Delaware gazette and state journal. (Wilmington, Del.) 1883-1902, 1885-09-10

FIVE INSTEAD OF SIX.
The Citizens LOan Association
Lowers the Rate of Interes,.

|
Lowers the Rate of Interest.
! The Citizens Loan Association last
evening closed its fifteenth year and
started on its sixteenth with an innova-
tion which is regarded as the most impor-
tant in the history of loan associations in
this city--the reduction of the rate of
interest, paid and received from G per
| cent to per cent.
Amendments to the bylaws embodying
this reduction had been offered at the
preceding monthly meeting, and, accord
ing to rule, came up last night for action.
These amendments were three in number
applying the reduction to the interest
paid by borrowers, to the interest granted
on prepaid dues and to the interest paid
ON Withdrawals.
There was large attendance uf stock
holders and the propositions, which were
considered as unit, were discussed nj
considerable length before vote WIS
taken, George w. Stone and Charles
McClosliey championing the opposing in.
terests. The lines were practically drawn
between the borrowers and the investors.
the former favoring and the latter com
batting the amendments. On behalf of
the latter it was urged that the innova
tlon would be tantamount to breach of
faith, as the investors had put their money
into the concern upon six per cent basis
and the proposed action would operate to
deprive them of one-sixth of the income
Justly due them in the present and to
defer for relatively increased interval
the maturing of their shares and their
coming INTO their principal.I 1t was further
argued that as theprofits of the association
now hardly meet the legitimate demands
upon it for interest, current expenses.
losses by depreciation of mortgages or
otherwise and other unavoidable outeoes,
the reduction of the interest rate would
be attended by an awkward deficit.
To this the advocates of the measure
replied that the proposed reduction
promised to work benefcially in two
ways-by attracting new members and by
encouraging borrowers to pay higher
premiums. The association has recently
been disposing of its receipts at from one
or two per cent down to par. Reduce the
interest rate and new borrowing members
would come in, competition would be
aroused and the premiums which loans
might be expected to bring would prob
ably make up or more than make up the
loss in interest. 1t was also stated that
NNS w bSb cent
outside was influencing borrowers to re-
turn their loans to the association and re-
place them with funds borrowed on the
street.
This brought up the question what is
the prevailing rate of interest in this COM
mtlnity; some placing it at five per cent
while others declared that this was only
an exceptional rate on larse transactions
and that it was impossible to negotiate
loan of 81 900 or under for less than six
per cent.
AT the close of the discussion the
amendments were adopted by rising
vote of Is to IL. This action was followed
up by the offering, by Mr.. Stone, of n
resolution giving investing member, who
may wish to withdraw, until the LIST of
january next to do so Mt the old 6 per
cent rate; which resolution goes over
until the next meeting.
An amendment reducing the seeretary's |
salary from $500 to 5000 per annum was
voted down without dissent.
The sales of money after the meeting
included some $4,000; 800 at A per
cont and the balance at par.