LETTERS TO THE EDITOR

Dominion, Volume 11, Issue 9, 5 October 1917, Page 8

LETTERS TO THE EDITOR

MONEY-LENDERS" CHARGES

CASK KOK THE DEFEiSX'K. Sir,—Jlost prejudices die hard, but surely nono is harder to kill than that which exists against money-lenders, especially if a Jew is concerned. Even many of Ijiose peoplo who believe that they are broad-minded still retain sumo inward feeling that money-lending is scarcely <» "respectable" undertaking, although at the same (imo these people have .a great awo of the "respectability" or prestige of our great bunking institutions. Yet what else but money-lending is tho basis of the business of tho banksh The recent references in Parliament to the rales'of interest charged by some money-lenders have revived the fading in certain, quarters against those who loan money to people financially embarrassed. Prom" Auckland, to the Bluff the old reproaches, "vampires," "Shylocks,' 1 "bloodsuckers," etc., are re-echoed, and the money-lender is condemned offhand by those' who at heart really wish to be just. Knowing your desire for fair play, 6ir, I ask permission to outline' briefly the case for the defence, and hope to prove that, far from being the 'heartless persecutor he is usually represented to be, a money-lender is engaged in "a clean, honourable" calling, and is' far too often the victimised party. It is 6rst necessary to recall tlwt monev-lending is a commercial business equally with the sale of groceries, meat, clothing, or any other commodity, one man selling cash as another man may sell 6iigar. What is usually termed a. money; lender's "interest" is really his "profit.' Nor is this profit, excessive, and indeed, compared to that made by the grocer. ] butcher, or baker, etc.. is small. Where the public, mind is led astray is in the fact that the rate of interest or profit made by a money-lender is always calculated 'bv the public at so much per annum, instead of at so much per day, as in other business. For instance, if a butcher was to sell his meat at a if turn of 10 per cent, on bis gross outlay he would-especially in these days of the high cost of living, be hailed as a philanthronist, but when a.iuone.y-lender charges one-Half per cent, he is, derided as a "heartless scoundrel" or similar epithets. Why should this be? A butcher will, say, sell for ss. cash meat which cost him 4s. 6d., and is regarded as a good Samaritan. He repeats the transaction, say. every day for a year, with _ the result that at the end of the period on his outlav of 4s. 6d. he has received in interest or profit 365 sixpences, '.£9 2s. 6d. What rate of interest, or profit, is that? A. money-lender who similarly charged sixpence a day for his -Is. bd.. in cash would be addressed m most unkind, terms, when the borrower found at the end of the year lie 'had paid over £9 in return. Why should one business man be praised and another condemned lor doing the same thing? Moreover, is. 6d.. in cash is obviously worth 4s. 6d.; car. anyone guarantee that 4s. 6d. invested m moat is equally full value? I have only quoted tho butcher as an example, but the principle applies lo all commercial transactions. I am quoting tacts, not opinions, and if any accountant can disprove my assertion I am willing to forfeit ,£IOO to the Kcd Cross Fund. I do not wish to go into a lot of detailed figures as to tho rates of interest charged bv banks for money lent, but consider the following elementary every day transaction. A lends to the bank .£IOO on deposit at 3 per cent. E borrows that JUOO itoin the bank and is charged li or 7 per cent. Ihe bank, therefore, charges £H or £~ for what cost it £3 on the day's transactions. Is this over 100 per cent, interest heartless or a. reasonable profit? One hours much of the woes of the "victims" of a money-lender, but the latter has his full share of annoyances and grievances. In the first place he often has to lend on doubtful security, generally such as a bank would not look at. A man with really good security, such as land, goes to a bank; the man who visits a money-lender often has furniture only to offer.- That cannot be locked up in tho lender's safe, as title deeds can. A money-lender sometimes finds that tno "security" has vanished, or is covered by a previous and undisclosed billot sale. There is no cohesion between money-lend-ers; and a dishonest borrower has been known to obtain money from various lenders, offering tho same furniture to them all as security. Fraud is frequently experienced by the money-lender, but ho is generally helpless. If he takes the matter to Court, he is rarely aucccssiul, and he finds that he has added-to his •No business man makes so many bad debts as does a. money-lender, and, per-' sonally, I am sorry I ever entered the business. AVhy don't I get out? That w easier said than done. It would take years to recover all the amounts outstanding, meanwhile the expenses vould be going on much as usual, despite the fact that new business was being ;efused. It would surprise most peoplo Jo know the extent of the expenses incurred by a money-lender. On the amount of his turnover, it is much above the average proportion experienced by other traders. There are inquiries to be made, collectors to pay, office and clerical outgoing, advertising, and to these expenses must be added the bad debts made. I assert that on his turnover a money-lender makes less profit than any other business man. Another point is that the money-lender does, not canvass for borrowers, apart from a little advertising. They Cijme;.to him, and in my case clients sre told clearly and distinctly what my terms will be. If the terms do not suit, the wouldbe borrower is not pressed, but is invited to do business elsewhere. Nor if he c-mes to borrow, say, .£lO, is he persuaded to have more. A money-lender usually wants the loan to be smaller than the first demand. In most businesses a customer is tempted to order beyond his original intentions. Again, one hears little about 1 the many borrowers who are quite satisfied, and come again.

One. might write a lot more, lint this letter.is already too lengthy, but I hope I have written eiifficicnt to prove iny claim that money-lenders do not a;,k exorbitant rates of interest, considering the circumstances, and that no man need be ashamed of belonging to the calling.— I am, etc.,

T,. W-. BALKIND, Wellington, October 2.