; 
 
 
 RUSSELL SAGE 
 
 FOUNDATION 
 
 THE CHATTEL 
 LOAN BUSINESS 
 
 A REPORT 
 
 PREPARED UNDER THE DIRECTION OF 
 THE BUREAU OF SOCIAL RESEARCH, 
 NEW YORK SCHOOL OF PHILANTHROPY 
 
 BY 
 
 ARTHUR H. HAM 
 
 NEW YORK 
 CHARITIES PUBLICATION 
 COMMITTEE ... MCMIX 
 
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RUSSELL SAGE 
 FOUNDATION 
 
 THE CHATTEL 
 LOAN BUSINESS 
 
 A REPORT 
 
 PREPARED UNDER THE DIRECTION OF 
 THE BUREAU OF SOCIAL RESEARCH, 
 NEW YORK SCHOOL OF PHILANTHROPY 
 
 BY 
 
 ARTHUR H. HAM 
 
 NEW YORK 
 CHARITIES PUBLICATION 
 COMMITTEE ... MCMIX 
 
Copyright, 1909 
 
 By the Charity Organization Society 
 
 of the City of New York 
 
TABLE OF CONTENTS. 
 INTRODUCTION. 
 
 CHAPTER I. 
 The Need. io 
 
 CHAPTER II. 
 
 The Law. 12 
 
 CHAPTER III. 
 Methods of Business. 17 
 
 CHAPTER IV. 
 Experiences in Philadelphia. 24 
 
 CHAPTER V. 
 What the Philanthropic Companies Are Doing. 34 
 
APPENDICES. 
 
 PAGE 
 
 Appendix I. The New York Law 40 
 
 Appendix II. Provision of the Penal Code of New York. . 44 
 
 Appendix III. The Business Corporation Law of New York 45 
 
 Appendix IV. The Maryland Law 46 
 
 Appendix V. The New Jersey Law 48 
 
 Appendix VI. List of the More Important Chattel Mort- 
 gage Loan Companies Operating in New York City 51 
 
 Appendix VII. Financial Statements of the Chattel Loan 
 Association of Baltimore City 52 
 
 Appendix VIII. Report of the Treasurer of the St. Bar- 
 tholomew's Loan Association of New York for the Year 
 Ending October 31, 1907 55 
 
 Appendix IX. Financial Statement of the Citizens' Mort- 
 gage Loan Company of Cincinnati, December 31, 1907. ... 57 
 
 Appendix X. Report of the Working-men's Loan Associa- 
 tion of Boston, March 31, 1908 59 
 
INTRODUCTION. 
 
 Last year the Bureau of Social Research issued a report on 
 the salary loan business in New York City.* The present report 
 on the chattel loan business is a logical complement of the earlier 
 one. Together they form part of a larger scheme of investiga- 
 tion including the study of various agencies and practices that 
 seem to exploit the necessities of the ignorant or helpless. 
 
 Among the conclusions reached in the salary loan investiga- 
 tion emphasis was laid on the one hand upon the need among 
 wage earners for temporary aid to tide over emergencies, and on 
 the other upon the distressful consequences frequently caused by 
 borrowing from existing salary loan agencies. With the chattel 
 loan companies severe and often unscrupulous business methods 
 produce like distressing results among borrowers, who, in an even 
 larger proportion of cases than those obtaining loans on assign- 
 ment of wages, are steady, reliable, hard pressed men in need of 
 temporary assistance. 
 
 The large problem then in this connection, is to afford loan 
 facilities which will meet the need of wage-earners in financial 
 straits in a way that will obviate the regularly burdensome and 
 often dire effects of an appeal to existing agencies of the purely 
 commercial type. A comprehensive remedy by legislation alone 
 seems to be unobtainable. Laws have been framed to meet 
 changing conditions, but they have thus far failed to obviate pre- 
 vailing difficulties. The founders of the Citizens' Mortgage 
 Loan Company of Cincinnati, after investigating the chattel loan 
 situation in that city, were convinced that it would be futile to 
 attempt to eradicate oppressive features by restrictive or repress- 
 
 *C. W. Wassam : The Salary Loan Business in New York City. Russell 
 Sage Foundation Publication, 1908. 
 
5 CHATTEL LOAN BUSINESS. 
 
 ive legislation. They adopted philanthropic competition as the 
 most practicable remedy. In 1900 the legislature of Maryland, 
 on the initiative of the Chattel Loan Association of Baltimore, 
 enacted a law which it was thought would meet the requirements 
 of effective legislation ; but the loan companies had little difficulty 
 in evading its provisions. In 1902, the law that is at present in 
 force in Maryland was enacted. It has been an improvement on 
 the earlier law, but usurious practices continue to flourish. The 
 manager of the Baltimore company has come to the view that 
 restrictive legislation can do little so long as borrowers are will- 
 ing to pay high charges, and that the most reliable remedy lies 
 in extended philanthropic competition. 
 
 The present laws of the State of New York seem sufficiently 
 explicit. They open the way, on the one hand, for charges 
 aggregating 24 per cent per annum to chattel loan concerns 
 which will place themselves under the supervision of the state 
 banking department ; and on the other hand the law prohibits, to 
 concerns which do not incorporate and place themselves under 
 supervision, a higher charge than 6 per cent per annum under 
 penalty of criminal prosecution and forfeiture of principal and 
 interest for usurious practices. But the money lenders are 
 having little difficulty in evading the law by devices that make 
 proof of usury almost impossible. 
 
 In general, experience would suggest the conclusion that any 
 attempt to keep loan companies within bounds merely by adding 
 to the list of restrictive measures under which they may operate, 
 simply results in higher charges and more irresponsible prac- 
 tices. Newspaper publicity, setting forth the experiences of 
 unfortunate borrowers, apart from a program of action, is like- 
 wise unavailing, for such accounts are soon forgotten and un- 
 scrupulous practices go on without abatement. 
 
 At present in New York City there is only one agency with 
 limited capital to which a needy man can be referred with the 
 assurance of being charged a reasonable rate on a chattel mort- 
 gage loan. No such agency exists in the salary loan field, and 
 none can exist so long as it is impossible to charge more than 6 
 per cent per annum on salary loans. With this situation in mind, 
 
INTRODUCTION. 9 
 
 the next step would seem to be one combining legislation with phil- 
 anthropic competition. The work so well begun by the St. Bar- 
 tholomew's Loan Association might well be extended at 
 once in such manner as not only to meet in a more adequate way 
 the growing demand for loans on chattel security, but ultimately 
 as well to make an experiment in the salary loan field, thus far 
 unexplored by philanthropic enterprise. Meanwhile, existing 
 laws might well be amended so as to legalize the charging of 
 reasonable rates on salary loans, at the same time subjecting 
 both salary and chattel loan concerns to such regulative super- 
 vision as will keep pace with the changing devices of the money 
 lenders. The main remedy must be sought in competition, and 
 that perhaps in the chattel loan rather than in the salary loan 
 field ; but legislation can make an effective contribution if for 
 merely repressive measures it will substitute discretionary action 
 based on contemporary knowledge. 
 
 The results here published are in large part the outcome of 
 the work of Mr. Arthur H. Ham, who has spent the past three 
 months in making an investigation of the chattel loan situation. 
 Mr. Ham has drawn freely, however, on material gathered in- 
 cidentally by Mr. C. W. Wassam in his salary loan study, as well 
 as on special reports prepared by Mr. Frank J. Warne and Mr. 
 W. F. Finley. The Bureau is indebted to these gentlemen for 
 help received in this direction, as well as to Mr. Frank Tucker, 
 Vice-President of the Provident Loan Society, whose advice "and 
 aid have been a constant source of reliance. 
 
 Roswell C. McCrea, 
 Associate Director (in charge of the Bureau of Social Research), 
 
 Samuel McCune Lindsay, 
 
 Director. 
 
THE NEED. 
 
