The Richmond palladium and sun-telegram. [volume] (Richmond, Ind.) 1907-1939, 1914-01-19
Harpooning the Loan Shark.


II came ont at a recent trial in Boston that
a loan company of that hub of culture had in
on]v four wears time realized profit OF $4,000
on an original capital of $1,000! That single
fact tells q irving story of hundreds of sweating
victims, doesn't it?
But we haven't anything on Boston. The
loan shark is still with us. OF course we passed
the well-known observation-disclosures Act last
wear but it doesn't seem to have done very much
good Investigations show that all its provisions
have been side-stepped in one way or another by
the smooth-fingered folks who run that kind Of a
business
The Fidelity Loan company, of Indianapolis,
has been making loans on the basis OF signed
note which appears, at first glance, to adhere
rightly to the letter of the law, but which proves,
on investigation, to violate it both IN spirit and
in letter And what that firm has done it is said
that dozens of others are doing every day OF the
year.
The Accommodating act provides that
no loan company can charge more than per cent
per month, but allows the right to
make an additional charge of per cent on the
amount remaining due when the loan is renewed.
The trick is, in order to get around that, to
make the loans for one month, and then to renew
them each month BY this plan the shark is
able to make his 3 per cent charge each
month during the entire time its victim is pay
ing it.
The receipts produced by one Indianapolis
man showed that he had paid more than so per
cent interest on a $50 loan which ran him ten
months.
1t seems exceedingly doubtful whether any
possible prohibitory law can avail to check this
sort of thing But that there is way of stop
ping it is now declared by Julius Rosenwald,
Vincent Astor, D. E. L. Gould and Andrew Car
negie.
These men, who are worth, in the aggregate,
nobody knows how many millions, have been
working at plan which they hope to use against
the loan sharks. Rosenwald has spent several
months in Europe studying the way they do it
there and is convinced a remedy be had.
Briefly put the plan advocated by them
is to establish a chain of small banks over the
country, which will make small loans to work
ngmen who give proof of good character
They reason on the assumption which the late
j. P. Morgan held to, that character is as gooc
security property.
A chain of banks is now operating in Italy
which makes loans as small as ten dollars. Ros
enwad says it is working like a charm
This is not form of charity. On the con
trary, sufficiently high rate of interest will be
charged to return per cent to the investors
But all earnings over ana ABOVE lndI VIII De re
turned to the borrowers in decreased interest
on the loans.
Gould and Rosenwad argue that the plan i
no mere hypothetical scheme, but has already
been quietly tried out here. They must know
what they talking about, because such mel
are not Missionaries and know what finance is
We will hope they know what they are talk
ing about, any how, because it would seem tina
some such method as this will alone succeed i,
driving from the ranks of civilized society
type of human vulture which has never beer
surpassed for cold, calculating cruelty and TO
heartless rapacty.
But even if the plan is feasible, as we hope
it is not plain to why the present method o
banking may not be expanded to do this sam
work. If small bank do it, why can't
department in big bank do it? Why is Their
need of duplicating machinery when hav
all the machinery need in operation now?