The Washington times., 1911-08-03
The LOAN SHARKS AND
THEIR METHODS.

ing the business of loan sharks could
well be studied by our District
guardians who seem unaccountably
slow getting some protective legislation
for this city.
Massachusetts, act takes effect this
week, and is the elimination of careful
consideration and considerable legisla-
tive experience with this business. It
is the demonstration that legislation
on this subject is no wild experiment
in an unknown field. 1t is no foolish
interference with legitimate business.
1t is simply the effort to make usury
laws efficient, to give the poor man
decent chance, to stop one of the worst
kinds of oppression that is exercised in
our cities against the needy and the
ignorant.
The business is falling rapidly into
control of chains" of agencies in cities.
If borrower moves from one town to
another the agency in his new town is
promptly on his trail. Interest rates
actually earned are found in some
agencies to have run to 300 per cent
year. The heavy risks are found
much exaggerated; losses are really
very few.
Most of the loan companies extend
credit for amounts ranging from S. to
$50. For a loan of S. one pays in
several companies 81 per week for
seven weeks; for a $40 loan the pay
ments are ST per week for fifteen
weeks, or Sl.5O for ten weeks; for a
SIS loan 81 per week is eXacted for ten
weeks, and for a $40 loan, $3.50 per
week for ten weeks. The favored patron
whose credit is good for $25 pays Sl.sO
for twenty weeks, or 50 per week for
eighteen weeks. A $50 loan, which is
not often made, calls for three monthly
payments of $2l.6O.
The new Massachusetts law estab-
fishes a supervisor of loan agencies, and
gives him plenary power. After careful
investigation it was found that the
rate of interest could not be fixed by
the law, so provision was made that
it's maximum should be 3 per cent
month, but the State supervisor has
authority to regulate it. No assign
ment of wages by a married man is
legal unless Endorsed by his wife, and
in no case is an assignment good unless
accepted in writing by the employer OF
the borrower.
A common practice among the Mas
sachusetts companies, it was discovered,
is TO have the borrower make his note
for a larger sum than he actually gets.
Then the companies claim that they
are not technically loaning money, but
buying notes." This sort of pro-
cedure is not to be countenanced. In
order to prevent it the supervisor is
given full power to investigate all
books, papers, and accounts of the
agencies whenever he wishes, so that
he may know whether such transac-
tions are going on.
1t is a standing reproach to the
government of Washington that our
legislative authority seems unable or
incapable of dealing intelligently with
these problems of the modern, complex
life of cities. Congress contains few
experts in municipal affairs. 1t ought
to make the best use of those it has.
1t ought to seek the experience and
guidance of outside experts in city ad
ministration. These things it motor
iously does not do.
The Washington Times has vivid
recollection of a certain crisis of the
fight for cheaper gas in this city. The
Times hired one of the country's
greatest experts in gas business to
make a presentation of the peoples
case for cheaper gas, and paid him
500 a day.
And when he was thus hired and
ready to appear it was necessary to
beg and plead with the chairman of
the House District Committee-then
the Hon. Samuel w. Smith, late but
unlamented-to get the privilege of
putting this witness on the stand!
This affair of the loan shaTk legis-
lation has developed a very similar
situation. The Senate's debate the
other day showed how innocent of any
real, useful information are most of
the men whose votes will decide what
sort of a law on this loan question
Washington will get, or whether it will
get any.
This sort of government is bad for
the city and a discredit to the system
under which it is imposed.
HUNTING THE MOSQUITO