Evening star., 1922-09-14
UNINCORPORATED
HOME LOAN FIRMS
HERE THREATENED
CriSsenger Warns Local
Companies to Get Charters
or Quit D. C.
CONTROLLER is DEFIEO,
COURT FIGHT PROBABLE
Hiring of Lawyer Is Reply to
Edict-Congress May Outlaw
Assailed Associations.

Controller of the Currency Crissinger
has notified heads OF all so-called and
4 per cent loan associations in the Dis
trict of Columbia, that they must i'm
mediately incorporate" as provided by
the laws of the District of Columbia
covering building and loan associations.
'or remove from the District" it was
announced today.
Letters to this effect have been sent
to four concerns operating in Washing
ton. They are the United Home Owners
Of America, the Atlantic Society Home
Builders. the Union Home Builders. and
the Cooperative Home Building Trust
ees Agency. 1t is understood that sim
liar letters may be sent to one or two
other institutions Of like character. 1t
is said to be the belief of officials that
the scheme under which the companies
are doing business is unsound basical!y.
Text OF Letter.
The controllers letter follows:
This Office is advised by counsel after
| an exhaustive study OF sections 691 and
691a Of the code of the District Of Co
| lumbia, that no unincorporated associs-
ton doing business Of a building and
loan association can lawfully operate
in the District of Columbia.
you are advised. therefore. that it
will be necessary for your associa
tion to Immediately incorporate. as
provided by the laws of the District
of Columbia, or to remove from the
District in which latter event you
would cease to be under the super
vision of the controller Of currency,
and must discontinue advertising
such supervision.
please advise Immediately what
steps will be taken to comply with
requirements"
Firms File Reply.
| In answer to this notice. fulfillment
! of the provisions of which would
mean changing the whole method OF
doing business. several of the local
| companies affected placed their case
| in the hands of an attorney. Web
ster Ballinger. who drew up and
| filed with the treasury department =
| brief opposing the recommendation
of the solicitor and setting forth
reasons why promoters of the con-
Germs believe they are not violating
any law. This brief and mass OF
data relating to Investigations and
court and state decisions of a num-
ber of states are said to be now in
| the hands of the solicitor of the de-
| partment. who so far has not made
an announcement of his findings.
1t was learned today that legisla-
! ton designed to wipe out OF exist
ence all such loan organizations is
| likely to ensue. Representative Nils
paugh of Pennsylvania, himself
| banker and financial expert. is known
/ tn have received a of InfornlS-
! tion about the companies. and ii Is
| understood that he is framing a bill
| which would make the unincorporat-
i ed loan firms illegal. Local bankers.
! ests and real estate men are said to
/ be backing Congress in this respect
Several prominent legal and bust
! ness men are said to be officials of
/ some of the companies affected by the
! Treasury edict. Many persons of
! more than average means also are al
| legged to have put their money into
| the companies for investment" pur-
poses.
1t is estimated that Washington
1 residents already have invested
/ several hundred thousands of dollars
! in the loan associations. in the belief
that they are bona fide building and
| loan associations.
Follows Missouri Action.
Several weeks ago similar institu-
! tions in Missouri were declared lot
! teries and a violation of the law.
! In holding that such an institution in
Missouri was in the nature OF lot
| terry, and violation Of the Constitu-
| tion and the laws of the state of Mis-
souri,. the attorney general of Mis-
! souri,. on August IL, stated:
THE contract of the organization
| 0iscloses that the contract holder at
! maturity is entitled to receive back
without interest what he has paid in
and to borrow at 3 per cent the differ
ence between the amount paid in and
$1,000. In other words. IL the con-
| tract natures when the contract
! holder has paid SO per month for
| fifteen months. the sum of $3.50 is
| repaid him and he can borrow $3.50
at per cent, repayable at the rate
! of $40 per month; or il the contract
I say, sixty months, the holder Is re-
| funded $500 without interest and can
borrow $500; or il his contract runs
| ninety mine months after maturity
he is refunded $500 without interest
and he can borrow exactly $40 for one
month at per cent. Applications for
contracts undoubtedly will be written
by agents scattered throughout the
; country. The number that will be
placed on the contract is unknown to
| the applicant and to the agent
| Maturity of contracts is in order
of the number thereof, and such num-
| bering Is determined by the exact
minute and date of signing