The Ocala evening star. [volume] (Ocala, Fla.) 1895-1943, 1922-08-26
oCALA, FLORIDA, SATURDAY, AUGUST g. 1922
CHEAP MONEY
A Timely Warning Against People
Who Offer to Make Loans at Ex-
tra0rdinarily Low Interest


Every now and then somebody
seems to think he has found a new
plan of financing that will solve the
problems of the poor man and bring
with it abundant prosperity to the
state, when as matter of fact he has
merely resurrected an old idea, al
ready tried out and put aside as i'm
practical and unsound.
The bad features of the proposition
are usually well hidden under the
| guise of meritorious undertaking,
which enables its promoters to reap
a rich harvest and get away with it
before the unsuspecting and long suf-
fering public wakes up.
| The latest thing to hit the state is
thre and four per cent loan contracts,
which propose to lend money to home
| builders at three and four per cent
| per annum, to be retired in small
monthly payments, similar to the old
| building and loan plan. The contracts
carry additional features, such as
cash surrender, temporary loan and
paid up values, as well as non-forfeit-
ure clauses similar to regular life in.
surance policies. Upon the whole they
strike a prospective homebuilder, the
| rent-ridden man who yearns for a
home, or those financially pressed in
need of funds on easy terms as being
a good thing. The promoters are usu-
ally from outside the state, "fy-by-
night" fellows so to speak, or new
comers established for the purpose of
scattering this philanthrophy among
our people. often by means of the
high pressure salesman.
Far be it from me to criticise or
hinder any legitimate enterprise that
makes for the upbuilding of this state,
especially home building, the one
: thing that deserves more considera-
) tion and encouragement, for easy
money and plenty of it is highly desir-
able; however, people should know
what they are getting and how much
it is costing before they buy one of
these contracts.
During the past few months b
) study has been made of these con-
tracts and other states called upon fol
information about them for the pur.
pose of letting those interested, who
have no time nor opportunity to in
g vestigate them for themselves, know
, about them.
= At the outset let me say as an alb
+ stract proposition, it is possible for {
t number of persons to pay ten dollar:
+ each into a pool every month regular
ly for one hundred months, and eacE
draw down one thousand dollars some
n time during the period, provided ev
, cry last one Of them stays in ant
I pays in to the end But when thi
p pool comes to be handled by others
n loaned out, with the expenses, losses
U ETC., incident thereto, we know from
1 experience, as practical proposition
$ it will not pan out.
f The companies named below wer
q denied permits to sell their contract
in Florida; no others of this clas
K have applied:
e Great Western Loan & Building CO
= North American Savings & Loan CO
4 United Home Builders of America.
# Security Home Builders Association
IS They were denied because tn
n beard, composed of the controller an
a attorney general, believed the con
le tracts could not be successfully car
st ried out for any length of time and i
re the end would work hardship if nc
p defraud some of the contract holder
Is in this state. Securities commission
i'd Of other states have refused authorit
T. to sell similar contracts in thei
ic states for lime reasons, and wher
he companies have gone into courts t
h force them to do so they have lost ou
&c Look Out for Federal Reserve Loan
= Advices from the Kansas bankin
= department show that Federal RI
= serve loan company, operating on tl
~ same plan there, failed sometim
~ since. There are companies offerin
ie thes contracts for sale in FloriG
Il now, and strange to say are sellin
~ them-a few operating under stat
~ charter, some under declarations {
trust and others as foreign corpor;
0' tions, but none are under state or n,
- tional supervision, though they clai
= to be if reports are true. All col
tracts are upon the same gener
- plan-none promise loan at any sp
W cited time-it may be secured in OF
;" month after the contract natures (
~ i1 may be in seven years hence, if Il
company lasts that long.
An analysis of these contracts shog
that it costs a borrower more thu
three per cent, considering the tin
the company has the use of his none
although they seem to be framed upt
the theory that "holder's" money
worth nothing while the company
using it, but he must pay while usir
the company's funds. The contrac
are issued in classes" or seri
which may be changed at viii by t