UPSETTING LOAN SHARKS

Hokitika Guardian, 18 June 1928, Page 3

UPSETTING LOAN SHARKS

Loan sharks and blue sky operators in tbe United States thrive because they pretend to satisfy a human need which other agencies do not adequately meet, is a fact well known in America and elsewhere, and the decision of the largest bank in the U.S.A. to make loans of 50 to 1000 dollars to salaried individuals of good character, but without property, will do more to check tbe operations of the'gougers of needy borrowers than a hundred restrictive laws and a thousand indignant speeches. The National City Rank of New York, America’s largest banking institution, which has shown the way in numerous other activities, is now pioneering in a field of distinctive social service. At best tfie huge financial institutions will make credit'available to the small borrower on easier terms than ever before. Even the better grade loan societies in New York, taking advantage of the principle of double interest and service charges, in reality charge the man or woman in need from upward of 1G per cent, and they have succeeded by fighting the loan sharks. Another national small loan organisation called attention in a prospectus to the fact that in some States it was permitted to charge up to 36 per cent a year. These high charges are hidden in discounts, which are taken out of the gross amount, which is actually repaid in monthly instalments hv borrowers, making tbe average time of use of a so-called one-year loan six months only.

Charles E. Mitchell, the comparatively youthful and energetic president ot the National City Bank, is being congratulated for the social vision which has induced him in this way to broaden the horizon of the commercial bankers. The National CiTv Rank, though the first big bank to enter the small loan field is not the first bank in tbe field. In New York a Labour bank, operating in a limited field, makes loans upwards of 50 dollars, anil charges of six per cent on funds actually used by tlie borrower, plus one per cent service fee, are added to cover investigations. This activity of the Labour bank is unprofitable, being run at a loss as a social service.