Evening star., 1936-01-16
SMALL LOANS BILL
PASSED IN SENATE;
HOUSE MUST ACT
Unanimous Consent Speeds
Measure Regulating
Lenders Here.
H. P. D0N0HUE DECLARES
PER CENT RATE is FAIR
Head Of Company Tells Hearing
Several Amendments Are
Needed, However.

Several Amendments Are
Needed, However.
The bill establishing a new plan for
the regulation of small loans in the
District, a subject congressional COM
mittees have had before them for
five years, passed the Senate uneX-
pectedly today. It still requires House
action.
The measure, which had met with
objection during the last session, went
through by unanimous consent and
without debate this afternoon.
District officials have been urging
the legislation. This bill describes as
interest not only the simple interest
stated in the note, but anything OF
value required to be paid as compen-
sation for the loan, and specifies that
interest so determined shall not ex-
ceed per cent per month on the
monthly unpaid principal balance.
The Senate committee report points
out that the interest may not be
compounded, and neither the interest
nor the fee can be deducted from the
principal of the loan.
Three Glasses of Loans.
The provisions governing fees divide
loans into three classes, as follows:
So-called character loans of s35 or
less for a period of of 80 days or
less without collateral, fee of not
more than ST may be charged for a
credit report. In these loans total
of so cents as interest and other
charges, in addition to the 81 referred
to, may be allowed.
Loans of any amount for more than
80 days and loans of more than S35
for 80 days or less without collateral,
fees of not more than SO may be
charged for credit reports at the rate
of 81 per report, concerning either the
borrower or indorser.
In the case of loans on collateral,
q fee of 81 may be charged for re-
cording a chattel mortgage, and not
to exceed 50 for examining titles, mad
insurance premiums actually paid for
protection of the collateral limited to
the amount necessary to protect the
total of the loan. The fees and other
charges in the bill apply only to loans
up to $500, loan above that amount
being regulated by other laws.
80 Per Cent Rates Charged.
The Senate committee report stated
that at hearings on the question nu-
merous instances were cited where
rates, including charges, as high as
80 per cent of the face amount of
the loan have been charged in the
District.
The bill will require those making
loans to take out licenses at an an
nual fee of 5000, and the licensees
will have to put up bond for the
protection of persons who may suffer
as the result of violations of the new
regulations.
The report points out that the pres
ent law of 1918 fixed the rate of in
terest at / per cent per month on
small loans but states that licenses
have not been taken out under this
law for many years. The report said
many residents of the District find
themselves in need of small loans and
added:
Large numbers of these unfor-
tunate persons are now compelled to
borrow money from lenders in the
District of Columbia at rates vastly
in excess of those prescribed in the
bill. Many others use the loan COM
panies in nearby Maryland and Vir-
ginia operating under statutes which
permit the collection of 31a per cent
per month"
Boiler Inspection Bill Passes.
The Senate also passed a bill drafted
by the Commissioners to reorganize
the steam boiler inspection service in
the District. which goes to the House
for action.
Small loan companies with suffi-
cient capital can operate on an in
terest rate of per cent a month,
Harry j. Donohue, president of the
Washington Industrial Loan Co., told
the Judiciary Subcommittee of the
House District Committee meanwhile
during hearing on small loan legis-
lation.
Donohue said his company, which
has 5000 loans outstanding, totaling
S260,000, is in a position to operate on
/ per cent interest rate basis-the
rate fixed in the new small loan legis-
lation proposed by the District Com
missionerS.
Several major amendments to the
bill, submitted by the Commissioners,
we're urged by Donohue, however. He
declared that unless these changes
are made his company would be un-
able 20 operate under it.
Opposes Voiding Provision.
Donohue particularly opposed as too
drastic provision which would void
o loan. 1t reads: eff any interest,
consideration or charges in excess of
those permitted by this act are
charged, contracted for or received,
the contract Of loans shall be void and
the icensee shall have no right to
collect or receive any principal, inter-
est or charges whatsoever, and the bor-
rover shall be entitled to recover from
the lender any or all sums paid or
returned to the lender by the borrower
on account Of or In connection with
such loans"
Another amendment as suggested
by Donohue would raise the maximum
Of q loan as stipulated in the bill from
$40 0to $500. He also urged that
provision be eliminated which provides
that II a loan is made outside the
District the interest rate shall be no
greater than allowed under the District
law.
Thomas z. Lodge, president of the
Federation of Citizens Associations,
indorsed o bill that would allow AN
interest rate Of 2 per cent month
on small loans.
Exemption of credit unions from
the license requirement in the bill of
the Commissioners was urged by
Victor L. Lowe, president of the Dis
trict Credit Union League, and