 An emergency in the economy of the wage-worker whose 
 earnings range below $100 a month cannot be met through the 
 fiscal agencies that satisfy the similar demands of men of larger 
 income. His only recourse, in lack of willing friends or of others 
 charitably inclined, is to one of a group of the following agencies : 
 the pawn broker, the salary loan company or the broker in chattel 
 mortgages. Of these the first is very often closed as an avenue 
 of assistance, owing to the lack of suitable property to be pledged 
 by the would-be borrower of small means. His choice is conse- 
 quently restricted to those brokers who charge high rates of 
 interest and take as security mortgages upon furniture or assign- 
 ments of wages. Of these two forms of loan, by far the more 
 oppressive in the obligations it imposes and in the effects it pro- 
 duces is the salary loan. The borrower is seldom able to defend 
 himself if steps are taken by the broker to stop his wages. Upon 
 the filing of an assignment his earnings are summarily cut off 
 and his position lost. If he secures work in another establish- 
 ment he is followed and again he finds his pay stopped by the 
 aggressive broker. As Dr. Wassam shows in his account of the 
 salary loan business ( a ) in New York City, the borrower who 
 assigns his salary as security for a loan has little protection in 
 the law, for by the amendment of 1904 to the Penal Code it is 
 impossible to criminally prosecute those persons who charge 
 usurious rates upon wages assigned, and the provision of law 
 requiring the notification of the employer within three days after 
 an assignment of the wages of an employee is systematically evad- 
 es C. W. Wassam : The Salary Loan Business in New York City. Russell 
 Sage Foundation Publication, 1908. 
 
THE NEED. II 
 
 ed by requiring the borrower to sign a power of attorney when 
 taking out a loan. This scheme renders the law of 1904 of no 
 effect. Added to this, the general feeling of distrust engendered 
 among employers has resulted in a very general refusal on their 
 part to side with employees in an endeavor to defeat the claims 
 presented by the loan brokers. 
 
 This branch of the loan business has been well described by 
 Dr. Wassam, and has been the subject of frequent comment by 
 the daily newspapers. That phase of the subject, however, which 
 has to do with loans on chattel mortgage security is at present 
 little understood, and it is for the purpose of showing the condi- 
 tions under which the chattel loan business thrives in New York 
 City that this account has been written. 
 
 It is generally supposed that while borrowers on security 
 of wages have little hope of protection at law, borrowers on 
 household furniture are well protected. At first glance the law 
 would seem to afford adequate protection to the borrower and 
 allow the lender no opportunity to exact more than the legal 
 rate of interest. But the result of a careful examination of the 
 law and a thorough investigation of the business methods of 
 mortgage loan companies proves it to be extremely doubtful 
 whether the money lender can be criminally prosecuted ; and so 
 far as civil action is concerned, he is able as a rule to demand 
 illegally high rates by reason of the many devices employed for 
 evading the laws and for covering up the usurious nature of the 
 contract. 
 
II. 
 
 THE LAW. 
 
 Chapter 326 of the New York laws of 1895, popularly known 
 as the "Pawnbrokers' Act," provided for the incorporation of 
 associations for loaning money on personal property in any 
 county of New York State having a population of more than 
 300,000 and less than 600,000 inhabitants. Under this act, any 
 three or more persons in such county might become a corporation 
 of this sort, loaning money upon pledge or mortgage of personal 
 property, by filing a certificate in the form prescribed by the 
 Business Corporation Law ( a ) and a bond equal to one-tenth of 
 its capital stock, but in no case less than $5,000, with the Super- 
 intendent of Banks. Upon his approval, such corporation was 
 empowered to loan money on security described at a rate not 
 exceeding 3 per cent per month for a period of two months or 
 less, and not exceeding 2 per cent per month for a longer period ; 
 also a sum not exceeding $3.00 for first examination of security 
 and for drawing necessary papers. No loan was to be made 
 for an amount greater than $200 to any one person. The divi- 
 dends of such a corporation were limited to 10 per cent yearly, 
 and after a surplus of 50 per cent of capital had accumulated, 
 the Superintendent of Banks had power to reduce the rate of 
 interest if he were satisfied that such a corporation was making 
 a profit of more than 10 per cent yearly. No person or corpora- 
 tion engaged in the money loaning business on similar security, 
 except those incorporated under above act, could charge more 
 than 6 per cent per annum under any device or pretext; and the 
 violation of this restriction was made a misdemeanor. Upon 
 proof of such fact the debt was to be cancelled and security made 
 
 (•) Appendix III, page 45. 
 
THE LAW. 13 
 
 void. The first section of the foregoing act was amended by 
 Chapter 706, laws of 1895, so as to apply to all counties having 
 a population of more than 300,000. It was further amended by 
 Chapter 206, laws of 1896, to apply to all counties containing a 
 city of more than 25,000, except the counties of Monroe and 
 Westchester. Why these two counties should have been except- 
 ed is not clear; it was doubtless due to local conditions which 
 the members from these counties thought sufficient to justify ex- 
 emption. Chapter 78 of the laws of 1902 amended all sections of 
 the first act. It now applied to all counties of the state contain- 
 ing or contained in a city of more than 25,000 inhabitants, except 
 the counties of Monroe and Westchester. The number of incor- 
 porators was changed from three to five and the form of incor- 
 poration slightly altered. The Superintendent of Banks by this 
 act was empowered to grant licenses to all corporations fulfilling 
 the requirements of the law, and these licenses as well as the 
 required bonds were to be renewed each year. An annual report 
 verified by the oath of the president or secretary of a company 
 was required and provision made for inspection of a company's 
 books at least once a year, with the further provision that the 
 expenses of such examination should be borne by the company. 
 The interest allowed was reduced to the uniform rate of 2 per 
 cent per month and the charge for papers, etc., reduced to $2.00 
 on loans of more than $50 and $1.00 on loans of $50 or less. 
 Except in New York City no such corporation was allowed to 
 make loans in any other county than that in which its principal 
 business office was located. The last section slightly altered the 
 corresponding section of the law of 1895, by substituting the words 
 "legal rate'' for the words "6 per cent per annum," as they ap- 
 peared in the first law. This was in connection with the pro- 
 hibition of a higher charge by companies not incorporated under 
 this law. A further amendment appears in Chapter 333 of the 
 laws of 1905. This makes the act apply to any county contain- 
 ing or contained in an incorporated city, except the counties of 
 Westchester and Monroe. In all other particulars the law of 1902 
 stands as the present law. ( a ) Corporations organized under this 
 
 (*) Appendix I, page 40. 
 
14 CHATTEL LOAN BUSINESS. 
 
 law may, as previously stated, charge 2 per cent per month and 
 $2.00 for papers on loans of more than $50 or $1.00 on loans of 
 $50 or less. Any charge in excess of this involves forfeiture' of 
 the $5,000 bond and the further penalty provided by the General 
 Usury Law, by which the debt is cancelled and the security made 
 void. ( a ) 
 
 Section 378 of the Penal Code, as amended in 1904, ( b ) makes 
 it a misdemeanor to charge more than 6 per cent per annum on 
 loans of money where security is taken for such loan upon house- 
 hold furniture, tools or implements of trade, wearing apparel or 
 jewelry; and under the General Usury Law( c ) the penalty for 
 usury is loss of both principal and interest. It is readily seen, 
 therefore, that no corporation or individual can legally loan money 
 on chattel mortgage security at a higher rate than 6 per cent per 
 annum unless incorporated under Chapter 326 of the laws of 
 1895 as amended. Yet, of the concerns doing such a business in 
 
