consumer credit that they have always assigned another set of reasons as to why they should have this control over the private citizens' right to use his private credit.

At this time there is no reason assigned for the extension of the authority by the administration or the Federal Reserve Board, except the contingency of changed economic conditions at some time in the future. We don't know what that would be. And our principal point on this phase of the question is simply this: That the Congress alone has authority to enter into this area of regulation, and should not thus lightly delegate that authority to any administrative agency. Just in support of that thesis, let me point out that twice in the last 3 years this Congress has found it necessary to curb overextension or abuse of authority by the Federal Reserve Board-once when you passed an act terminating regulation W controls, and then again last year when you placed the 18 months' floor under the authority of the Federal Reserve Board.

Now, then, the pressure is on again from industry across the country to terminate regulation W controls, and in the light of this consideration by the Congress now we have a suspension.

I would like to point out that if any national emergency should occur this Congress would be in session. I don't think there is any doubt about that, and you can immediately restore any proper control, although we would sincerely hope that any new type of control over consumer credit would be of an entirely different type than that which has heretofore been used in regulation W, but certainly it is unwise to delegate stand-by control authority under these circumstances.

I listened this morning to the statement made by ex-Senator Myers on behalf of the National Foundation for Consumer Credit, and I would like to say for the record that we endorse the sentiments expressed by the National Foundation for Consumer Credit through ex-Senator Myers, and I have read the statement which he submitted and we concur in the arguments which they propound.

So I doubt if I should take further time now to go into the discussion of the economic conditions. I believe, Mr. Chairman, and members of the committee, that you are sufficiently familiar with them to appreciate the fact that there is now no occasion justifying a control of this type.

I would like to comment, though, upon another angle: that you cannot, under any circumstances, regulate buying habits of the public by consumer controls.

That has been argued all the way through the last 10 years' experience, that you could regulate buying habits.

Take the example that happened last year. The Federal Reserve Board, you will remember, vigorously opposed relaxation of terms to 18 months. All their dire prophesies of impending doom never took place. There was no sudden spurt or upsurge in consumer credit outstanding after terms were relaxed.

As a matter of fact, the trend has been the other way, and we have seen a downward trend in outstandings in consumer credit ever since the relaxation from 15 to 18 months.

Another thing: Savings increased. There is purchasing power in the country adequate to buy, but buyers are not going into the market place to buy their goods, and I point that out as an illustration of the argument for which we have contended for years; namely, that

you cannot regulate buying habits through these consumer credit controls.

I think it is quite obvious to this committee that these controls are extremely discriminatory and un-American in principle.

Senator Myers was talking about rationing by the pocketbook. I would like to emphasize that point, that under regulation W provision, the wealthy and those with cash are not restrained in any respect whatsoever in going into the market and buying any type of durable goods or soft goods that they want to buy. It is only the middle and lower income groups who are restricted by a regulation W-type of regulation, the hard-pressed families and the workers who produce the goods that they are restrained from buying.

All your other regulations do treat everyone alike, and if there are burdens to be borne, in the name of patriotism and the common cause of defense, the burden should rest equally upon all classes of people. Mr. COLE. Equality of sacrifice.

Mr. SELBY. Equal sacrifice upon all persons; yes, sir. And this point is becoming realized.

There used to be many people who went along with the theory of regulation W. Labor organizations, for example, were for it at one time. But you have heard, before your great organizations of workers speaking out against, I need only to mention the United Mine Workers, the American Federation of Labor, Brotherhood of Carpenters and Joiners, International Brotherhood of Electrical Workers, and more recently, the CIO and other labor organizations.

Industry, I think, is united-that is the employer industries of the country, manufacturers as well as distributors.

Now with the labor organizations and the credit grantors, it is practically a unanimous voice of industry in opposition to the controls. Why should there be a regulation over the right of private individuals to make private contracts with merchants and leaders? The family purchasing power, the family purchasing requirements, and the borrowing procedures are of endless variety.

Each transaction must be tailored to the individual needs, conditions, and capacities. Families are not regimented classes. They should be afforded an opportunity for free choice, and experience has demonstrated that consumer credit is a better risk as commercial loans than foreign debts of the commercial banks.

