The Detroit times., 1914-11-13
PLAN
OF LENDING TO
WAGE FARMERS
Officers Of Industrial Finance
Corporation Make Appeal to
Detroit Capitalists
STRICTLY A BUSINESS
PROPOSITION" THEY SAY
Both Stakeholder and Borrower
Profit Under Morris System
Loan Sharks Eliminated

Clark w. Williams, OF New York
city. and Arthur ]. Morris. OF Nor
folk, Va. president and vice-presi-
dent. respectively. OF the Industrial
Finance Corporation. an organization
formed for the purpose Of extending
the Morris plan" Of making small
loans to wage-earners at legal rates
Of interest and under conditions cal
culated to make them independent
OF the loan sharks, are In Detroit for
the purpose OF interesting local
financiers In the establishment Of
one OF their banks In this city.
They explained their system at a
luncheon in the Board Of Commerce,
at noon, Thursday. Several promin-
emit bankers and other capitalists
were present.
The plan Is the child Of the brain
Of Arthur ]. Morris, who has been
working to find some method Of
combating the "loan shark" evil for
I, the last 15 years and who founded
his first Morris plan" bank five
years ago.
"The purpose OF the Morris plan
banks Is to furnish worthy persons
who do not enjoy the privilege Of the
culinary bank, means Of borrowing
money In times OF need at the legal
rate of interest, repaying the loan
| In installments suitable to the earn
ing capacity Of the borrower, thus
giving relief to thousands who, with
out this assistance. would be left In
financial distress, and, at the same
time, eliminating the so-called loan
shark" said Mr.. Morris to The
Times, Thursday morning.
"The second purpose OF the insti-
tuition is to encourage the spirit OF
saving, and the third is to. furnish
the contributor Of the capital with
safe and profitable investment.
This Is the way we are organi-
zing:
For instance in New Haven, We
issued capital stock Of 1000 shares
of the par value Of 800 a share.
This stock was sold to subscribers
at $110 a share, creating capital
of $4,000 and asurplus OF $4,000
for organization expenses. The sur
plus derived from the earning Is
credited to this stock. making its
book value and, on this book value.
dividend of not to exceed six per
cent. is paid. BY this method
book value OF the stock continues to
increase and, as a result. the annual
dividend to the stockholders 10 In
creased proportionately..
THE earnings Of the institution
are derived from the interest charg-
ed to borrowers on their loans.
These earnings have proven satisfac-
tory, wherever the system has been
tried, because OF the system or re-
| loaning each week, the borrowers
weekly payments, and the interest
on the loan, which Is always deduct
ed in advance These earnings COM
pare very favorably with those OF
| most national banks. Our banks do
not accept deposits.
NOW as to our method OF making
loans: take, as an illustration, loan
of $50.
"The borrower gives his note for
$50, cue In 81 weeks from date, and
pays 6 per cent interest, or SO. In ad-
vance. He then subscribes to what
lis known as installment certificate
c. for $50, which he agrees 70 pur-
chase at the rate of 81 q week for 30
weeks. This certificate Is then at
tached to the borrow's note as collat-
eral for his loan. At the end Of so
weeks this installment certificate be-
comes fully paid up. and, therefore.
equals the amount Of the loan. Two
weeks later his note falls due. He
can then withdraw $50 paid on his
certificate, pay his note and close the
transaction. II is also a part Of the
plan that he can. II he wishes, liquid
ate his note and retain his class &C.
certificate as an investment.
"All that Is required OF the most
humble borrower Is that he produce
two CT his fellow workers of good
character and satisfactory earning
capacity to indorse his note. Should
the maker of the note default, through
death or otherwise, there are left two
men who can divide the loan and pay
on the note in such small weekly pay
ments as to cause no Inconvenience.
ANY one who desires TO do so may
purchase, In installments Of 81 q
week, one of the class c. certificates
and, after paying for II, borrow to the
extent of its face value Of $50 without
security.
| Under this plan subscribers of
stock are guaranteed a Satisfactory
and reasonable return on their invest
ment and, at the same time, the Dor
rover Is assured of a means of OBJ
taining money at legal rate Of In
terest without being harassed, black
mailed and bounded, as Il In the GUS
tom Of the so-called loan shark,
Since the first Morris plan bank
was established i've years ago, loans
have been made to $1,000 persons,
who have taken total OF S5,7S1, 900,
an average Of 1923 to each borrower.
Losses have averaged less than one
quarter Of one per cent.
In the first pear of existence of
our bank I'm Atlanta. Ca, 1901 loans
were made. OF this number 1,155
were 10 persons who negotiated the
loan to escape from the clutches Of
! the loal sharks. A dircc. saving, I'm
rates Of interest to the borrowers, of
$4,000 was effected.
4 I'm our bank In Washington, ID. @.
out of 5000 loans, but one loan OF
$50 was lost.
The cashier OF our bank in Atlanta
Idecfared that two persons confessed
to him that. had they not obtained
loans from us In order to curb the
harrassing tactics OF loan sharks. they
would have committed suicide.
"One women who obtained a loan
tainted from very Joy.
The basis of our loaning system