 ( a ) In the case of Daniel Pratt ct al. vs. Henry W. Short et al., (79 N. Y. 
 437), the court held that "Where a prohibitory statute points out the conse- 
 quences of its own violation and it appears to have been the legislative intent 
 to exclude any otber penalty or forfeiture than such as is declared in the statute, 
 no other will "be enforced and an action may be maintained upon the transaction 
 of which the prohibited act was a part if it can be done without sanctioning its 
 illegality." Subseciuent court decisions seem to contradict that in the foregoing 
 case, as in Tyng vs. Commercial Warehouse Company of New York (58 N. Y. 
 308), where the court held that "A company authorized to charge more than 
 the legal rate has no more power to charge commissions than an individual 
 engaged in the same business. Therefore the usury laws are not repealed in 
 the defendant's favor and it is a question of fact for a jury." The decision of 
 the Court of Appeals in the case of Lowry vs. Collateral Loan Association (172 
 N. Y. 394), affirming the decision of the Appellate Division (62 App. Div., 240), 
 gives a clear interpretation of the law of 1895 overruling the decision of the 
 lower court in the case (79 N. Y. 437), cited above. The court was of the 
 opinion that "Chapter 326 of the laws of 1895, providing 'for the incorporation 
 of associations for lending money on personal property,' must be construed 
 with and is subject to statutes relating to usury ; usurious loans made by such 
 associations are subject to the penalty of forfeiture. The statutes relating to 
 usury (1 R. S. 771 and amendments thereto) are not repealed as to corporations 
 formed under Chapter 326 of the laws of 1895, providing 'for the incorporation 
 of associations for lending money on personal property . . . and 
 authorizing such corporations to take as security for the payment of any such 
 loans either a pledge or a mortgage of any personal property' and to 'charge 
 ■or receive upon each loan . . . interest or discount at a rate not 
 exceeding 3 per cent per month for a period of two months or less, and not 
 exceeding 2 per cent a month for any period after said two months.' The 
 ■effect of the two statutes when read together is to increase the rate of interest 
 upon loans covered by the later statute and to apply the penalty of forfeiture 
 prescribed by the Usury Act if the rate so authorized is exceeded ; and a person 
 who has borrowed money upon notes secured by chattel mortgages from a cor- 
 poration organized and doing business under such statutes may, upon proof 
 that the corporation has exacted interest and charges upon the loan in excess 
 of the amounts allowed by the statute, maintain an action to have the loan 
 declared void, the notes and the mortgages surrendered and the corporation 
 restrained 'pendente lite' from foreclosing the mortgages." 
 
 ( b ) Appendix II, page 44. 
 
 (c) Cummings and Gilbert Gen. Laws, pp. 1984-1995. 
 
THE LAW. 15 
 
 New York City, only three have taken advantage of this law en- 
 titling them to charge more than the legal rate of interest. These 
 are the St. Bartholomew's Loan Association, the City Credit Com- 
 pany and the Fidelity Loan Association. The first, founded on a 
 philanthropic basis, is loaning money to the extent of its limited 
 capital at 1 per cent a month. Not much is known of the other 
 two companies and their business methods, but it is certain that 
 they are charging at least the full 2 per cent per month allowed 
 by the law under which they are incorporated, in addition to at 
 least the legal charge for papers, etc. 
 
 It is not at all hazardous to say that with the exception of 
 the three above-mentioned, not one of the many loan companies 
 now operating is doing a legal business. A profitable business at 
 6 per cent is impossible. The usual loan of $40 or $50, plus 
 interest charges, is divided into equal payments, payable in from 
 three to six monthly installments. The interest on a $50 loan at 
 6 per cent per annum for six months would be $1.50. There 
 must be offset against this the salary of an investigator who will 
 examine the security and pass upon its acceptability, that of a 
 collector to call for the payments as they fall due and look up 
 those who are seeking to dodge their settlements, an office with its 
 attendant expenses for bookkeeping, cashier, stenographer, and 
 maintenance, as well as the usual losses and necessary fees to 
 attorneys. All of these expenses must be paid out of the gross 
 returns from loans. Apart from direct evidence bearing on the 
 point, it is clear that a 6 per cent rate would not cover expenses. 
 Yet the morning papers contain several columns of advertisements 
 in which these companies claim to be loaning money at 6 per cent 
 with no further charges. An examination of the actual trans- 
 action and of the business methods of these companies will reflect 
 at once the absurdity of their claim of legal charges. In reality 
 their charges run from 100 to 150 per cent per annum. When 
 the applicant for a short-time loan has satisfied the lender as to 
 the value of his security, etc., he is informed that the rate will be 
 6 per cent per annum, and in addition he will be required to pay 
 a bonus of 25 per cent to 30 per cent, which will be deducted 
 from the amount of the loan. Under the law, the imposing of 
 
1 6 CHATTEL LOAN BUSINESS. 
 
 such charges would seem to constitute usury, upon conviction for 
 which an offender is punishable by a fine and imprisonment, as 
 well as by loss of principal and interest. But by a skilful method 
 of requiring the borrower to sign a receipt for the full amount, 
 the transaction is given the appearance of legality. If at the end 
 of the period for which the loan is to run the mortgagor is unable 
 to pay off his debt, the same excessive charges are repeated on a 
 new loan, or foreclosure proceedings are begun and the borrower 
 is eventually sold out at auction. Although the lender seems to 
 be able to conceal the usurious nature of the contract and to bind 
 the borrower to a settlement in full, he fears the effect of pub- 
 licity upon his business, and almost invariably when the borrower 
 secures legal assistance and shows sign of readiness to fight the 
 claim in the courts, the lender is willing to compromise and settle 
 for much less than his original claim. However, the great mass 
 of borrowers have no knowledge of this fact, and the lender's 
 threat of legal action to collect is usually sufficient to make the 
 borrower pay the claim in full. An attorney in this city who has 
 made a very careful study of the law in relation to the loan busi- 
 ness is of the opinion that a compromise and settlement at figures 
 much lower than the amount claimed can invariably be secured, 
 if borrowers would put their cases in the hands of competent 
 lawyers. Yet he holds to the view that owing to the evasive 
 methods of lenders they cannot be prosecuted and convicted under 
 the present law. 
 
III. 
 
 METHODS OF BUSINESS. 
 
 It is practically impossible accurately to determine the present 
 number of agencies loaning money on chattel mortgage security 
 in New York City. It is equally impossible to estimate the num- 
 ber of people borrowing, the volume of business transacted or the 
 amount of capital invested. The only place where this informa- 
 tion exists is on the books of the companies, which are obviously 
 inaccessible for our purposes. The number of companies can 
 roughly be estimated as not far from forty, for there are thirty 
 frequently advertising in the daily newspapers and several in 
 addition that are known to exist. ( a ) Three of these companies 
 are incorporated under Chapter 326 of the laws of 1895 as 
 amended, and are therefore allowed to charge 2 per cent per 
 month, with a small additional charge for papers, etc. These are 
 the St. Bartholomew's Loan Association, of 211 East 42nd street; 
 the City Credit Company, of 621 Broadway, and the Fidelity 
 Loan Association, of 140 Nassau street, previously mentioned. 
 The remaining companies and individuals doing business under 
 corporate names, as well as individuals doing business under their 
 own names, are allowed by law to charge only 6 per cent per 
 annum. How far they keep within the bounds of the law will be 
 seen. With few exceptions they advertise as loaning money at 
 the legal rate, but an application for a loan reveals the fact that 
 the charge for interest is but a small part of the total cost to the 
 borrower. As a rule these companies have no schedule of rates 
 to which they strictly adhere. They exact all that the borrower, 
 in desperation or in ignorance or neglect of legal rates, will agree 
 to pay. 
 
 (") Appendix VI, page 51. 
 
l8 CHATTEL LOAN BUSINESS. 
 
 A few extracts will show the methods of advertising by which 
 these money lenders seek to attract patrons : 
 
 6% Loans Quickly Made 6% 
 
 From i to 12 months to man and wife on 
 furniture, pianos, machinery, without removal ; 
 rents, bankbooks and all other securities ; easy 
 payments, weekly or monthly; strictly confi- 
 dential. 
 
 Leslie Realty Co. (Inc.), 
 145 West 125th St., opp. Koch's. 
 
 Lower Rates Than All Others In City. 
 
 Quick loans to husband or wife, any 
 amount, longest time, on pianos, furniture, 
 autos, carriages, trucks, horses, without re- 
 moval ; rents ; easy payments ; confidential. 
 London Realty Co. (Inc.), 
 1265 Broadway, Near 32d St. Tel. 4656-Mad. 
 375 Fulton St., B'klyn., Opp. City Hall. 
 
 Money At Lower Rates Than All Others 
 
 at 6 per cent per year in any amount in 
 Greater New York on furniture, pianos, with- 
 out removal ; rents, legacies, machinery, second 
 mortgages, bank books, real estate, horses, 
 carriages and all other securities ; easy pay- 
 ments, weekly or monthly ; strictly confidential. 
 