The individuals who make up the public at large have proved in countless personal transactions that their good judgment can be relied upon. They are not overextending themselves. They do not need a Government inspector to supervise their day-to-day living.

In proportion to income, people are now using less consumer credit. than they did in the prewar days. And I would like to emphasize. that, in attempting to regulate personal buying habits; the Federal Government is stepping into a field where it does not properly belong, and cannot function.

Neither the Federal Reserve Board nor any other administrative bureau can operate effectively and efficiently in this field. There is always a time lag between the incidence of the trend and the compilation of statistics 2 or 3 months later. You are always too late, I don't care whether it is the Department of Commerce or the Federal Reserve Board or any other bureau, you are always too late in measuring the trends and changing the regulation.

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Theoretically, consumer credit controls are supposed to be flexible. But we have seen an illustration in the last 6 months of where they have carried on with the regulations beyond the point of danger.

It may well be argued that the Federal Reserve Board has now demonstrated that it is flexible in its dealing with this question of regulation W controls. I would like to reemphasize what Senator Myers emphasized this morning: that suspension at this time-last week is only proof of a thing that industry has been claiming for the past 6 months, and that they are too late, always too late, in shifting from one position to the other.

This Congress should retain a control to meet that situation if conditions do change. And so we contend that in the light of experience, and on the record, this authority should be deleted from any extension of the Defense Production Act, leaving the control authority, if it should become necessary, in this Congress.

I would like to develop the thesis, just for a sentence or two, that consumer credit is a necessity in this country. We are not dealing with a matter of choice. We are dealing with a necessary element in the living habits of the American family. It undergirts the outlet, production, and distribution and consumption system at the very point of consumption, and from the standpoint of industry and from the standpoint of the consumer, these personal transactions of individuals, private transactions, should be left free to be tailored to the income pattern of the family.

The record will establish another fact: that we have never had a change of as much as 1.5 percent of the consumer purchasing. We never had a change in consumer credit outstanding that amounted to as much as 1.5 percent of the consumer purchases in the United States, in any year, even in the sudden upsurge of consumer credit after the World War, and after the incident of the Korean situation.

In our particular segment of consumer credit, our loans are not inflationary because the great majority of them are simply refinancing of ordinary store bills and professional accounts and other obligations of borrowers, which simply shift the obligation from a number of creditors, over to one creditor, where they are budgeted out on a monthly installment payment basis. That can't increase the obligation in any sense. So we end with this thesis with which we started: that Federal control of consumer credit should be abolished, and no stand-by authority should be granted. If the time comes that it is necessary to reimpose it, you could do that within a week. And our people would go along with it, if it would seem to serve any good purpose in a time of great national emergency. That time is not here now, and it is not foreseen any time in the near future.

I would like to emphasize again that consumer credit controls do not, under these circumstances, contribute in any way to the war effort or the defense effort, and have no place in a peacetime economy. So we would like to urge upon you that all authority for continued regulation be deleted.

Incidentally, I would like to leave with you the thought that while you are striking out title VI with respect to consumer credit controls, you might as well clean the record and get X out of the books too, and just strike out the whole of title VI.

Thank you very much.

The CHAIRMAN. What is the average size of loans your institutions make?

Mr. SELBY. Well, in $300 ceiling States, the size of the loan runs around $190 to $200. That is the average loan made.

The CHAIRMAN. For how long a time? What is the average amortization period of those loans?

Mr. SELBY. The maximum term that has been permissible under regulation W is 18 months for the purchase of any durable goods, but the amortization period runs about 15 to 17 months, in those States.

In some States they permit a $500 maximum loan, and in those States, when it levels out, over a period of 4 or 5 years, you find that the average loan is over $200, $200 to $250, depending upon the character of the State.

The CHAIRMAN. What are the usual interest rates?

Mr. SELBY. They are fixed by statute. In Massachusetts the maximum rate is 2 percent per month. In Ohio it is 3 percent on the first $150 and then 2 percent on the next $150 and two thirds of one percent per month up to the maximum ceiling.

