"There's really no way to go in there and break the system except to tackle it from several different angles. You can try to educate these people in consumer consumption. We can try to establish some credit for them and by doing this maybe eventually you will draw them away from this peddler. But you have to supplement something if you're going to take them away. There has to be something."

"You have to have a substitute for the system that they now have?" "That's right."

"One thing we could certainly begin to use is the store front churches. The store front churches personalize their feelings, particularly their emotional and psychological feelings with the newcomer. I feel if we have any chance, it is through the store front churches with a minister who is from the same area and who speaks the same language. I feel that we are not utilizing the same techniques to fight this as the peddlers are using to perpetuate it. I feel if we do make a dent in it, it will have to come from the store front churches and social workers.

"The store front preachers have got to go from door to door preaching, the same way that the peddler goes from door to door selling.

"The store front churches have little kitchens in the back. Now, he could go out and buy quantities of meat, with a dollar a piece, if they got 20 members. They could prepare this meat in the store front churches and they would save hundreds of dollars over a period of months. This has been done in Philadelphia, in Los Angeles, and in Texas. It works. But they have to put as much effort in it as the people who do wrong are. It's not going to work if you don't do it this way."

"I understand what you're saying, but only someone who has been into this area and has lived with these people and knows them, could understand this problem. In our area these people trust no one. They don't trust the preacher, the bishop only that guy at the liquor store."

"That's right. This guy to them is God. You could not walk in that bar and say one thing against it because hundreds of people flock there-people from other places. You can do anything you want-you can sit down, you can play gin, you can play black jack, you can play poker, you can do anything you want to. If you beat your old lady up, the cop won't come. You think I'm exaggerating, but I'm not lying about it."

"Well, you made a solution very easy. If this is their focal point, then all you have to do is destroy that place."

"You're bucking the millionaires. This fellow is a millionaire who owns the place. You're not bucking a ten cent guy on the corner."

"He's not bigger than the Federal Government."

"No, he's not bigger than the Federal Government, but by the time the Federal Government gets there and finds him, the people there will be dead. Their kids will be dead."

"You see, you're talking about the same thing that happened in other cities. The same thing happened in Dallas, Texas, the same thing happened in St. Louis, and it has been corrected."

"You're missing the point. If this is what their whole life is based on, then all you have to do is destroy that one thing."

"Before they closed Pete down, the little store front church gets going. They have a play ground, a pool table, they have shuffle boards. All these things prepared, before they close Pete down."

New Voice

"I'm talking about a whole city. I'm talking about a population of 750,000 people."

"They built another project on the outskirts of town."

"No, these were army barracks, they put them in and moved everybody out of the district and put them over there."

"You tell these people that they have to live in army barracks, they live in the shacks, the rats are running with them-"

"I'm talking facts."

"Don't tell me what you're going to tell these people. You can't say, we're going to tear this area down. You have to live out there in the street. You have to tell them something, right?"

"That's right."

"You tell them they're going to live in army barracks, and you're going to be run up and down the street and cut 97 times."

"You can't tell me what you tell these people. You can tell them in San Fran cisco, but you can't tell them down here."

"I know what I'm dealing with. I know these people in this area. I know them all. First name-kids, mother, grandfather, all. We were born in North Carolina together. I came up a litter earlier because they ran me out. But I got here, and they came behind me. But I know them. I know the families. I even know the horses' names. I can't get to them and I go to them with information."

"But you don't have a replacement. You see, you're not destroying any thing and you're not replacing anything. How many people are there? How many families live in this area? I mean just roughly. Say 400 families?"

"Oh, no. You're talking small."

“All right, let's say 10,000 people are there."

"They told these 13,000 people, 'We're going to build a project on the West side. Everybody here is going to have to move out because we're going to destroy this whole area and it's going to be a business section from now on. We're relocating you as of June 1st.'"

"We're talking about these people being solely dependent on the peddler and his outlets. I'm saying that we can break this vicious circle by destroying the source of this peddling, and replacing it with a better source. I'm saying that we can do this, with the help of the Federal Government, particularly with urban renewal. If we replace this with the store front minister, particularly with a person like yourself who now knows how to be money wise, and who is part of these people, and who can speak their language, by using you, we can destroy this infested nest that exists there and put these people in a different surrounding where we'll have constant leadership and dedicated leadership, the same as a peddler has."

"In order to be able to get to these people, they must have confidence in you. Now, the reason all these people are in this particular area is because they were forced in there. They moved all the people from the East side, they told them, we're going to move you out, and we're going to build low-income houses, and we're going to let you come back after it's finished. They built $160 houses. Nobody that moved out can afford to move back. Now you go over there and try to tell them you want them to move again, that you are going to put them in another place and build something over there. If you don't get chased up and down the street, I'm sorry. They have been fooled and they don't believe anything. It's hard to get to them. That is why they have lost confidence in everybody except that loan shark. He's the only one that's doing what he said. He says, 'You come in, you pay me this time, I'll let you have some money next week.' They pay him. He loans them money and that's their friend. It's hard to break them away, it's hard to break this barrier. We have a problem that I don't think exists anywhere else. Ours is bad, because at first, the people were fooled. They were told they would be able to move back. The lowest apartment is $120. I know people over there that pay $160. The low-income people that moved out of this area have been relocated. The property started to deteriorate. There are rats and roaches. This is what they're living in now. And it's hard to get them out, because they only pay a low rent, but at least they have their friendly service, they have a shopping center, they pay twice as much but at least they get what their material needs are, and they have a little luxury, they go to the bar. It's hard to reach them. This is a problem that we don't know how to solve." The CHAIRMAN. Of course, the truth-in-lending legislation will take. care of one of the problems you mentioned, would it not? Mr. O'BRIEN. Yes, sir.

