The Washington times., 1911-07-08
SAGE FOUNDATION
AGENT URGES TWO
PER CENT ON LOANS
A. H. Ham Says Sharks
Should Be Allowed That
Interest Per Month.

This question has been causing trou'
bic at the Capitol and has been respons-
ible for the failure Of Congress to enact
any remedial loan legislation at this
session.
Today The Times is able to present an
authoritative statement on the issue. it
is from Arthur H. Ham, agent of the
Russell Sage Foundation, who spends
all his time establishing philanthropic
loan agencies and encouraging State
legislation.
Mr.. Ham says the rate should be
per cent a month, and he backs up his
statement with evidence obtained
through personal observation and ex-
perience. This was the rate specified in
the original loan bill, prepared by the
committee of the Monday Evening Club
two years ago, and passed by the House
year ago. This rate was vigorously
onDosed by the loan sharks" on the
ground that 1t was ruinously low. Now
it is opposed by several members of
Congress on the ground that 1t is too
high.
Gives Reasons.
just why this is a proper rate and
why the bill should be passed are force
fully explained by Mr.. Ham in the fol-
lowing letter, written at the request OF
The Times:
To the Editor OF THE TIMES:
There seem to be two distinct sources
of objection to the so-called loan shark
bill now before the Senate. This bill
is designed to raise the rate on small
loans to 2 per cent. per month under
the supervision and control Of the Com
missioners. Opposition is encountered
on the one hand from the loan sharks,
Of whom there are more than 100 in
Washington, who are satisfied with the
present law limiting the rate to 6 per
cent. per annum, but providing no
penalty for its violation, and who do
not desire the law limiting the rate OF
"a per cent. per annum under such su-
pervision and control and so severe
penalties for violation that the con-
tinued charge Of the present rates of 200
10 500 per cent. would be dangerous.
The bill is also opposed by a few
people more or less influential, who.
while desirous of improving loaning
conditions in the District, apparently
have lost sight Of the fact that tenn
porary financial crises among wage
earners necessitate the borrowing Of
money, and having no banking facilities
friends in better circumstances or upon
the small loan agencies.
when people need money they will
find others ready to loan II, with or
without the sanction Of law, but II the
practice is made unlawful. dangerous
and disreputable, the risks and discI ed
II which attend 1t will surely be made
the basis for increasing the charges
many States show conclusively that 1t
is impossible to suppress the small loan
business by dratic law, that the prob
lem now before the Dittrict is not to
prohibit the practice, but to regulate
It, and keep 1t within proper limits,
thus preventing the extortions which
have, up to this time, been practiced on
the small borrowers.
Should Be Legalized.
"The only way to cut down the exac-
tions in the small loan field seems to
be to legalize the business. and make
II reputable, safe and reasonably prof
liable, but to impose restrictions and
to exercise strict supervision and con-
troll. By this means honest capital will
be attracted to a business largely dis
reputable at present
THE experiences of the remedial loan
societies that have been formed offer
an opportunity to borrowers to obtain
money in time of need at reasonable
rates, show that per cent per month
is the proper rate.
1T is true that several remedial loan
societies now opera ting have reduced
their rates below per cent per month.
This has been made possible, however,
by the accumulation Of surplus OBJ
tained before the rates were reduced
and by the limitation of dividend to 6
per cent per annum.
1t is interesting to note that of
twenty-five States legislating on this
subject this "ear, in only one has de-
termined effort been made to enact a
law limiting the rate to per cent.
Most of the others have recognized the
need for allowing an equitable rate. In
New York, New Jersey, Missouri, Mich
igan, and several other States, laws
have been enacted allowing loan COM
panies to charge per cent per month
under certain conditions. In Massa-
chusetts the Legislature has evinced a
very intelligent interest in the subject
BY empowering the joint committee on
banks and banking to make an eXhaus-
tive investigation into the workings of
small loan laws.
This investigation resulted in the in
PRODUCTION of bill requiring all loan
companies TO become licensed and come
under the supervision Of a State super
visor of loan agencies, to whom is given
the power of fixing the rate that may
De charged within a maximum Of Sc per
cent per annum, and by making other
regulations for the conduct of the bust
ness as he may see fit
Senator Burd's Bill
This bill is similar to one introduced
present session by Senator Burd, of Buff
talo, and in my opinion is the nearest
approach to model law that has YET
been drafted.
The support that has been uniformly
accorded the loan bill OF the District
bv the press of Washington and by the
large numbers Of civic and social asen-
Cjes and individuals who have openly
supported the bill ought tC convince
doubling Congressman that the bills ad-
hereuts are not directly concerned in
the passage OF Law enabling money
lenders to make a profit, except that
borrowers be protected.
IF the law does not allow a money
lender to do business honestly, and at
n reasonable profit 1t is practically GER
tain that in response tc the great need
for small loans. money-lenders will ex-
act illegal interest and in proportion
as the laws Of the locality in which
thew operate are drastic and unfair the
rates Of interest charged and the
business methods adopted will be ccr-
respondinglv eXorbitant and unjust.
In the opinion of most students of
this subject ii will be a grave =nisfor-
tune II the District bill in its original
form allowing per cent per month is
not passed by Congress.
81 desire to commend the policy of
The Times in supporting this bill and
hope IL will continue to urge the mat
ter Very truly yours,
ARTHUR H. HAM. agent.