 MONEY BROUGHT TO YOUR HOME. 
 
 If not convenient to call, fill out this blank, 
 mail it to any of our offices, and our agent will 
 call at once with the money. 
 
METHODS OF BUSINESS. 19 
 
 Name 
 
 Address 
 
 Amount wanted $ 
 
 On security of 
 
 Adelphi Realty Co. (Inc.) 
 Main Office— 116 Nassau St., N. Y. 
 20 E. 120th St. 373 E. 146th St. 
 
 Brooklyn Branches : 35 Cooper St. 
 408 Gates Ave. 
 2 95/"2 Atlantic Ave. 1867 Fulton St. 
 
 The man in need of money fills in the blanks in the above 
 advertisement, mails the clipping to the company's office, and by 
 return mail receives the following reply: 
 
 Mr 
 
 Dear Sir. — Your application for a loan re- 
 ceived, acted upon and passed favorably. 
 Kindly call at once at our main office, 116 
 Nassau street, near General Post Office, New 
 York City, with a list of your chattels, and we 
 will fix up the matter for you immediately. 
 
 In case you cannot call during the day, you 
 may call at 21 10 Fifth Ave., New York City, 
 any evening between 8 and 9 (except Friday), 
 and ask for our Mr. B. 
 
 Yours respectfully, 
 
 A. R. Co., 
 
 Per J. B. 
 
 When the applicant calls at the office he is asked the stock 
 questions and made to fill in the application blank, just as if the 
 company had never heard of him before. This method attracts 
 many prospective borrowers. 
 
 As a rule loan companies are very secretive as regards their 
 schedule of rates, and at the time an application is made it is 
 difficult to learn from them just what their charges will be. The 
 writer applied for a loan at the office of the Adelphi Realty 
 
20 CHATTEL LOAN BUSINESS. 
 
 Company and was told that the charge would be ^ of i per cent 
 per month. When he asked if this would be the total cost and 
 if there would be no further charge of any sort, the young lady 
 in charge said, "Oh, yes, there will be some charge for investi- 
 gating your security and for making out the necessary papers, 
 but we can't tell how much that will be until we have seen your 
 furniture and looked up your references." 
 
 However, the writer applied for a loan of $50 at the office of 
 the Broadway Securities Company, Broadway and 28th street, ( a ) 
 and was told at once that the charges would be $15 for the use of 
 $50 for two months. 
 
 This represents the amount charged by most of the companies, 
 which averages a rate of 100 per cent and upward per annum, 
 although in a number of cases now on file in the Bureau of Social 
 Research even these rates have been exceeded. 
 
 The following list of rates, obtained from some of the most 
 important companies, gives an idea of their customary charges 
 covering principal and interest : 
 
 Acme Security Company, 289 Fourth Avenue — 
 
 $50 for 8 weeks — 8 notes for $10, each payable 
 
 weekly. 
 If one payment is missed 50 cents extra is charged. 
 Adelphi Realty Company, 116 Nassau Street — 
 
 $50 for 12 weeks — 12 weekly payments of $6.25 
 each. 
 Ariston Realty Company, 1 10 West 34th Street — 
 
 $40 for 10 weeks — $5.75 weekly. 
 Anchor Realty Company, 31 West 42d Street — 
 
 $50 for 4 months — $15 monthly. 
 Riverside Security Company, 271 West 125th Street — 
 
 $50 for 8 weeks — $7.50 weekly. 
 Seiff, 217 West 125th Street — 
 
 $50 for 8 weeks — $8 weekly. 
 Bryant, 140 West 42d Street — 
 
 $50 for 8 weeks — $10 weekly. 
 
 (*) Bernard Wolf, doing business under name of Broadway Securities Co. 
 
METHODS OF BUSINESS. 21 
 
 The usual length of time for loans to run is two or three 
 months, and loans taken for shorter periods seem to bear nearly 
 the same charges. 
 
 It is hardly necessary to state again that money lenders sel- 
 dom openly violate the law so as to render themselves liable to 
 the charge of exacting usury, involving not only loss of prin- 
 cipal and interest, but also ground for criminal prosecution ; on 
 the contrary, they have many devices by means of which they 
 conceal the nature of the transaction. By far the most common 
 of these devices, in fact the one almost universally practised 
 at the present time, is that of deducting a certain sum from the 
 amount borrowed as a charge for papers, etc., and of requiring 
 the borrower to sign a receipt for the full amount and notes for 
 this sum plus the legal rate of interest. The sum thus deducted 
 is usually twenty to twenty-five per cent of the loan. The fol- 
 lowing cases illustrate the operation of this method: 
 
 On August 21, 1908, a lady borrowed $105 from the Times 
 Square Realty Company, Broadway and 41st street. On October 
 9 she took out another loan with the St. Bartholomew's Loan 
 Association for the purpose of settling her account with the 
 Times Square Company. The manager of the latter company 
 refused to give up the mortgage unless $125 were paid. This 
 sum, he claimed, was the amount of the loan, and in addition 
 he demanded $1.25 interest charges. The lady paid the $125, 
 but refused to pay the "interest" charges and the matter was not 
 pressed. 
 
 A Mr. C borrowed $100 from the Anchor Realty Com- 
 pany, of 31 West 42d Street, receiving only $84 in cash. He was 
 required to sign a receipt for $100 and four notes aggregating 
 this sum plus the legal interest, payable monthly. 
 
 Another device commonly practised is that of requiring the 
 borrower to purchase so-called "oil paintings" of the loan com- 
 pany at a figure far exceeding their actual value. The following 
 
 case illustrates the method: Mr. T borrowed $100 from the 
 
 State Credit Company for a period of four months, for which 
 loan he paid $150. At the time of taking the loan he was 
 required to purchase of the company two oil paintings at $5.00 
 
22 CHATTEL LOAN BUSINESS. 
 
 each, making $10, which was deducted from the $100 he was 
 to receive. The pictures, according to the statement of the bor- 
 rower, were worthless. 
 
 Another device employed is that of requiring the borrower 
 to take out insurance on the life of a relative with a designated 
 insurance company, from which company the lender without 
 
 doubt receives a commission. Mr. M borrowed $50 for 
 
 three months and paid $5.48 weekly, or $65.75 in all. In addi- 
 tion he was required to take out an insurance policy for which 
 he paid $8.00. 
 
 A further means of evading the law is that of ostensibly pur- 
 chasing the furniture of the borrower and renting it back for a 
 certain number of months at a figure far exceeding the legal rate 
 of interest. When a sufficient number of payments have been 
 made the title to the furniture is returned to the borrower. 
 
 As previously stated, the first-mentioned device is by far the 
 most common, and since the borrower is allowed to bring no 
 one with him when he calls at the office for his money it is a 
 secure protection to the lender, since the receipt for the full 
 amount is legal evidence of the debt. The amounts exacted by 
 such means over and above the legal rate vary, but the system 
 remains constant, the end and aim of such business evidently 
 being to exact all that the traffic will bear. 
 
 A very common method by which the loan concerns seek to 
 get an additional rate of interest is by encouraging their clients 
 to take a new loan before the old one has been paid. If a bor- 
 rower finds it impossible to meet a payment he will be accom- 
 modated with a further loan on similar terms. The following 
 case illustrates this point: A working woman, in great need of 
 a small loan, borrowed $22 from the London Realty Company, 
 receiving $15 in cash. She signed a note for %22, plus 6 per cent 
 interest, to be repaid in twelve weekly payments. After having 
 made six payments and finding herself unable to meet the one 
 next due, at the advice of the company she took a new loan in 
 order to settle the old one. As a matter of course the usual 
 bonus was deducted by the company, plus the amount she still 
 owed, so that she received almost nothing, but was now indebted 
 for a much greater sum than before. She was an ignorant 
 
METHODS OF BUSINESS. 23 
 
 woman, unable to understand the legal forms she signed, but she 
 did understand that unless she made her payments promptly she 
 would lose her furniture. She has gone on for four years, taking 
 new loans to settle the old ones, until now she is paying $2.16 
 every week, and is still indebted to the London Realty Company 
 to the amount of $24. When the writer suggested that she had 
 paid about enough to the loan company, she said she dared not 
 stop paying what they asked for fear they would come and 
 take her furniture, and if that happened she did not know what 
 she would do. In line with this illustration it would seem that 
 the main value of a mortgage to the lender is often the moral 
 effect it can be made to produce upon the borrower. 
 
