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the archeologistsand progress in civilization has been slow. But viewed over the span of years the advance toward the rule of law is clear. Through the ages the lawlessness of the jungle has gradually been replaced by order and the peaceful settlement of disputes. The early records of man show that the first unit was the family, that families banded together to become tribes, and tribes established communities, each unit developing a rule of law. In Europe feudal lords joined together for protection. Their individual authority over their followers was surrendered to a king in exchange for security and thus the law of the feudal estate was superceded by national law. In our country each colony had its own laws subject to the power of the British crown. The Revolution brought them together in a loose confederation, each state continuing to exercise almost complete sovereignty. It was not until our present Constitution was adopted that the separate states evidenced a realization of the necessity and a willingness to surrender power to the federal government over matters of national interest. To form a union, indivisible, a civil war was necessary. During this century there has been an increasing realization of the need of regional and world organizations to promote higher standards of living and to end the scourge of war. Each time a treaty is signed, a court established for the settlement of disputes between nations, or a union formed between two or more countries for whatever purpose, there is a surrender of certain powers by each nation involved in exchange for benefits to be derived from the agreement. Inevitably disputes continue to arise between nations. The rule of law means not only the settlement of disputes, but enforcement of settlements as well, and, as in communities, police are required. The individual surrenders his right to carry arms for security furnished by police. For world law to be effective there must eventually be national disarmament and a world police force. I said this conference on peace through law gave us cause for hope. I say this again because at the conference, representatives from 120 nations were in complete accord on the necessity of replacing force with law. But hope cannot minimize the difficulties that lie ahead. Progress will require agonizing efforts. The road, on which we must travel to convince the people that peace will only come through a surrender of sovereignty sufficient to settle disputes and enforce decisions, is long and rough. Again there is hope in that the history of mankind shows that as necessity has arisen, man has been willing to surrender rights to obtain security for his family and himself. The greatest danger of all time faces us now and perhaps this necessity will hasten the Rule of Law in time to save succeeding generations. THE URGENCY of the need places a great responsibility on those who believe in the rule of law as a means of bringing justice and freedom to the people of all nations. Peace through law can only be achieved when people are informed and demand action. The job of each of us is to make whatever contribution is within Comptroller Saxon So Rules Austin A startling ruling by the U.S. Comptroller of the Currency that national banks in Texas “may lawfully charge the highest rate permitted to any competitor” opens up the possibility, perhaps the probability, that the “small lender” rates up to 320% that the Texas legislature has authorized on small loans and the higher-than-banks’ rates provided for consumer finance companies may now be charged by the banks also. On Aug. 13, the Observer can report, Jack Adams, first vice president of the Austin National Bank, wrote James J. Saxon, the Comptroller, saying that until 1960 the maximum interest rates in Texas was 10%, and that while in 1963 the legislature passed a law legalizing higher charges on loans of $1,500 or less \(including very the law. Texas also permits credit unions to charge one percent a month on the unpaid balance of loans, Adams said. Adams called attention to a paragraph in the Comptroller’s Manual for National Banks that says, “A national bank may charge interest at the maximum rate permitted by applicable state law to any competing state lending institution.” Adams asked Saxon to “confirm to us . . . our understanding” that “a national bank in Texas can make loans of $1500 or less at the same rates of interest as are authorized by the Texas Regulatory Loan Act” of 1963 and for credit unions. Saxon, on Sept. 26, 1965, wrote to Adams that national banks making loans “do so exclusively under the authority of federal legislation. Therefore . . . a national bank may charge interest at the maximum rate permitted by applicable law to any state institution. . . . If . a national bank in Texas may lawfully charge the highest rate permitted to any competitor, including a lender licensed under the Texas Regulatory Loan Act, even though the national bank is not similarly licensed. Any provision in such Act which purports to exclude a national bank from its rights under federal law is inoperative and ineffective,” Saxon ruled in his letter to Adams. Sam Kimberlin, executive vice president and chief Austin lobbyist of the Texas Bankers’ Assn., wrote to his association’s member banks sending them copies of Adams’ and Saxon’s letters and observing: “This very important administrative ruling by the Comptroller of the Currency our abilities toward informing ourselves and others and assisting in the development of an intelligent public opinionand to continue to hope that there is yet time. affects current operations of national banks in Texas. Your T.B.A. office is studying its effect, if any, on state bank operations, but certainly it will ultimately be of benefit to state banks also.” As the Observer went to press this issue, these events and their apparently sweeping import for interest rates in Texas banking had not received attention in the Texas press. In Dallas late last month, the Dallas News reported, Leonard Passmore, secretary of the T.B.A., said that national banks may charge the higher interest rates set for finance companies, and that if allowed to continue, the resulting “disparity” between legal rates for national and state banks “would be ruinous to our dual banking system.” The News said Passmore made these remarks to the T.B.A. installment credit section at the Statler Hilton Hotel. However, apparently the News reporter misunderstood Passmore, for the story said that “In effect, Mr. Saxon stated that the Small Loan Regulatory Act passed by the Texas legislature two years ago does not apply to national banks.” The Saxon ruling, a copy of which the Observer has in hand, says just the oppositethat this 1963 Act does apply, as to its interest rates, to national. banks in Texas. Otherwise, the Observer’s staff have found no notice of these events in the Texas press. Gov. John Connally, having vetoed the 1965 legislature’s bill to give banks higher interest rates, asked the State Finance Commission to study and report to him on interest rates before the 1967 legislature. The News quoted the substance of Saxon’s letter to Adams, but the earlier inconsistency in the story cast doubt on its plain meaning. The News story \(which appeared am neither elated nor depressed by reason of the [Saxon] decision, but it is of supreme importance to the study of the finance commission which now is under way. I feel confident . . . that the legislature will correct the disparity that now exists.” Thus, two days after Saxon made his ruling, the Texas Bankers’ Assn. spokesman was calling on the 1967 legislature to pass a law to extend the 1963 law’s interest rates for consumer finance and small loan companies to state as well as to national banks. October 15, 1965 5 U.S. Banks in Texas To Get Small Lenders’ Same Interest