Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-04-13

q minimum Of about $4,000, and he
may engage in no other business. This
Is presumed to remove the temptation to
employ bank funds held on deposit In
some other business in which the Or
ganizer is involved. In the United
states, for instance, many a bank d.
rector has borrowed excessively from his
bank iIt oder to help cut his dry goods
business or lumber business to the ulti.
mate sorrow Of his deposltors.
The organizer of the Japanese loan
company, or "mujin," as it is calleH.
then may obtain subscriptions to stock
and this accumulated capital Is lent In
| small amounts. The members or
shareholders have first call on this
reservoir of capital. Sometimes those
who shall receive loans are selected by
drawing lots. In this way the money
is distributed as by lottery, save that
the winner merely wins the right to
borrow and he must repay with inter-
est. In other cases the system is for
the members 10 meet and bid for money,
those Offering the highest rate of in
terest, provided the security also is
good, being awarded the loans. AS
these loan societies are not rich insti-
buttons such meetings for lot drawing
or bidding are open air affairs. the
members sitting or standing around in
their kimonos and with Characters
tic Japanese dignity following the pro-
ceedings.
The Central Chest.
There are more than $4,000 such
loan societies, having nearly 100000
members. These small loan organiza-
| tons have a sort of reserve system
somewhat akin to the American Fed
eral Reserve system There is estah.
lished what is called the central chest.
Various co-operatives have put up capi-
tai for this chest. which functions as
a sort of central bank. like an Ameri-
can Federal Reserve bank or like the
Bank of England. The Japanese gov
eminent holds half the stock. It di-
reefs the flow of credit. helping out by
rediscounts loan companies and Coop
eratives which are pressed for funds,
and maintaining a balance of credit
supply throughout the empire.
The pawnshop, the poor mans bank
all the world over, houriSheS in Japan,
but in this field, too, cooperative effort
has been manifested. There are some
40 or more public pawnshops which
have been organized by communities
and undertake to make small loans on
personal property at rates lower than
those charged by the $4,000 private
pawn brokers. Loans to an individual
average around $3.50. The term Of
loans runs from three to six months
and rates vary from 20 to 48 per cent
figured on a yearly basis. The Coop
erative pawnshops charge less.
Labor Union Bank.
In an effort to bring better borrowing
conditions TO the poorer workers Of
Japan labor union bank was estab-
lished last year by the All-Japan Labor.
ers' Association. II started with a cap
ital of only $4,000 and its 1000 shares
are virtually all held by laborefs. This
bank was organized especially to strike
at the high rates of the pawnbrokers.
Seeing what the workers are doing for
themselves, comparatively, in the bank
ing field. there is disposition on the
part of the big, old line commercial
banks to adopt more liberal attitude
toward the small borrower, as is the
case in this country. The Japan Day
& Night Bank, for example. has just
inaugurated Small-loan department
and, indicating that it's managers have.
an insight into what class of people
need money the most urgently. has re-
stricted its small loans to married men.