The Washington times., 1911-07-31
WHY NOT A MUNICIPALLOAN'
ING AGENCYi

interest, IL per cent per month, was
too high. One Senator, Mr.. MARITIME, in
sisted that 8 per cent a year should
be the limit. Even a limit of 6 per
cent year was urged; and one sug-
gestion was that strict laws, strictly
enforced, against usury would serve the
purpose best of all
First, as to the rate of interest to be
permitted. Bank rates cannot be i'm
posed on this business Banks loan, not
their own money merely, but that of
their depositors. A bank with 500, 900
capital and $l,OOO,OOO deposits makes
its profits out of loaning the deposits,
not the capital
The loaning agency must do its busi-
ness on the capital alone. 1t does not
receive deposits.
Banks insist upon and get class
of security that the loaning agency
cannot get. The law requires banks to
insist upon such security as is utterly
impossible IN chatteI loanlng.
To require that the same sort of Sc
curity should be given for chattel loans
as for bank loans, would in itself put
the chattel agencies out of business.
Enforcement of ordinary usury penal
ties would have the same effect.
Is chattel loaning to be regarded as
legitimate business, to be regulated,
controlled, and subjected to reasonable
conditions; or is it to be set down as
illegitimate and subjected to conditions
that must ultimately suppress it en-
tirely?
We think the answer is manifestly
in favor of the legitimacy of the bust
ness. In the present complexity of So
ciety, the uncertainties of the mans
relation to his job, there are times in
the experience of proportion, all too
large, of individuals and families, when
the privilege of a loan is absolutely
necessary. The whole social fabric win
have to be made over before this con
dition is eliminated.
Moreover, it is demonstrated by all
experience that if loaning is made ille-
gitimate it will be carried on with the
increased risk and costs incident to its
illegitimacy, and the borrower who is
square" will pay the additional costs.
Experience of philanthropic or semi
philanthropic loaning bureaus and of
municipal undertakings of the kind has
formed basis for judgment that 2 per
cent a month is not an unreasonable
rate The business is an expensive and
more or less dangerous one.
Washington is widely regarded as a
peculiarly fertile field for this sort of
business, because there are so many
working people who borrow in this way,
and who are forced, by the nature of
their employment and the tenure of
their positions, to be scrupulously care
full in meeting obligations. 1t is, there
fore, possible that a rate of / II per
cent might suffice in this town, while
| in other cities it would be insufficient.
In short, there are so many local
and peculiar conditions to be met, there
is so apparent all innocence of detailed
knowledge of the problem among the
members of Congress, that it seems
worth while to suggest the solution
which has been tried with success in
many other places; some in this coun-
try, many abroad. That is the muni-
cipal loaning agency.
The experiment would provide, first
of all, fund of experience on which
Judgment could be formed and model
piece of legislation framed. 1t would
be in line with the most advanced social
experience and thought. 1t would, with
out doubt, serve the purpose of keep
ing rates within moderation, and pre-
venting extortion from the ignorant
and helpless.
The whole course of this loan shark
legislation has been at least peculiar
There have been from the beginning in
timations that a powerful lobby is at
work to prevent any such law passing
that national organization of loaning
agencies is putting money into the fight +;
that political influence has been enlisted
in most unusual and unexpected quar-
| ters.
All in all, the situation is not a
pleasing one to contemplate. While
all accomplishment is blocked, the un-
fortunates of the city are going on,
paying their and per cent a month,
compounded, as has been shown in some
cases, at unconscionably short periods
sapping the energy and hope out of peo-
pie who most need fair chance.
Legislation is needed, and it seems as
if the municipal loan agency would be
an experiment we'll worth the trying
Why not?
NEW YORK ENCOURAGES
I