THIS STUDY HAS three main purposes: to present statistical characteristics of the market, service, and institutions of the small-loan industry in Texas; to describe and analyze regulatory laws of the state which currently apply to the industry; and to present principles of small-loan regulation as a suggestion for essentials of a small-loan law for Texas. During the last forty years the small-loan industry has developed into a national and major source of consumer credit. State legislation and supervision have done much to guide the industry's growth on an ethical basis. However, the loan-shark problem still prevails in states without adequate small-loan statutes. Texas has no small-loan act, and loan charges exceeding an effective annual rate of 200 per cent are not uncommon in the state. In consequence, Texas has been described as a paradise for loan sharks. Ironically, the state usury law is both the source of strength for abusive lenders and the major barrier to legitimate lender operations. A provision (adopted in 1876) of the Texas constitution limits interest to 10 per cent per annum. Nation-wide experience indicates that this rate is insufficient to induce capital investment in the smallloan industry. Thus the usury law has prevented legitimate lenders from fully competing with loan sharks collecting exorbitant charges. Today, two types of lenders operate in Texas: the certificate lender and the unregulated lender. The latter type uses various lending devices to avoid usury regulations, such as the open note plan, the brokerage plan, the supplemental charge plan, and the credit insurance plan. On the other hand, the certificate lender group is composed, in general, of ethical lenders operating according to provisions of the Industrial Loan Law (similar to an industrial banking or Morris Plan act). Statistical data for 1957 provided by the Texas Consumer Finance Association indicate that a certificate lender's loan office will make an average number of 1,274 loans, totaling $607,920 per year. While between 84 and 96 per cent of certificate lenders' assets consist of