Those rates vary from State to State, they are fixed by actuarial standards, reviewed by every session of the State Legislature, and calculated to return a net return of 6 to 7 percent to the industry.

The CHAIRMAN. What are the entire assets of your member organizations?

Mr. SELBY. That would be a guess, if I were to attempt to answer it. We did a volume last year, of $2.5 billion, total loan credit granted, and we have outstandings of loans on our books of about $1.275 billion today.

The CHAIRMAN. Do you operate in every State in the Union?

Mr. SELBY. No, sir; we do not operate in every State in the Union, because we operate-the members of our associationoperate only in those States which have adopted the uniform small loan law, in whole or in such substantial part that they are strictly regulated. We do not accept as members in our association companies who operate in unregulated States.

The great Commonwealth of Kentucky is a regulated State. The State of Michigan is a regulated State. Kansas is not a regulated State. That is the answer. We operate in 35 States.

The CHAIRMAN. Are there further questions?

Mr. GAMBLE. I would like to ask a question.

The CHAIRMAN. Mr. Gamble.

Mr. GAMBLE. Since the suspension of regulation W, there has been no great upsurge in installment buying, that was talked about as being in prospect if that should come about; is that not correct, sir?

Mr. SELBY. That is correct, and instead of their being an upsurge in buying you heard the automobile dealers this morning, and the appliance dealers, and the department stores are still telling us that sales are lagging, and if they can break even on dollar volume this year they will be happy to do it.

The profit margins are less, and the unit volume, of course, is substantially down from what it was some time ago.

Mr. GAMBLE. Isn't that borne out, too, by a lot of the advertising you see in the papers, particularly in the last week? "Come in and

buy a television at reduced rates," and so forth. I think that also follows for automobile dealers."

Mr. SELBY. That is true. The fact of the matter is that these stores are so overstocked with inventory that they will usually use almost any method to level down to a point where they can carry the inventory a little more conveniently from a financial standpoint. Mr. GAMBLE. Yes.

Mr. SELBY. I think that the records show that inventories of goods. in this country now are over $70 billion. The last figure I saw was

$71 billion, which is the highest on record. The CHAIRMAN. Mr. Nicholson.

Mr. NICHOLSON. Most of your small loans, in my State, I think, are for sickness. Have you any breakdown on that?

Mr. SELBY. Well, I have breakdowns of figures all the way through. As a rule

Mr. NICHOLSON. Isn't it the same in most States?

Mr. SELBY. It follows a general pattern, but it isn't that high. The largest single category is the consolidation of debts, which runs nearly half of the total loan volume.

Usually the combined medical, dental, and hospital bills, lumped together, run from 22 to 25 or 26 percent of the total volume of loans made. That is the usual practice in the States.

Mr. NICHOLSON. In my State we have a $300 limit loan.

Mr. SELBY. Well, of course, under a $300 ceiling you cannot finance automobiles.

Mr. NICHOLSON. No; I don't think they finance any automobiles. I don't think they finance any of these things from small loans. Most of it is for sickness or medical bills.

Mr. SELBY. Yes; there is a larger proportion of emergency and necessitous loans in that kind of a State.

The CHAIRMAN. If there are no further questions, you may stand aside.

We are glad to have your views.

Mr. SELBY. Thank you.

The CHAIRMAN. The clerk will call the next witness.

The CLERK. The next witness is Mr. C. L. Austin, president of the Jones & Laughlin Steel Co.

The CHAIRMAN. You may proceed, Mr. Austin, and you may insert any pertinent matter you desire into the record.

STATEMENT OF C. L. AUSTIN, PRESIDENT, JONES & LAUGHLIN STEEL CORP.

Mr. AUSTIN. Gentlemen, my name is C. L. Austin. I am president of Jones & Laughlin Steel Corp.

I believe that each of you gentlemen has a copy of the statement that I propose to make before you.

I am here today to present some of the general aspects of wage and price controls as I view them. But most particularly I propose to comment on how the administration of these controls has broken the trail to the dark morass into which the steel dispute has fallen.

Mr. WOLCOTT. Mr. Austin, perhaps you answer the question in statement, but is the position which you take in your statement generally that of the steel industry?