IV. 
 
 EXPERIENCES IN PHILADELPHIA. 
 
 This demoralizing system of extortion is by no means con- 
 fined to New York City. Every large city of the country is 
 affected by it, and in a number crusades have been undertaken 
 to stamp out the evil. One of the first cities to engage in this 
 movement was Baltimore, and the excellent work of the Chattel 
 Loan Association of Baltimore in connection with it is described 
 later in this report; but the results of the crusade conducted by 
 the Police Department in Philadelphia are even more illustrative 
 of the situation. ( a ). 
 
 The industrial depression following the panic of October, 
 1907, threw many men out of employment in Philadelphia. They 
 were consequently unable to meet payments due the loan com- 
 panies, and the sheriff's office was flooded with executions. This 
 unusual activity on the part of the loan companies attracted the 
 attention of the sheriff and led to an inquiry on his part into the 
 situation. The startling disclosures resulting led to a more 
 extended investigation by detectives into the business practices 
 and methods of the money lenders. The offices of a number of 
 the larger concerns were raided and the books and papers seized. 
 At the same time widespread publicity was given to these activ- 
 ities, and people who had borrowed money were invited to pre- 
 sent their claims and grievances to designated officials. On the 
 basis of the mass of evidence thus secured a number of loan 
 office managers were arrested. As far as we know none of these 
 cases has yet come to trial, but the books seized are still in pos- 
 
 ( a ) The description of the Philadelphia situation which follows, is sum- 
 marized from an unpublished report on the subject, prepared by Dr. Frank 
 Julian Warne, 
 
EXPERIENCES IN PHILADELPHIA. 25 
 
 session of the police. Meanwhile loan companies continue to 
 do business, and some new ones have been started. 
 
 At the time these arrests were made thirty-five companies 
 were found to be operating throughout the city, besides many 
 individuals engaged in the same business, and the detectives be- 
 lieved that at least thirty additional companies were active, as 
 well as a number of individual concerns, sufficient to bring the 
 total up to one hundred and seventy-five. Many of these com- 
 panies had branch offices in different parts of the city. All of the 
 thirty-five companies with which the detectives were familiar ad- 
 vertised extensively and employed various other devices coupled 
 with promises of secrecy and easy payments, by which to attract 
 borrowers. The intending borrower on furniture was required to 
 sign the following blank : 
 
 I hereby make application through 
 
 my agent to for 
 
 the loan of dollars; said loan to run for 
 
 the period of months; to be paid in 
 
 monthly installments and in addition 
 
 to the amount of the loan I agree to pay the sum of 
 
 dollars, which I understand is the 
 
 charge for drafting papers, appraising my property 
 and looking up the title to same, making all necessary 
 searches, including the judgment records; and also the 
 
 interest at six % in advance 190 
 
 This makes my total indebtedness amount to 
 
 dollars. 
 
 The application blank from which the above was copied was 
 filled out for a loan of $150, to run for fifteen months, to be paid 
 in fifteen monthly installments of $15.65 each, making a total 
 return of $234.75 for a loan of $150. Thus the amount the 
 borrower agreed to pay in addition to the loan was $84.75, f° r 
 "drafting papers, appraising my property and looking up the 
 title to same, making all necessary searches, including judgment 
 records, and also the interest at 6 per cent in advance." 
 
 As security for the loan, chattel mortgages and judgment 
 notes were given. Usually these chattel mortgages were signed 
 in blank by the borrower and filled in by the lender whenever 
 payments stopped. On failure to pay the company usually filled 
 in the judgment note signed in blank, put this in the hands of the 
 sheriff who seized the borrower's goods "by due process of law." 
 
26 CHATTEL LOAN BUSINESS. 
 
 The borrower was also required to fill out the following 
 blank for the lender's information: 
 
 190.... 
 
 Name 
 
 Wife's Name 
 
 Address 
 
 Have lived there 
 
 Where you are 
 
 Last address Time 
 
 Payments per 
 
 Property Valued at 
 
 Any incumbrance on goods To whom 
 
 What amount 
 
 Did you ever have a loan before 
 
 What company 
 
 Employed by 
 
 In capacity of How long 
 
 Previous employed by for 
 
 Look up 
 
 Wants money by 
 
 Appraiser's condition reported 
 
 For $ 
 
 Remarks 
 
 Appraised by 
 
 Recorded by 
 
 Inventory of property. 
 
 The chattel mortgage blank which the borrower was required 
 to fill out and sign stated that the articles therein enumerated 
 were security for the payment of the indebtedness thus incurred. 
 What the borrower actually did was to sell outright his property 
 to the lender upon condition that it be returned to him when the 
 sum agreed upon had been paid. In case of default the borrower 
 empowered the lender "with the aid and assistance of any person 
 or persons to enter his dwelling, house, store and other premises, 
 and such other place or places as the said goods or chattels are 
 or may be placed, and take and carry away the said goods as 
 chattels, and to sell and dispose of the same for the best price 
 he can obtain ; and out of the money arising therefrom, to retain 
 and pay the said sum above mentioned * * * and all charges 
 touching the same, rendering the overplus (if any) unto the bor- 
 rower or his administrators." If the borrower keeps up his pay- 
 ments he is "to remain and continue in quiet and peaceable pos- 
 
EXPERIENCES IN PHILADELPHIA. 27 
 
 session of the said goods and chattels and the full and free enjoy- 
 ment of the same." 
 
 Having complied with these necessary requirements the bor- 
 rower received the money, not the amount applied for, however, 
 although the notes signed indicated the receipt of this sum, but 
 the amount remaining after commissions, fees, costs of investi- 
 gation, paper, etc., had been deducted, — and this in spite of the 
 advertisements of the companies guaranteeing "the full amount 
 in cash; nothing deducted." 
 
 Loans of $20 were made for no longer period than seven 
 months; loans of $50 or more were made for not less than six 
 months; and as a rule loans for $175 and more were made for 
 no shorter time than ten months, and usually they extended over 
 an entire year. The scale card of rates charged by the companies 
 was found to be by no means rigidly followed, for in many cases 
 the monthly installments and the total amounts returned on simi- 
 lar loans varied considerably. In this connection the practices 
 of one representative company differed in the case of different 
 borrowers of similar amounts for the same period. On forty- 
 eight loans of $10 for five months, four different rates were 
 charged. Thirty-five of these borrowers each paid monthly $3.10, 
 or a total of $15.50; seven paid $3.25 each month, or a total of 
 $16.25 ; four paid $3.30 monthly, or $16.50, while two paid $3.35, 
 or $16.75. Of the sixty-two who borrowed $20 for seven months, 
 thirty-nine paid $4.30 monthly, or a total of $30.10; nine paid 
 $4.45, or $31.15; eight paid $4.40, or $30.80; three paid $4.60, 
 or $32.20; one paid $4.66, or $32.62; one paid $4.30, or $30.10, 
 and one paid $4.25, or $29.75. Of eighty-six loans of $25 for 
 seven months, fifty-four borrowers paid $5.30 each month, or a 
 total of $37.10; fourteen paid $5.45, or $38.15 ; twelve paid $5.40, 
 or $37.80; four paid $5.35, or $37.45; and in two other cases one 
 paid $5.30 monthly, or $37.10, and the other $5.55, or $38.85. ( a ) 
 
 This variation of rate was quite prevalent. There may be 
 
 (») If presented in the scale card table these charges would he as follows : 
 
 «m t^ «™ ™™ J $3.10 :$3.25 :$3.30 :$3.35 : 
 $10 for five mos. f | 5 50 .f 6 25 .f 6 50 .J Q75 . 
 
 eon *~„ c„™ o 5 $4-25 :S4.30 :$4.40 :$4.45 :$4.60 :$4.66 : 
 
 $20 for seven mos. { £ 9 75 .g 10 .g 80 £ 115 .g 2 20 .§ 2 62 . 
 