The CHAIRMAN. And if the education program is coupled with truthin-lending, you will have made a great impact upon this problem, won't you?

Mr. O'BRIEN. We have, yes, sir.

The CHAIRMAN. You mentioned the inadequate receipts which the poor get and the customary failure to disclose the total cost of the merchandise.

If at the time of making a purchase they were to receive a receipt disclosing how much they were paying for the merchandise, do you feel they would be inclined to exercise a right of cancellation in many cases?

Mr. O'BRIEN. Yes, sir.

In many cities that we have been in we have asked that question of some of our trainees, and, as I stated, most of them don't know the total cost of the merchandise.

If they get some sort of a receipt that showed them the total cost of the merchandise, I think they would cancel out. They have given us evidence that they would.

(Facing this page is a sample of the type of receipt sometimes provided in the low-income areas. It was furnished at a Project Moneywise session in San Francisco.)

The CHAIRMAN. You have mentioned, and I have read about this in the past few months, that in many cases people buying at stores which advertise greater discounts find that they pay more than if they went to a regular discount store or a regular store. Is that correct? Mr. O'BRIEN. Yes, sir.

We have done comparative shopping trips in each city our program has been in, and in these comparative shopping trips into the lowincome area where the poor shop

The CHAIRMAN. Of course, in those cases they have gone to the store. I think there was some study made in the District with regard to grocery prices at one time. I remember reading about it.

You mentioned that your study did show that when the door-to-door prices are compared with those charged by retail merchants in the low-income areas for the same merchandise, the door-to-door prices were higher mainly?

Mr. O'BRIEN. Yes, sir. In Boston we did a survey, and the newspaper in Boston, the Boston Globe, took some of our students and did a survey. The newspaper paid for the merchandise that the students purchased over a period of time, and then the newspaper went out and priced this same merchandise and found that it usually was three times more than in the reputable store.

The CHAIRMAN. Have you any questions?

Senator MORTON. NO.

The CHAIRMAN. Thank you very much. The committee feels free to call upon you for such information as you may have, Mr. O'Brien. Mr. O'BRIEN. Thank you.

The CHAIRMAN. Mr. Williams, are you here?

I see that you are from Washington, and I wonder if it would be inconvenient for you to testify tomorrow. Could you do that?

Mr. WILLIAMS. Yes, sir.

The CHAIRMAN. We have to go over on the floor on another very important matter. And we have Mr. Caplovitz who is a professor at Columbia University. I would like to accommodate him. If you can come tomorrow, I would appreciate it. We will have you on first tomorrow. Professor, I am glad to hear from you.

STATEMENT OF DAVID CAPLOVITZ, PROFESSOR, COLUMBIA UNIVERSITY, NEW YORK, N.Y.

Mr. CAPLOVITZ. Thank you, Mr. Chairman.

In the past few years we have seen a growing concern on the part of Government with the problems confronting American consumers. For all too long the interests of consumers have gone unprotected with the result that consumers in all walks of life have been subjected to crass exploitation by unscrupulous merchants. It is most heartening that efforts are now being made to redress the balance. I welcome this opportunity to testify on S. 1599, the Door-to-Door Sales Act, for in my opinion this act will do much to eliminate the abuses associated with direct selling, abuses which my own research has convinced me are especially likely to be inflicted upon the lower income groups of our society.

Door-to-door selling has expanded rapidly in the past decade or so, its growth being part of the general growth of consumer credit in our society. Although S. 1599 covers all transactions of $25 or more, I par ticularly welcome the protection it offers to the person who buys on credit from door-to-door salesmen. Through the institution of credit, door-to-door sellers are able to foist enormous debts upon their customers for expensive durable goods. Whether the would-be buyer can afford the purchase is largely irrelevant to the eager salesman intent upon obtaining the customer's signature on a sales contract. It should be noted that door-to-door selling of expensive merchandise undermines completely the conventional process through which consumers decide to commit large portions of their income to expenditures.

Typically, before deciding to make a major purchase, the American consumer has been engaged in a period of deliberation and consultation. The purchase itself is apt to be the outcome of a more or less rational assessment of need and resources. Door-to-door selling reduces this deliberative process to a minimum at the same time that it maximizes what has been called "impulse buying." It is quite one thing to buy an inexpensive trinket on impulse, and quite another to assume a debt of several hundred dollars or more in this way.

Door-to-door credit selling as it is now carried out, particularly in low-income areas, often involves the most unscrupulous of sales practices. It is quite common for low-income residents to respond to a bait advertisement announcing an unusual bargain in some appliance-for example, a sewing machine for only $25. The salesman who is sent to the house to demonstrate the product uses all kinds of high-pressure techniques to convince the housewife to purchase a much more expensive model, the $25 now serving merely as the down payment on a $200 machine. The poorly educated housewife has few resources with which to resist the blandishments and promises of the fast-talking salesman. Once the salesman gets the housewife to sign the installment contract, he quickly disappears, never to be seen again. It is only then, when it is too late, that the housewife comes to regret the purchase, realizing that she has been taken in by a high-pressure salesman.

In most instances, the credit salesman simply shows up at the door unannounced. The housewife has no idea when she goes to open the door that a fast-talking salesman awaits her. One of the tragedies associated with this mode of selling is that it frequently leads to tension