House approved by a lopsided 143-4 to give public school teachers an $810 pay increase. The bill goes to the Senate, and the sponsor there, Sen. A. M. Aiken, has warned he will not bring it to debate until the $144 million needed to finance it is at least in sight. Rep. DeWitt Hale of Corpus Christi, arguing that Texas ranks 42nd in teachers’ pay, guided the measure through a tangle of amendments which would have cut off state aid for counselors blocked the increase for principals and superintendents \(Har$600 \(two amendments by Jones by Woods of Waco raising salaries only $234 with various bonuses was also defeated. A House redistricting bill supported by the Speaker’s committee and most liberals and moderates was finally approved by voiee vote after a complete substitute offered by Minton Murray of Harlingen and backed by most House conservatives was turned back, 73-64. The Murray version would have gerrymandered more liberals and moderates than the bill which was passed. Murray’s measure would have given El Paso and the Rio Grande one more place than provided in the committee bill. The measure, as approved, would pit these representatives against one another next summer: Thurmond Wheatley, Heatly Ehrle, Curington-Ronald Roberts, Price-Glass, Martin-Crews, Fairchild Burgess, Bailey Gibbens, Adams Chapman, Cole Turman, McCoppin Bass, Shram. Pieratt, Moore-Barnes, and Struve-Butler. The Senate state affairs committee voted out, 11-5, the 88-mile Padre Island bill previously passed by the House. Sen. Bruce Reagan of Corpus Christi beat down an amendment by Sen. Hubert Hudson of Brownwood which would have required the federal government to build access roads on the island before the legislature approves. Hudson warned he would take his amendment to the floor. Sen. Bob Baker of Houston said, “Hubert knows the road isn’t practical. The federal government isn’t about , to build a road under those conditions and he knows it. If we make that road a condition, we aren’t going to get the park.” A compromise bill liberalizing unemployment insurance was passed to third reading in the House and was to come up for final vote Friday. Sponsored by Korioth, the measure would raise the weekly maximum benefit from $28 to $3.3 and extend the maximum period of payment from 25 to 30 weeks. The federal government will help subsidize payments up to 39 weeks. Korioth also got a provision through which would base payments on 65 per cent of a claimant’s average weekly wage rather than 50 per cent. He was unsuccessful in an attempt to strike the “one week waiting period” requirement. Rep. Bob Johnson of Dallas actually offered as a substitute the basic bill which was adopted, but a number of modifications finally persuaded the sponsor that his own bill had not been seriously damaged. One of the liveliest issues of the session, Red Berry’s horseracing proposal, failed to draw a quorum before the House interstate cooperation committee, to which his HB 777 for a statewide opinion poll had been referred. Berry had the option of asking for another hearing, but he said, “No. I didn’t particularly want this one. I just wanted to see how many preachers showed up.” In other developments, the House-passed bill authorizing 10-2 jury verdicts was approved by , the Senate jurisprudence committee. With a minimum of debate, the Senate passed and sent to the governor a House measure raising to the constitutional limit of $47 million annually welfare payments to the blind and the aged. . The Senate also passed a bill allowing voters to abolish the job of county school superintendent in counties where the job carries no duties. George Corse of Graham, who has been campaigning three years to do away with the unnecessary position, was closer to victory than he had ever been. Sen. Babe Schwartz of Galveston, Senate sponsor, predicted the House would pass the bill. The House Friday passed Henry Grover’s bill reducing from 24 to 12 the number of required education hours for teaching accreditation. As’ the Observer went to press Friday, Sen. Bob Baker fought off renewed filibustering and won final passage of his bill making