 «9* *™ *^c„ ™™ J 37.10 : :37.45 :37.80 :38 :15 :38.S5 : 
 $25 for seven mos. j 37 10 :37>45 ;37 80 :38 15 :3g 85 . 
 
28 CHATTEL LOAN BUSINESS. 
 
 no genuine business explanation for the practice, but it may have 
 been due to the varying ability of borrowers to make their pay- 
 ments, the greater rate being charged where the greater risk was 
 incurred. 
 
 A similar variation also existed in rates charged for similar 
 loans for different periods. For $10 for three, four, five, six, 
 and seven months respectively, the charges were as follows : 
 $14.40, $14.00, $15.50, $15.60 and $18.20. The same in general 
 is true of larger loans. This variation is possibly explained by 
 the fact that there was a greater demand for loans for three 
 months than for four, hence the greater charge for the shorter 
 period, the lower rates being used by the lender as a means of 
 advertising his business. 
 
 An analysis of the seven hundred and fourteen loans on 
 household goods made by one representative company covering 
 a period of six months shows the number and percentage of bor- 
 rowers for the respective periods to be as follows : 
 
 LENGTH Ojt i'IME 
 IN MONTHS. 
 
 1 
 
 NUMBER OF 
 BORROWERS. 
 1 
 
 PER CENT, 
 14 
 
 2 
 
 2 
 
 .28 
 
 3 
 
 40 
 
 5.60 
 
 4 
 
 17 
 
 2.38 
 
 5 
 
 107 
 
 15.00 
 
 6 
 
 72 
 
 10.08 
 
 7 
 
 299 
 
 41.88 
 
 8 
 
 13 
 
 1.82 
 
 9 
 
 27 
 
 3.78 
 
 10 
 
 85 
 
 11.90 
 
 12 
 
 51 
 
 7.14 
 
 The amount secured by these 714 borrowers and the number 
 and percentage in each loan group is as follows : 
 
 AMOUNT NUMBER OF 
 
 BORROWED. BORROWERS. PER CENT. 
 
 $10 93 13.02 
 
 11 to 20 225 31.51 
 
 21 to 30 179 25.07 
 
 31 to 40 46 6.44 
 
 41 to 50 67 9.38 
 
 51 to 75 36 , ... 5.04 
 
 76 to 100 39 5.47 
 
 101 to 150 18 2.52 
 
 151 to 200 8 1.12 
 
 250 2 28 
 
 300 1 14 
 
EXPERIENCES IN PHILADELPHIA. 2Cf 
 
 When a payment is not promptly met the lender at once puts 
 his machinery into operation. He writes the delinquent bor- 
 rower, pointing out the significance of his promise to pay, the 
 legal punishment for failure to do so, and ends by threatening 
 action unless payment is made at once. These threats and 
 demands are continued, and at the same time "dun letters" in 
 glaring red envelopes, with the name of the loan company dis- 
 played in large type, are sent to the borrower's home and place 
 of employment. Collectors make frequent calls, and thus the 
 borrower is constantly "hounded." Finally he receives some such 
 letter as the following: 
 
 "Dear Sir: — 
 You have failed to pay your note of November 11th, 
 
 as you promised you would. Now, Mr. H , we 
 
 have this to say to you for the last time; we will not 
 fool with you longer, but if this is not paid by 6 p. m. 
 November 13th, without fail, we shall issue execution 
 against you at once and have the sheriff's office sell 
 the furniture to satisfy this ^bt of yours to us." 
 
 Or a letter of this type : 
 
 Philadelphia, Pa., 190 .... 
 "Dear Sir and Madam: — 
 
 Our clients of this city have 
 
 placed in our hands for collection a claim against you 
 
 of , this amount being the balance due on 
 
 money borrowed by you and for which you assigned 
 all your collateral over to the said company, and in 
 addition signed a judgment note containing a Waiver 
 to the $300 exemption law. 
 
 The informs us that they have re- 
 peatedly requested a settlement of this account by 
 you, and you have not only ignored their requests and 
 disregarded the papers you have signed, but you have 
 not shown the slightest disposition to pay. 
 
 If you wish to adjust this matter in an amicable 
 way, and without compelling us to proceed legally, we 
 would advise you to remit or call at this office by 
 
 In the event of your failure to do as requested, we 
 shall issue execution on the note signed by you out 
 of Common Pleas Court, and additional costs and in- 
 terest. This procedure will mean a levy on all your 
 household effects by the sheriff. 
 
 Very respectfully, 
 
30 CHATTEL LOAN BUSINESS. 
 
 But if the borrower still refuses to pay, he gets the following 
 spurious foreclosure notice : 
 
 "Notice of Foreclosure 
 
 State of Pennsylvania, ] 
 County of J ss,: 
 
 To whom it may concern: 
 
 Default having been made in the conditions of a 
 certain judgment note secured by Bill of Sale as col- 
 lateral security, made and executed by and 
 
 of the City of County 
 
 of State of Pennsylvania, to 
 
 at the office of under which contract 
 
 and agreement there is due and remaining unpaid at 
 the date hereof, the sum of $ 
 
 Inasmuch as the said and 
 
 acting as custodian (s) for said goods have defaulted 
 
 in the conditions aforesaid, the said 
 
 will be obliged to take steps at once to take personal 
 possession of said goods according to law and the terms 
 of said contract. 
 
 Unless payment is made at the office of the 
 
 at or satisfactory arrangements made 
 
 on or before the day of 
 
 190 by o'clock M. 
 
 By 
 
 Signed, sealed and delivered this Agent. 
 day of A. D. 190 " 
 
 And if there is still no satisfactory response the notification 
 of a fake execution sale is sent to the borrower. This feigned 
 use of the official authority has been of considerable influence 
 in frightening borrowers into complying with the lender's de- 
 mands. There also appears to exist an alliance between the 
 money lenders and shyster attorneys, as the following interview 
 appearing in the Philadelphia Public Ledger of January 16, 1908, 
 shows. The speaker was the sheriff's solicitor, George S. Rus- 
 sel, Esq. 
 
 "The legal work done for the money lenders is not confined 
 to any one class of attorneys, as might be imagined. I have the 
 names of twenty-three members of the Philadelphia bar before 
 me who have writs here for various money lending firms. We 
 have nothing to congratulate ourselves upon in our system of 
 
EXPERIENCES IN PHILADELPHIA. 3 1 
 
 enforcing the rapacious claims of the money lenders. I have 
 been in close touch with hundreds of instances, and the public 
 is in ignorance of the shameful abuse of our court processes 
 under excuse of the law. Of the many writs of execution where 
 the household goods of the debtor are seized and sold by the 
 sheriff at least one-fourth are issued by money lenders, com- 
 pared to whom the memory of Shylock is a monument to charity. 
 Debts incurred to money lenders under conditions of distress 
 and misfortune are obtained by a contract by which the person 
 duped renounces and waives every right and legal safeguard. 
 After thus rendering himself and those depending upon him 
 helpless, he adds to his misery the additional burden of paying 
 his tormentor's attorney's fees and the costs." 
 
 If after this threatening process the borrower still fails to 
 pay, the loan company, when it feels secure, resorts to law. Of 
 2,582 writs of execution received by the sheriff of Philadelphia 
 County in 1907, about 40 per cent were from money lending com- 
 panies, and of the whole number, 2,362 were returned as satis- 
 fied. This shows the extent of the loan business in Philadelphia. 
 
 The costs of such proceedings to the borrower are illustrated 
 by the following case in which action was brought to recover a 
 balance of $17 on a loan of $50. The additional costs amounted 
 to $15.94, including the following items: Costs for attorney for 
 plaintiff, $4.12; prothonotary fee, $3.37; sheriff's costs, $3.50; 
 service of writ, $0.25; mileage, $0.10; publishing hand bills of 
 sale, $4.35. In addition to these costs, in the case of a sale of the 
 borrower's goods an additional 2 per cent is included for "pound- 
 age." Where the amount sued for is small, as is true in most 
 cases, the costs to the dependent borrower may total from two to 
 five times the sum which the money lender sues to recover. 
 
