Evening star., 1914-04-12
Interest Charges Sometimes
Exceed 200 Per Cent, Says
Citizens Chairman.
ExT0RTION is OBSCURED
BY METHODS OF PAYMENT
Monthly Periods for Small Install
ments Make Total Receipts Far
in Excess of Amount Received.

W. II. Baldwin, chairman of the citi-
zens' committee working to enforce the
loan shark" law, last night made pub
lie some figures showing how the loan
sharks" operate to obtain interest charges
of 100 per cent. $50 per cent and 200 per
cent or more.
Mr. Baldwin expects to appear before
the House District committee Tuesday. at
the hearings on proposed new loan
shark legislation. 1t is expected that
he will then explain in detail more of the
lenders methods.
''It may seem surprising to those who
do not know the way in which the loan
sharks operate" said Mr. Baldwin. that
people should be foolish enough to pay
rates of 120 per cent. 40 per cent. 200
per cent or more per annum Probably
they would not be so foolish if the loan
was made at such or such rate of in
terest, as it is for larger loans at bank:
but the loan shark never does that, and
puts the matter in such a way that the
borrower never knows what rate he is
paying.
Installment Methods Evil.
Practically all of the thousands OF
loans by which borrowers have been
taken advantage of are to be repaid in
so many payments of a fixed amount
each month. and it would puzzle many
intelligent people to determine what rate
of interest these payments involve.
For example. as to an instance re-
ferred to in The Star, where a man got
$3.50 and agreed to make five monthly
payments of 81 each. amounting to $3J,
the rate is 222 per cent per annum. which
is about the rate he had actually paid on
each of four prior loans which he had
paid up
The calculation is as follows: He
pays back the principal $3.50, in five
monthly payments of $3.50 each. All the
rest that he pays is interest, $3.50 in all.
The interest for one month at per cent
per annum on $40 is SCOOPS, and at l
per cent per annum it is S0.OO375. These
monthly periods run from one up to six
for the six payments, making fifteen
monthly periods in all. and the total in
terest at 1 per cent per annum would
be soO0575 multiplied by 10, or 0.05625;
that is, SIS cents. Dividing this into the
Sl2O actually charged shows the rate to
be I'D per cent per annum.
Negro Woman Mulcted.
In another case a negro woman got
SIS and paid six monthly payments of "a
each, or s24. The 50 interest amounted
to 20S per cent per annum, but she did
not know 1t. The monthly payments
looked small, and she wanted the SIS. SO
she was drawn into the arrangement.
The loan shark knew. and 1t has been in
order to secure this tremendous profit
from people who are foolish or helpless
that he and those like him have been
violating the law.
In no other way than by making it
criminal ohense to take more than rea-
sonabie rate of interest can these weak
and ignorant people who are in need be
protected.
1T is evident that with several such
loans the ordinary borrower is incapa-
Bile of telling what his rigths are in any
settlement. 1t is. therefore. again urged
upon all those who owe any of the loan
companies. or who have made any pay
ments to them since March g. 1913, to
take in to the office of the corporation
counsel all papers. and all receipts for
money paid. in order that they may be
fully informed as to their rights before
making any payments. They are for
tunate in being allowed to do this with
out charge.
In many cases where the money
lenders are demanding payments it will
be found that they owe the borrower
something, when all is figured out