The Bridgeport evening farmer., 1909-11-13
RUNNING THE
 UsURER OUT OF BUSINESS

The Remedial Loan Movement Seeks to Establish a Reasonable Interest Charge-The Success of Existing Povident Loan Associations. ARTHUR 1T. HAM.
 Russell Sage Foundation. New York. CExclusive Service The Survey Press
 Bureau)
 Nearly every city has its problem of regulating the loaning of money on security not accepted by ordinary banking facilities. Such business may be conducted as pawn broi<ing, chat tel loans or salary loans. While many cities are not yet alive to the condi- tions existing within themselves. the desire is fast spreading to regulate this type of money lending and to af- ford loan facilities which will meet the financial difficulties- Recent investi- gatiops have shown that most of the loan companies, with which every city is flooded, operate In open violation of existing laws. extorting charges that are excessive and using business meth ods that have a strikingly baneful ef- feet upon the individual and the com munity. A definite economic need and ignorance of laws on the part of the borrower combined with secrecy, mis-
 
 the part of the lender, bring about a situation under which a great majority of loans become not a benefit but burden upon the borrower and his family.
 To be sure. not even one who falls into the usurer's hand is deserving of pity Some borrow to spend foolishly; this Is especially true of the unmarried man who assigns his wages as secur- ity. With the average man of family.
 
 call for extraordinary expenditures me- cessitates the borrowing of money. Many attempt to prevent nl-adyised borrowtns and dishonest lending must comes from genuine and pressing needs. The borrower will not take ad- vantage of laws framed for his pro- .tection; his wilful ignorance. his fear of publicity and his indifference to the nature of the papers he signs consti- tute the loan mans stock in trade. The latter makes it hard to prove us- ury by making out his papers. in such a way that 1t appears that the borrow CT has received almost as much as he pays back The loan shark has pros pered. not because of lack of laws, but because he satisfies a need
 A comprehensive remedy by lcgis- lation alone cannot be obtained Az tempts to solve the problem in this way In several states have proved that further restrictions result only in more sinuous practices on the part or the lender and a more submissive atti- tude on the part of the borrower. The remedy must be sought in another di- rectfon-a combination of philanthropy ic competition and wise. constructive legislation- The only way to put the loan shark out of business Is to com pete with him and under-hld him; to supply a better service at a reason able rate. To provide for this com petition there should be legislation al lowing a reasonable interest charge, for money cannot be loaned on non annum. The reasonable rate seems to be somewhere between 1 per cent. and per cent per month
 Many states already have such law and the experiences of the sixteen rem edial societies now operating show that much good can be done by lending money at low rates. Such a business Is a safe investment for capital and affords a reasonable return. Among these societies are: The Prevalent Loan Society of New York. The Workingmen's Loan Association and the Collateral Loan Company of Bos- ton, The Chattel Loan Association of Loan Company of Cincinnati. The work of the Society of Savings in Washington, D. C., is particularly in teresting. Hampered by a law limit ing interest charges to a rate under
  society has raised s25.oo0 capital and braving the odlum of nlegality by charging per cent. per month, 1t Is now taking business away from the seventy-five loan sharks of Washing ton to the extent of $235.000 a yearS Because of its iliegality the society finds 1t difficult to iniist sufficient cap ital to meet the demands made upon it and 1t now proposes law which may we'll be copied by other states This proposed law. legalizing the rate of per cent per month. will attract the capital of reputable citizens and stimulate wholesome competition which will ultimately result in the re- duction of the interest rate to per cent a month. It provides for li- cense and bond of not less than s5,00o to prevent violation of the law and frequent Inspection of the books at the hands of the District Commissioners The bill has the endorsement of Elk President Roosevelt, many members of Congress and leading business men of washington- It will be introduced at the next session of Congress and if passed will enable the remedial loan society to perform a service at req sonabie rates now carried on by un- scruplous men at the average rate of I2O per cent, per annum-
 In June. 1908, representatives of fourteen of these remedial societies met in Buffa1o in connection with the National Conference of Charities and Correction They declared. We are desirous of promoting the work In