 The following case shows the close connection existing be- 
 tween the business of the so-called "rival" loan companies and 
 the operation of some of their methods of business : 
 
 Mrs. A. secured a loan of $30, on which sum she paid charges 
 but received only $20. She made her last payment on February 
 20th, 1905, to close her account and received a receipt "in full 
 of all payments to date." Seven months later, on September 1st, 
 
32 CHATTEL LOAN BUSINESS. 
 
 1905, her husband received a letter from a constable and col- 
 lector, reading as follows : 
 
 "In regard to $8.25 claim for Security Co. 
 
 Dear Sir: 
 The above noted claim has been placed in my hands 
 
 against you for settlement in favor of 
 
 Security and Loan Co. for which I hold your note and 
 bill of sale. I will allow you five days from this date 
 to arrange a settlement. After that time I shall pro- 
 ceed legally to collect my claim and the costs that 
 accrue will be added to your present indebtedness. 
 Bring this notice with you." 
 
 About this time Mrs. A.'s little child died. Needing money 
 for funeral expenses, Mrs. A., having twice declined to pay the 
 $8.25, applied for a loan of $40 from a different loan company. 
 This company knew all about her relations with the other com- 
 pany, and the manager said he would make the $40 loan to her 
 if she would settle the claim of the first company unjustly held 
 against her. Because of her great need she paid the $8.25 claim- 
 ed by the first company, but the manager of the second company 
 now declined to keep his promise and refused to make the new 
 loan of $40. Later Mrs. A. received a letter from the first com- 
 pany to the effect that "A payment of $1.25 will fall due on Sep- 
 tember 30th. Kindly give this matter your immediate attention." 
 
 The following letter, written by a borrower to the Philadel- 
 phia detectives, shows how the lender takes unfair advantage of 
 the borrower's ignorance of legal matters : 
 
 "The percentage they charge is awful and when you 
 get behind in your payments they threaten to take 
 your goods and you are compelled to pay them what- 
 ever they ask. Only this week I was a victim of one, 
 having borrowed $5.00 for which I was to pay $8.00. I 
 got back in my payments. They came and was going 
 to take my furniture. To save it I was compelled to 
 pay them $12.00." 
 
 This campaign conducted by the Philadelphia Department of 
 Public Safety seriously affected the receipts of the loan com- 
 panies for the time being; but it cannot be said that the cam- 
 paign was productive of any lasting results, for as soon as the 
 activity of the Department waned business returned to its former 
 
EXPERIENCES IN PHILADELPHIA. 33 
 
 basis. Not only are the old companies continuing to operate as 
 we have said, but new companies of the same sort are known 
 to have entered the field. 
 
 Crusades directed against the loan companies similar to that 
 of the Police Department of Philadelphia have been undertaken 
 by the press and other agencies in many other cities of the coun- 
 try; but the results have been of no great value, except in those 
 cities where the investigations led to the founding of philan- 
 thropic loan agencies to compete with the extortionate money 
 lenders. Prominent among such cities are Baltimore and Cin- 
 cinnati, and the benefits derived by the needy from these institu- 
 tions can hardly be overestimated. 
 
V. 
 
 WHAT THE PHILANTHROPIC COMPANIES ARE 
 
 DOING. 
 
 To illustrate the proposition that competition can accomplish 
 much in regulating the loan business, no better instance can 
 be given than the history of the Chattel Loan Association of Bal- 
 timore. ( a ) Baltimore, a city of homes, was considered one of 
 the best "loan towns" on the Atlantic coast. The state constitu- 
 tion, while it ordained that 6 per cent per annum should be the 
 legal rate of interest, did not provide a penalty for charging more 
 than this rate ; the victim of the money lender was entitled to 
 recover only the excessive interest paid and the lender otherwise 
 went free. A reasonable fee was also allowed the lender for 
 drawing papers, etc., and gradually it became the practice to 
 charge a minimum fee of $3.50 for loans under $50 for papers, 
 and as much more as could be collected on loans of larger 
 amounts. The scale of rates for loans increased, until in 1898 
 charges were about as follows : 
 
 For loans under $50, 10 per cent per month for interest, from 
 $3.50 to $5.00 for papers, and $1.00 to $2.00 for recording and 
 acknowledgments before a notary; for loans not over $75, 8 per 
 cent per month was charged for interest and from $6.00 to $7.50 
 for papers ; while for loans of $100 or over 5 per cent per month 
 for interest and from $10 to $15 for papers, etc., was exacted. 
 No partial payments were ever accepted on account of principal, 
 which was to be repaid in one lump sum, the charges above men- 
 tioned being for the use of the money only. A system of "ex- 
 tension" fees for granting additional time on loans was adopted. 
 
 ( a ) The account of the Baltimore situation which follows, is taken from a 
 statement prepared for the Bureau of Social Research by W. N. Finley, manager 
 of the Chattel Loan Association of Baltimore. 
 
WHAT THE PHILANTHROPIC COMPANIES ARE DOING. 35 
 
 No loans were made for more than six months. A typical case 
 is illustrative of the system: A. borrowed $125 at 5 per cent per 
 month for six months. He was charged $10 for papers, etc., and 
 by force of circumstances had the loan renewed by the same 
 money lender no less than six times. At the end of the third year 
 he had paid (exclusive of extension fees) for interest $225; for 
 renewal fees (new mortgages) $60; total $285. When he was 
 suddenly taken ill and was in consequence unable to meet the 
 usual $6.25 monthly interest note, he received a notice to the 
 effect that unless the entire original sum borrowed, $125, was 
 repaid by noon on the ensuing Wednesday, his mortgage would 
 be foreclosed and his furniture and effects sold to satisfy the debt. 
 The worm turned at last, but the attorney he employed was not 
 as quick as he should have been and it cost A. $28 more to get 
 his mortgage released. The total amount borrowed was $125, the 
 total repaid, $313, in addition to further sums for extension fees. 
 Thousands of such loans were made annually in Baltimore 
 at enormous profit to the lender and corresponding discomfort 
 and suffering to the borrower. These conditions continued for a 
 long term of years and naturally grew worse ; in fact, no one 
 seemed to know or care anything about the state of affairs, until 
 in the fall of 1897 the late Rev. Maltbie B. Babcock became inter- 
 ested in the matter. He set on foot an investigation which 
 brought to light the general situation as previously mentioned. 
 Without loss of time a meeting of business men was called to con- 
 sider the situation and devise ways and means of permanently 
 correcting the existing evils. It was finally determined to start 
 a business organization which would have for its sole object the 
 lending of money upon security of a chattel mortgage, and which 
 would charge only enough to pay running expenses and a fair 
 dividend to its stockholders. At this meeting all needed capital 
 was quickly subscribed and in due time a charter obtained under 
 the general incorporation act of Maryland. The chartered capital 
 was $30,000, all subscribed and half paid in. At the end of two 
 years the capital stock was increased to $50,000, and two years 
 later to $75,000. The rates charged at the start were experi- 
 mental, but by the time the legislature convened in 1900 it was 
 
36 CHATTEL LOAN BUSINESS. 
 
 seen that they could be lowered, and accordingly the Loan Asso- 
 ciation proposed the first chattel act for Maryland, in which the 
 rates for loans on furniture were fixed at a figure averaging 
 $1.00 less per loan than the Association had been charging from 
 the time it began business. The bill was passed without amend- 
 ment and became a law. After two more years of experience 
 the law was slightly amended in 1902. This amended law stands 
 to-day. ( a ) It allows 6 per cent interest and an additional in- 
 clusive charge of $5.00 for examination and valuation of prop- 
 erty offered as security for the loan, and for preparation of the 
 papers, where the amount loaned does not exceed $50; $6.00 
 where the amount exceeds $50 and equals $100 or less; 5 per 
 cent additional of the excess over $100 where the amount loaned 
 exceeds $100 and equals $1,000 or less, and 2^2 per cent addi- 
 tional of the excess over $1,000 where the amount exceeds $1,000; 
 for additional papers, the amount actually paid for same. These 
 charges are to be deducted at the time of making the loan. 
 
