The representative. [volume] (St. Paul, Minn.) 1893-1901, 1894-09-12
WHAT CONSTITUTES USuRY
AN INQUIRY AND AN ANSWER
The Tricks of the Money-Lenders
to Avoid the Law.

l nave received the following letter:
NEW LONDON, Mimi, Aug. %, '94.
HON. IGNATIUS DONNELLY.
Hastings, Mimi.
DEAR SIR:-A friend has asked me
10 refer to you question of legality
OF certain bank loan, taken by him,
and though this question has been an
sWered through the columns of the
REPREsENTATIvE," l will give the
particular incident. The loan was
taken for three months, with chattel
security, the note when given was for
an amount which would equal twenty
SIX per cent per annum.
My friend does not know, but sup
posed, the bank will claim the extra
sixteen per cent for making papers,
recording etc, and wants to know if
IN this case the amount loaned being
500 (flfty dollars), would be considered
extortion, or if the transaction is per-
1ectly legal, and the debt collectable.
Very truly yours,
w. D. ANDREWS,
Upon the receipt of the foregoing
letter | sent it to Hon. r. A. Walsh, of
st. Paul and received the following re-
ply which | publish because it will be
OF interest to the people of the whole
state.
ST. PAUL, Mimi, Sept. 1, '94.
Hon. lGNATIUs DoNNELLY,
Minneapolis, Minn.
Yours requesting reply to your
correspondents letter Of inquiry to-
hand.
The case stated briefly in this.--a
farmer makes application to a Bank
for loan Of Fifty dollars for three
months. and offers as security certain
chattels; the loan is accepted and
note secured by mortgage on the
personal property is taken by the
Bank from the borrower. In addition
TO the highest rate permitted by law
Ten per cent per annum-a bonus or
charge of -Four dollars is deducted
from and retained by the Bank for
making papers, etc, that is, for draw
ing the note and mortgage and filing
the same with the town clerk. You
ask IS this note and mortgage usur-
ious and therefore void
Ii the farmer and banker. after
they had agreed upon the loan, should
and he should, without any collusion
with the Bank, charge -Four dollars
for preparing the papers and having
them filed, and the borrower should
agree to pay him that sum, there GER
talnly would be no usury in the trans
action, notwithstanding that the
charge for the service might be eXces-
sive: but if. on the other hand the pa
pers were prepared by the Bank and
the charge for drawing them was a
mere subterfuge to evade the Statute.
the note and mortgage is usurious and
void and cannot be collected
Usurcrs resort to all manner of
schem to clothe their transactions,
so as to cover up the usury features,
but the ears invariably can be seen
sticking out in spite of the cloak.
The Supreme Court of Minnesota.
in the case of Dade-vs--Spaulding
81, Mimi, 800 Ga late case) says,-"If
transparent contrivances Of this sort.
to evade the statute, meaning
charges for commission, viewing prop
erty, drawing papers, etc., should
prove effectual, the administration of
the law would fall into deserved dis
repute.."
this State have for some time past
been deciding these usury cases more
III dtCOiuducc Will Tue SplflU OF the
statute, than they did formerly,
brushing aside many of the fimsy
preteXts resorted to by these uncon-
scionable eXtOrtioners to cover UP
their nefariouS traffic.
The amount of suffering inflicted on
the unfortunate and needy by this
pernicious business is beyond compre-
hensiOn
| believe you are the author Of our
present usury law. None of the many
measures. the passage Of which you
have had the honor of securing. does
you more credit than this Yours
very truly, r. A. WALSH.