Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-09-25
BY !. A. FLEMING.

BN j. n. LEHMAlNc'
Back in Chicago in the late BUS OF
| the early 70s there was large lur
niture store owned by John Nj. Smyth
& Co. Soon after their opening they
| began selling furniture on the par
| tial payment plan. this being the llfse
acquaintance with the installheht
PAYMENTS in long experience.
The Smyth mouse gold lifetime rur
nitute that actually lived up to Its
name, indeed some of it at least mas
passed into tho second generation
ownership and promises to serve
equally well third and fourth gen
Grafton. The Smyth house, IKE ltS
furniture, is still in active operation
In those days person of some stahu-
ing and reputation could buy piano
on monthly payments, but the RANK
and file. who today may purchase any
piano made on weekly contributions
could acquire even a second lnstru'
ment only by saving and saving for
months.
Today the installment business coy,
ers the earth like a carpet, and credlt
is an easy matter for the just ana
often for the unjust. 1t has been
matter of common knowledge FOR years
that installment payments were ar
ranged most any old way, weekly or
monthly, and that many OF the notes
incident to this way OF doing anu
that the strongest merchants anu
manufacturers engaged in this nusl'
ness were in the habit of making tne,r
collections through banks. while
others had the notes discounted, TAX
ing IN any that were not promptly
paid on maturity.
Homes on Monthly Payments.
It was not until many years later
that the story Of homes and lots on
monthly payments began 10 ledK
through news sources Later it deVei'
oped that this system had its concep-
ton in Washington. d. c.
It has since developed, too. that the
old Home Savings Bank was the orlgl-
nator of the plan Let Howard Moran
vice president Of the American Securl-
nv 4, Trust Co. formerly high oInclai
Of the Home Savings Bank, Wnlch
he helped organize, tell the rest or the
story.
Mr.. Moran's Story.
"1n this era Of competition banks
and trust companies have come 10 re-
alize that they have new competitors
in their field This has been partlcu'
larly felt within the past few years
through the fact that the American
people have not placed In savings ac'
counts the same volume of money as
in the past.
"The investment houses have been
drawing upon the savings deposlls
and the building and loan assocla-
lions have been getting their snare.
"The manner in which to meet inns
competition has been question only
tightly discussed up to year ago.
oh
gradual. Statistics, however, reVeai
An ever increasing movement from
the banks and trust companies ana
some solution must be found TO meet
this acknowledged competition.
perhaps the experience in WASH
ineton, D. c., of a banking 1nstltu-
ton will assist bankers to ma one
means of meeting the changes when
have taken place.
"When the building and loan asso-
Citations were organized 1t was prl-
marily to loan on real estate LOT the
purchase of homes, and III many n
stances this was confined to mohth-
~ payment plan. 1t was not, now
ever until about IS years ago that
other agencies, seeing the value oil
such q loaning plan, developed IT,
Home Savings Bank Progress.
ain Washington, tie Hoane Savings
Rank. which was the originator of
monthly payment plan of loan made
great progress in securing Increased
business, not alone in savings, put III
the loan field, and until its merger
with the American Security d trust
Co, it was able to increase Its busl-
ness more rapidly than any other
institution ever formed in the city,
in the period of its existence. A
great deal of this success was due
to the encouragement given to build
ars and purchasers of homes 70 trans
act their business on a monthly pay
ment plan, and 1t brought to the IN
stitution. which at that time was
somewhat outside Of the hnanclal
district, much progress.
Before this plan was introduced the
builder would obtain first trust real
estate loans on specific houses pullt'
and then accept a second trust for
the balance of the deferred purchase
price. to be paid on monthly pay
ment basis. In a good many IN
stances these monthly payments in
cluded also the monthly pro rata or
the interest on the first trust which
ordinarily is payable semi annually.
This was being done so that the
home buyer would know exactly what
amount he would nave 10 set aSlue
each month.
Payments on these second trust
notes were usually of sufficient
amount to mature the note within six
years. and as the first trust was usu-
ally made for period of three years
it was generally necessary for the
purchaser to renew his first trust for
a second period of three years. AL
the expiration of that time the pur-
chaser had become in the habit of
making monthly payments and he
would desire to place the first trust
on a similar basis.
Meet Competition.
The Home Savings Bank had made
a speciality of first trust loans to build
ers and at the same time had encour-
aged them to leave with the bank for
"N wv TC