St. Paul daily globe. [volume] (Saint Paul, Minn.) 1884-1896, 1894-02-22
USURIOUS MONEY LOANS.
CHA TTEL MORTGAGE PRACTICES IN
MINNEAPOLIS, y

MINNIE fFOLf
A SAD STATE OF AFFAIRS.
twenty-five Hundred and Eleven
Mortgages Taken in 1898 at
Extortionate Rates of interest
Placed on the Personal Effects
of Poor People-Remedy Sug-
gested by Powers.
Labor Commissioner Powers has for
some time been engaged In looking up
them% mortgage loan business of various
cities. He has completed his lnvestiga-
tons in Minneapolis. and makes a sad
showing OF eXtortions practiced upon
the poor. Following is a portion of his
report concerning the Flour City.
The instruments on file in the city
clerks office, of Minneapolis, and hav-
ing the legal force of chatlel mortgages.
are very diverse in their character and
description. They, however. divide
themselves into two broad, general
classes, first. those given to secure pay
'ment Of borrowed money. and second,
instruments executed to secure the cost
price of goods purchased. 1t is. how
ever, impossible to separate these two
classes with any absolute accuracy.
also loan money Oil chattel security, and
make use of the same kind of instru-
ments in the two classes of business.
Again, some dealers, in selling goods
on credit, make use of the same form of
chattel mortgage that Is en-
payment of borrowed money.
In an effort to separate from the rec
ords in the clerks office the two kinds
of business more or less errors will
arise from faulty classification. Some
instruments will be classed with those
given to secure borrowed money when
they properly belong with those given
to secure the cost price of merchandise
purchased. The reverse of this will
also be true. The same element will
also be found In other and further sub
divisions of the chattel mortgage bust
ness 20 which attention is here directed.
But as a rule the possible error of CLASH
fication is small or can be approx
mately estimated, and hence, for prac-
tical purposes, the bureau Of labor con-
siderS these subdivisions as substan-
TALLY correct unless modified by special
statements or estimates.
Of chattel mortgages given to secure
the repayment of borrowed money there
are two classes. those at extortionate or
usuriOuS interest and hose at legal in
terest. OF the instruments on file in the
city clerks office in 1893 there were of
those that can be said to be eXtOrtionate
2,211. The mount of the face of inStru
mentS of tthlS character was $50, $1,000.
The estimated amount of money Sc
cured on this security was approxim-
ately $50. 600. This statement is based
upon answers to a II the money borrow
ers of this class who were found. In
nearly every case it was found that the
mortgage was for ten per cent greater
sum than tho money received from
the money dealer. The average amount
Of each mortgage was for $40 40, and
hence the average loan secured a trihe
over $50. The instruments on tile
to secure this class of usurious
loans state the time of the loan at
one month or are silent concerning the
same with few exceptions. The only
way approximately to ascertain the
average ordinary life Of those usurious
loans is by a study of the satisfaction Of
smaller loans OH file. The average of
OUCl SoLlOlaCLlOlo L o.fO lllOtIthSs HIS
is doubtless a little below the average
usurious loans. The average must
therefore be not far from four months.
OF 2.2TI known usuriOus loans, 1,445. or
two-thirds, were secured oil household
goods; 100 On musical instruments; 1893
OIL live stock, wagons, etc; e on mer-
T chandiSe. aud 25S on miscellaneous
articles difficult to classify. OF the in
struments, 9l3 state no rate of Interest:
2 give 8 per cent, and S49. give 10 per
cent. The satisfactions were 1868 in
number. and renewals were "a. These
rates stated in the instruments are not
the actual rates collected.
OF chattel mortgages to secure loans
and not positively known to be eXtor-
tiOnate in their interest charges there
were in 1893 about the same number as
Of the known usuriouS loaus. The
known usuriOuS loans being 2,211 in
number, and the others 2.171. These
latter involve an Indebtedness of S515,-
S45.06, the average amount covered by
each of these instruments was S237.61,
and the average life of these insIru-
ments was $3.50 months. These 2,171'
debts were secured upon The following
classes of property; 593 upon household
goods; 81 OH musical Instruments;
741 on live stock, carriages, ETC.,
80 on merchandise; Is on farm machine
cry, and u on miscellaneous articles.
In this, as to the proceedings class
when musical instruments are men,
toned as security in the same instru-
ment with household goods, they are
ciassed with the latter. OF these 2.171
instruments 997 do not state the rate of
interest; 2 give the rate at 3 per cent;
4 at 4 per cent; % at 5 per cent; 55 at 6
per cent; 125 at z; 371 at 8. and 479 at 10
NOR can't and OF Unrn rpnaxUalc of old
mortgages. The sa~tiSfactionS were tab
ulated with the other instruments.
or these z, III instruments not known
to be with uSurious interest, probably;
from 800 to 500 instruments are really of
the same general nature with those of
known uSurious interest. Calling this
number the larger estimate, which is
above the actual number of such eX-
~tortionate instruments not known to be
such, we reach the conclusion that the
number of extortionate loans made in
Minneapolis in 1898 was substantially
{, Zoo, involving loans of a little less than
500. 000. The face of these instruments.
however, would represent an amount
not far from S110, 600. Allowing an
average life of four months, Or a trif1e
over, for these e~Xtortionite loans, we
reach the conclusion That in the making
Of the 500, COO of uSuriouS loans II Min
neapOlis in 1898 there was invested a
capital of from $50, 600 to $40, 600. This
investment melted the owners a sum
about equal to the principal.
The nswers of some of the victims of
these extOrtionate loans say thai in the
opinion of these parties it will injure
| the poor who desire loans, unless by
bringing into the field more capital to
be loaned on chattel security. This
opinion the buleau Of labor believes to
be essentially correct. The problem of
how to free the poor from the eXtortlon
of the money loaner is hen the follow
| ing: How can more money be secured
to be loaned, and how much will be
needed to practically end .eXtortionate
Joaus ammo tha DnOr nf cuoh a oItv