Omaha daily bee., 1915-07-15
LOAN SHARKS PUT
OUT BY NEW LAW
Council Bluffs Agencies Are Closed,
or Preparing to Close,
as Result.
HEAVY BAN PUT ON UsURY


which became effective on July 4. and no
! possibility Of getting n single copy OF
! the session laws. many citizens OF
Iowa are liable to be Jailed for violating
some law whose existence they cannot
know Of
! Chattei loan brokers at Council Bluffs.
however. have received typewriter copies
OF new anti-usury law which IL driving
them out OF business and within another
week It Ia improbable that there will be
n place where chattel loan can be
negotiated In Council Bluffs.
| Senate file No ST. introduced by
Thompson, is an act intended 20 amend
the states interest laws but it's title Is
AN act TO punish loan agents and others
FOR receiving greater rate Of interest
than per cent a month. and TO provide
II penalty therefor"
The penalty provided Is what has scared
out the local loan agents, for II calls
for a fine OF not less than t2S nor more
than 800 and imprisonment in the county
iail not less than thirty days nor more
than three months.
Details OF New. Act.
Tho new law IL brief II only has one
section outside of the enacting clause,
and as Il IL almost impossible TO secure
a copy at ALL and then only at great
expense. the law IL given herewith in
full:
Section l. Every person OF persons,
company. corporation or firm. and every
agent OF any person, persons, corporation
or firm who shall receive, or agree 10
receive directly or indirectly, by means
Of commissions or brokerage charEes, or
otherwise. for the forbearance OF use
OF any money. n greater rate than per
cent per month shall be deemed guilty
OF misdemeenor, and on conviction
thereof shall be punished by fine of
not less than s2b nor more than $500, and
by imprisonment In the county jail for
a period OF not less than thirty days nor
more than ninety days.
Nothing herein contained shall be con-
strued as authorizing a higher rate OF In
terest than Is now provided by law. But
the person or corporation making the
loan shall be permitted to charge and in
clude within the loan a reasonable
amount for the inspection or investigation
OF the security. or also the cost Of draw
ing papers not exceeding 81, and cost OF
recording same, which cost OF investiga-
ton and inspection shall not exceed 10
per cent OF the amount OF the loan when
the loan IL under $50 nor more than IS in
any event, and no recording fee shall be
included unless an instrument is actually
included"
Death KReII for Firms.
Bluffs loan men say this 10 the death
knell OF the business and that Il will
cease to exist. The National Loan COM
pany has gone out OF business entirely.
The Globe Mortgage company has ceased
making new loans and IL closing up It's
business Several other loan companies
have announced that they will probably
wind up business In the near future.
A. A. Clark a Co, the oldest and
strongest company In the city. announced
last evening that business would be con-
tinued for a while. at least while tho
new law In being studied, but the dec
laration was made that the law was APP
parently intended 10 put out OF business
every chattel loan broker in the state.
The business has been quite extensively
engaged IN IN the city and there has been
constantly in the hands Of chattel loan
makers az least $4,000. Loan men point
out that the business cannot be done on
per cent a month margin. For Illus
tratlon, a loan broker has all OF his
capital OF. say $4,000. out in loans Of $50,
or the usual small amounts. At 2 per
cent his income win be 800 a month II
will require two men to look after these
loans, and even the utmost care cannot
} prevent loss OF about 10 per cent q year
The pay Of the men win be not less than
SIS, or $50 a month. then office rent. tele-
phone postage. stationary and other ex-
penses more than consume the remaining
$780, more than absorbing the earnings OF
the $4,000 capital.
: Very Drastic Provisions.
III The new law IL a good deal more
drastic than II looks. II does not iegaliEe
, the per cent or the Is that may be added
for expense above the interest charge
, and all OF the interest may be forfeited
whenever the borrower chooses 10 set up
the plea OF usury. The legal rate of In
terest In Iowa is per cent and anything
In excess OF that 10 pronounced usury and
the penalty is the forfeiture OF all the
interest charged. Then the heavy fine
and the long term In jail are both i'm
B peratively imposed In every case whers
Il can be shown that more than pei
cent has been charged. The law doei
/ not say fine or Imprisonment" and de
/ mGnds both fine and jail sentence OF
not less than one month. Loan agents viii
0 not care 10 take the risk Bluffs Dor
rowers will hereafter be turned over e
4 the tender mercies Of the loan sharks al