MONEY LEADERS' CHARGES.

Taranaki Daily News, 9 October 1917, Page 6

MONEY LEADERS' CHARGES.

To the Editor

Sir,—Most prejudices die hard, but surely none is harder to kill than that which exists against money-lenders, especially if a Jew is concerned. Even many of those people who believe that tliev are broad-minded still retain some inward feeling that money-lending is scarcely a "respectable" undertaking, although at the same time these people have a great awe of the ''respectability" or prestige of our great banking institutons. Yet what else but money-lending Is the basis of the business of the banks? The recent references in Parliament to the rates of interest charged by some money-lenders have revived the feeling in certain quarters against those who loan money to people financially embarrassed. iFrom Auckland to the Bluff the old reproaches, "vampires," "Shylocks," "blood-suckers," etc., are re-echoed, and the money-lender is condemned offhand by those who at heart really wish to be just. Knowing 1 your desire for fair play, sir, 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, honorable calling, and is far too often the victimised party. It iB first necessary to recall that money-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 sugar. What is usually termed a moneylender's "interest" is really his "profit." Nor is this profit excessive, and indeed, compared to that made by the gr&er, 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 by the public at so much per annum, instead of at so much per day, as in other businesses. 'For instance, if a butcher was to sell his meat a return of 10 per cent, on his gross outlay he would—especially in these days of the high cost of living, be hailed as a philanthropist, but when a money-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 tiie end of the period on his outlay of 4s 6d he has received in interest or profit 305 sixpences, £9 2s 6d. What rate of interest, or profit, is that? A money-lender who similarly charged sixpence a day for his rfe Od in cash would be addressed in most unkind terms when the lender found at the end of the year he had paid over £9 in return. Why should one business man be praised and another condemned for doing the same thing? Moreover, 4s Cd in cash is obviously worth 4s fid; can anyone guarantee that 4s (id invested in meat is equally full value? I have only quoted the butcher as an example, but the principle applies to all commercial transactions. I am quoting facts, not opinions, and if any accountant can disprove my assertion I am willing to forfeit £IOO to the Red Cross Fund. I do not wish to go into a lot of detailed figures as to the rates of interest charged by banks for money lent, but consider the following elementary every day transaction. A lends to the bank £IOO on deposit at 3 per cent. B borrows that £IOO from the bank and is charged oor 7 per cent. The bank, therefore, charges £0 or £7 for what cost it £3 on the day's transactions. Is this over 100 per cent, interest "heartless" or a reasonable profit?

One hears 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 011 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 the lender's safe, as title deeds can. A moneylender sometimes finds that the "security" has vanished, or is covered bv a previous and undisclosed bill of sale." There is no cohesion between money-lenders, and a' dishonest borrower has been known to obtain money from various lenders, offering the same "furniture to them all as security, fraud is frequently experienced by the money-lander, but he is generally helpless. If be takes the matter to court, he is rarely successful, and he finds that he has added to his loss. No business man makes so many ; bad debts as does a money-lender, and, "personally, I am sorry I ever entered the business. Why don't I get out? That is easier said than done. It would take' years to recover all the amounts outstanding, meanwhile the expenses would be going on much as usual, despite the fact that new business was being refused. It would surprise most people to know the extent of 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 busi* nsss man.

Ajiother point is that the money-lend-er dcres not canvass for borrowers, apart from 3 little advertising. They come to him, and in my ease clients are told clearly and distinctly what my terms will be: If the terms do not suit, the would-be borrower is not pressed, but is invited to do business elsewhere. Nor if he comes to borrow, say £lO, is ho persuaded to have more. A money-lend-er 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 hear,? little about the many borcome again. One might write a lot more, but this letter is already, too lengthy, but I hope t have written sufficient to prove my elaiin that money-lenders do not ask exorbitant rates of interest, considering the fircumstances, and that no man need be ashamed of belonging to the calling.— I am, etc., L. W. BALICIND. Ohristchurch, October 2.