South Bend news-times. (South Bend, Ind.) 1913-1938, 1918-01-06
SMALL BROKERS
REPLACE SHARKS
Progressive Laws Place Mort
gage Loan on Sound Basis
and Eliminates USurer.

]
the small loan business on a solid
and respectable basis has been made
/ by the American Association of Small
Loan Brokers, made up Of men in
/ this business in states where laws
have been passed putting the old
] type Of loan shark out of business
according TO Clarence HOdson of
New York, chairman of the assOcia-
tons publicity committee In an
article for the New York CONNER
cial, Mr.. Hodson said:
There has been a vast change in
public sentiment and in laws gov
erning the business of making small
loans as the public has gradually
come TO appreciate the economic
+ function performed by legitimate
I loans of this type.
Small loan brokers are legiti-
mate business men, are licensed,
bonded and regulated by the more
progressive states and are not pawn
brokers nor loan sharks. Before
proper legislation was secured, the
small loan business was a hazard
Gus one and did not attract the type
Of men who are now engaged in it.
There was a constant demand for
small loans but as no legal prOtec-
ton existed FOR investors who put
their funds into the business, rates
were excessive and far greater than
those which now obtain.
Legislation is Help.
I'm those states which have pass
ed modern small loan legislation, the
business is expanding at a rapid
rate and is serving a part of the
public for whom the regular COM
mercial and savings banks can do
nothing. 1t has required a long and
arduous campaign of education TO
show legislators and the public what
small loan brokers are, and what
they are not The loans they make
are usually less than $500. from $40.
to SIS being probably the average,
repayable over a period of six or
eight months.
"Only those customers who have
steady jobs and have made a repu-
tation for paying their debts are
sought and the fact that a loan
broker has to make his loans and
provide against possible losses out of
his permanent capital and has not
>The deposit feature TO draw on for
funds, makes il necessary, naturally.
for him to require a higher rate of
interest than the big business man
has to pay for his money.
ION the other hand. a wage
Garner may have been a customer Of
savings bank for years and have
made a consistent record of saving,
but If adversely strikes him and he
needs a small loan, he can not Dor
row a cent from the savings bank
without real estate collateral. Loan
brokers and savings banks do not
compete, but each renders a service
to the public equally necessary and
in fact, both serve people drawn
largely from the same ranks Of So
Ciety.
Unlawful Profits Out.
I'm the annual report of the su-
perintendent of banks in Ohio for
1916 the following significant state
ment was made:
The operation of the restric-
tive prov lSlOu OF the law mas re-
suited in putting out of business
many money lenders who had lived
by the unlawful profits of their in
vestments. Men of high character
and correct business methods, salts
fed with the lawful returns upon
their loans, have taken their place.
so that we can now say with a good
deal of assurance that there is not
a licensee of this department who
deserves to be called a loan shark.
The new law has put dignity
and confidence Unto the loan business
heretofore unknown, so that loan
transactions stand upon the same
footing as other business transac-
tions, and neither borrower nor the
lender has anything TO cover up or
be ashamed Of
THAT is a good example of what
has happened in many other states
and has been Of incalculable value in
putting the business on q conserva-
tive and lawful basis where il will
attract the best class Of men TO it
and where investors will feel that
safe place for the investment of
funds has been created