Evening star., 1927-03-20
Move Initiated for Creation
of Agency to Combat
USurious Lending.
ASSOCIATION TO DISCUSS
IMPROVEMENT lN LAWS
Corporation Counsel Plans to Start
Prosecutions in Several Cases
simultaneously.

moved swiftly forward yesterday with
it's program of searching out violat
ors of the loan shark law" a move
ment was initiated among leading
Washington bankers for the creation
of a legitimate source where needy
persons might contract a necessary
loan on collateral that the banks can
not now accept.
Although no plan looking toward
this end has yet assumed shape. sew
eral bankers declared that If a re-
liable agency, working under the pa
tronage of the city's banks, were es
tablished and loans made to persons
of proven honesty at a legal rate of
interest, ii would drive loan sharks
out of business and would prove
profitable business enterprise, too.
Changes In Law Considered.
AS further step in support Of the
campaign initiated by The Star to
drive money lenders who charge eX-
Orbitant interest rates out of business,
the District Bankers Association will
be asked at it's next meeting 10 con-
slider the possibility of improving ex-
listing laws to bring within jurisdic-
ton loan companies which may have
succeeded in evading the loan shark
law"
Regularly established banks and
trust companies cannot make loans
on such hazardous security as auto
mobiles and household furnishings.
except in rare instances, to persons
Of unquestionable standing. This, 1t
was pointed out, compelS the man or
woman who must have several hun
dred dollars for a limited period TO
appeal to the loan shark-and pay the
usual penalty.
Many times, investigation has dis
closed, the amount of the loan means
the difference between recovery or
death to a sick member of a family.
or the money with which to provide a
family with food during a temporary
spell of unemployment.
Bankers TO Consider Problem.
1t is to assist cases like these that
the aid of the allied bankers of Wash
ington was enlisted in the search for
remedy. The entire problem will be
laid before the members Of the Dis
trict Bankers Association at their
weekly luncheon at the Willard Hotel
on Wednesday. 1t is expected that
some more definite action will be
taken then.
The question OF improving the Bis
trice code covering interest rates
however, probably will be left to the
consideration Of the executive board
of the association, which will not meet
until Friday. Any effort to amend
these laws. it was said, would neces-
state careful preparation and, prob
ably, hard work to get the amend
ments through Congress.
Corporation Counsel stephens does
not anticipate any trouble, however.
prosecuting money lenders now under
investigation by his office with the
present law. He said yesterday that
he already has obtained what appear
to be three clear-cut cases against as
many alleged loan sharks. Mr..
Stephens said that he would wait,
however, until his investigation is
complete and institute all prosecu-
tions simultaneously.
Pawn Brokers Filter Back.
Half a dozen persons called at Mr..
Stephens office yesterday in answer
to his appeal for informants. as pub
lished in The Star on Friday. Two
of these supplied evidence indicating
that during the years that have
elapsed since the prosecutor com
pleted his drive on pawnbrokers
even a number of these establish
ments, or at least their equivalent in
tactics, have filtered back into the
city.
Although 1 have not as yet dis.
covered any companies that lend
money on watches and what-nots,"
Mr.. Stephens said. II have evidence
sure. for making a loan on some fur
niture. This company used exactly
the same methods as the old-time
The victim was loaned
S156, and had to sign a note TO pay
back $3.50.
II find also that several companies
are making a practice OF selling such
notes Immediately to another COM
pany The second company will plead.
of course, that it legitimately dis
counted a note. That same stunt was
tried with us when we opened up on
the loan sharks in 1913. however, and
il failed TO work. / am sure il will
be no more successful this time.
One Paid 800 Per Cent.
''There is no doubt at all that these
cases are usurious. l want every per-
son who has dealt with loan sharks
Of any character-whether the loans
were made on automobiles, house fur
or anything at ALTO get in
touch with me If they feel that they
have been f1eeced. They may either
write or call in person. One man even
called at my home last night. L think
he gave me a sure conviction. too"
Another man has written to The
Star furnishing an example of the in
terest the loan shark eXacts. He paid
about 800 per cent interest. The let
Ter. together with the name of the
company that loaned the money. had
been turned over TO Mr.. Stephens.
The letter follows:
II have just read your interesting
article relative to the borrowing G.
money on automobiles and the
lsurious rates imposed, and wish to
you on the situation. Per-
,onally / have not an Automobile, but
.ecently in need of money as a result
# continual illness in my family and
TO have an operation per-
'ormed on my mother. 1 visited an
)ffice.
S63 Interest on $62 Loan.
"There / was informed I could OBJ
ain a loan on furniture of $125 on
very similar conditions as on an au-
omobile. as stated in The Star. 1 was
% pay for interest, commission, no.
arial fees, ETC., the sum of $63. which
would be deducted from the loan.
In other words, would pay $63 for :.
! loan of $62. They were kind enough
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