The Washington times., 1911-08-05
MR.. LEONARD'S FRANK LET
TER ON LOAN COMPANIES.

| -'AA" O' - HASoANCAS VI VIZ
League of Remedial Loan Companies
of the District, in a communication to
Senator Pomerene of Ohio, frankly dis
cusses some of the aspects of the loan
business in this town. We can COM
mend his frankness in exposition more
than his skill as an advocate.
Mr.. Leonard points out that the pawn
brokers are limited to per cent a
month, yet they get security; the loan
ing agency, he urges, getting no sch
security, certainly ought not be re-
stricted to a lower rate; therefore, the
minimum proper rate for the loaning
agencies ought to be per cent.
A very fair statement, provided the
pawnbrokers' rate is not already ex-
cessive. 1t would be we'll to investigate
that question and learn if in fact, from
interest paid and from sale of un-
redeemed pledges, the pawnbrokers do
not enjoy unconscionable profits.
Here is the most remarkable para
graph in Mr.. Leonard's statement:
We have in Washington approximately
100 loan companies or individuals en-
gagged in the business of loaning money,
lending in excess of the code rates, with
an aggregate capital in use of. say.
S2,OOO,0OO. OF this 100000 considerably
less than $l00. 900 is loaned at a monthly
rate of per cent: perhaps $2OO, 900
brings an average rate Of 21a per cent.
and approximately 500, 900 is loaned at
per cent, and the remaining $4,000
1t is believed, is placed at rates ranging
from per cent a month upward.
Mr.. Leonard assumes to speak for
the loan business as conducted by the
most reputable and reasonable agencies.
If his argument is to have any weight
it must be assumed that he knows
whereof he speaks when he deals with
the statistics of the business.
Therefore some marveling may be in
dulged at the frank declaration that
three fourths of the capital engaged in
this form of business is loaned at rates
ranging from 5 per cent a month up
ward.' Certainly that is an admission
which points to the absolute necessity
for reform, drastic and effective Mr.
Leonard does not agree with the ex
treme views of Senator Pomerene, and
neither will other peoIh familiar with
this business and conditions surround
ing it. But on the other hand the
Leonard statistics make the case in
favor of rigorous reform, both of pawn
brokers and loaning agencies, stronger
than ever.
Loanng at 5 per cent is in most
cases a positive disaster to the person
who may feel himself accommodated by
the loan. 1t is inevitably conducive to
thriftlessness and makeshift business
methods. We would like to know from
Mr.. Leonard what proportion of losses
are sustained on these ) per cent loans,
and what rate of annual return on capi-
tai thus engaged is earned.
Certainly it would be possible, by
legitimatizing the business, by provid-
ing registry of loans, requiring assign
ment of wages, etc, it would be pos
sible to make the security enough bet
ter to justify heavy cut in such Shy
lock rates as these. Suppose by i'm
posing such conditions lot of the bust
ness is destroyed? What of it? 1t
is good public policy to discourage
people from borrowing money at such
rates. 1t means in most
cases only a postponement and an ac-
of the disaster that must |
come to the borrower.