 In ten years the Association has made over nine thousand 
 loans, paid 5 per cent on its capital and 1 per cent to surplus. ( b ) 
 But the real test of the work of the Association is found in the 
 results produced in the community. Two of the largest loan 
 offices in the city have been driven out of business ; a search of 
 the dockets in both law and equity courts proves that during the 
 past four years not a single suit in either law or equity has been 
 filed by a victim of a mortgage money lender, nor has any money 
 lender brought suit against a customer. It should not be inferred 
 that there is no extortion practiced in the city, but it has been 
 very considerably reduced. Several new loan offices have been 
 opened since 1902, where loans can be obtained at the legal 
 rate. This experience shows that much can be accomplished by 
 legislation, but that more real help can be afforded by lending 
 money at low rates, and that such a business is a fair paying, safe 
 investment for capital. 
 
 The Loan Association of Baltimore has a counterpart in the 
 St. Bartholomew's Loan Association of 211 East 42nd Street, 
 New York City. This Company, organized under Chapter 326 of 
 
 ( a ) Appendix IV, page 46. 
 
 (b) Appendix VII, page 52. 
 
WHAT THE PHILANTHROPIC COMPANIES ARE DOING. 37 
 
 the laws of 1895, as amended, is allowed to charge 2 per cent 
 a month and $1.00 for papers on loans of $50 or less, and $2.00 
 on loans of more than $50. It began business thirteen years ago, 
 charging i l / 2 per cent a month and $1.00 for papers, but has 
 since reduced its interest charge to 1 per cent per month. ( a ) 
 
 The Association never makes a loan unless it is thought to be 
 a good thing for the applicant, no matter how valuable the se- 
 curity may be. The character of its business is shown by the fact 
 that its losses have aggregated less than five-eighths of one per 
 cent. Its business possibilities are revealed by the fact that it 
 cannot begin to meet the demand for loans, there being a long 
 waiting list of prospective borrowers. The Association has never 
 foreclosed a mortgage, unless it was discovered that the bor- 
 rower was intending to move his furniture away and avoid pay- 
 ing the loan. It has always maintained a policy of leniency, and 
 has given the borrowers all the time they needed in paying back 
 their loans. In the last four years the loans of the Association 
 have aggregated $290,840. 
 
 The Citizens' Mortgage Loan Company of Cincinnati, Ohio, 
 is a similar agency, organized on the lines of the Baltimore Asso- 
 ciation, for the regulation of the loan business. A number of 
 men engaged in philanthropic work, who investigated the chat- 
 tel loan business in Cincinnati, became convinced of the futility 
 of any direct attempt to remove its evil and oppressive features 
 by legislation or exposure through the press. After mature de- 
 liberation, they decided that the only practical remedy was to 
 furnish an opportunity where those compelled to borrow on 
 chattels could do so without becoming helplessly engulfed in 
 the mire of debt. The Citizens' Mortgage Loan Company was 
 therefore organized, with a view to applying this remedy. That 
 they fully comprehended the situation, as well as the possibilities 
 
 (») In the report on the Salary Loan Business in New York City, prepared 
 by Mr. C. W. Wassam, page 90, a statement is made that "the officers of the 
 church have decided not to extend the business. It is their belief that its 
 practicability has been demonstrated from a business standpoint, and that it 
 should be enlarged by an organization entirely separated from the church ..." 
 It has recently been learned from authoritative sources that the policy of the 
 church in this matter is quite the reverse of that reflected in this statement. 
 There is entire willingness on the part of the church authorities to expand as 
 rapidly as capital can be provided. It should be said that the misleading 
 statement above quoted was based on information afforded by the manager of 
 the loan association. 
 
 For financial statement see Appendix VIII, page 55. 
 
38 
 
 CHATTEL LOAN BUSINESS. 
 
 of their experiment, is best told in the business success of the 
 company and in the changes that have been effected in the loan 
 business in Cincinnati. The usurer has not been abolished, but 
 his power for evil has been curtailed, and he has been compelled 
 to observe better business standards. 
 
 The Company was organized in June, 1900, with a capital of 
 $50,000, since increased to $100,000. During the first eighteen 
 months the interest charged was 12 per cent per annum, with a 
 small expense for papers. At the end of that time it was found 
 that the 12 per cent rate could safely be reduced to 8 per cent, 
 at which figure all loans are now made. Even at this rate the 
 company has been able to pay a 5 per cent dividend annually for 
 the past four years. ( a ) Over 13,000 loans, aggregating $700,000, 
 have been made, and in its entire business the company has never 
 been obliged to resort to a forcible sale of security to satisfy its 
 claims. The losses have been less than one-half of 1 per cent, 
 a fact which speaks volumes for the honorable and liberal policy 
 of the company and the honesty of appreciative patrons. 
 
 The following table gives the company's rates in comparison 
 with those of all others in the city: 
 
 Amount. 
 
 6 Months. 
 
 9 Months. 
 
 One Year 
 
 $25.00 
 
 50.00 
 
 100.00 
 
 Citizen's 
 
 Loan Co. 
 
 $3.00 
 
 4.50 
 
 7.50 
 
 All others. 
 $8.00 or more 
 11.00 or more 
 17.00 or more 
 
 Citizen's 
 Loan Co. 
 
 $5.50 
 
 All others. 
 
 $16.00 
 or more 
 
 Citizen's 
 Loan Co. 
 
 $11.50 
 
 All others. 
 
 $34.50 
 or more 
 
 The Provident Loan Society of Detroit has just finished its 
 second year. Its rates are reasonable and its earnings sufficient 
 to pay expenses, 5 per cent upon capital invested, and provide a 
 small surplus. As in other cities, the excessive charges of money 
 lenders were the impelling cause which led to the organization 
 of the Detroit company. Following a newspaper communication 
 which called attention to the need of a philanthropic loan com- 
 pany, two men talked together about it, and after studying the 
 methods used, especially in Baltimore and Cincinnati, they called 
 together a half dozen other men of influence who agreed to act 
 
 ( a ) Appendix IX, page 57. 
 
WHAT THE PHILANTHROPIC COMPANIES ARE DOING. 39 
 
 as directors and provide money for the commencement of the 
 business. Because the distress occasioned by the mortgage loan 
 offices seemed to be greater than that caused by the pawn shops, 
 the society has thus far loaned upon the mortgage rather than the 
 pledge of personal property. 
 
 Other companies of this sort are the Workingmen's Collateral 
 Loan Company of Cleveland, Ohio, and the Workingmen's 
 Loan Association of Boston, Mass. 
 
 The last mentioned company, charging i per cent a month, 
 pays 6 per cent on the investment and is accumulating a surplus. 
 It refuses to take some mortgages which other companies might 
 not consider too risky, but it is constantly lending to poor people. 
 The experiences of these companies prove that a i per cent per 
 month business may be profitable. Whether any salary loan com- 
 panies could do a profitable business at such a rate has not thus 
 far been demonstrated. 
 
APPENDIX I. 
 
 The New York Law. Chapter 326 of the Laws of 1895, as 
 amended by Chapter 78 of the Laws of 1902, and Chapter 333 of 
 the Laws of 1905 : 
 
 AN ACT to provide for the incorporation of associations for lending 
 money on personal property and to forbid certain loans of money, 
 property or credit. 
 
 The People of the State of New York represented in Senate and 
 Assembly do enact as follows: 
 
 Section I. In any county of this State containing or which is con- 
 tained in an incorporated city, except in the counties of Monroe and 
 Westchester, any five or more persons may organize and become a 
 corporation for the purpose of aiding such persons as shall be deemed 
 in need of pecuniary assistance by loans of money at interest not ex- 
 ceeding $200 to any one person, upon a pledge or mortgage of personal 
 property by making, signing, acknowledging and filing a certificate in 
 the form prescribed by the business corporation law. Before transact- 
 ing any business, the said corporation shall execute and file a bond 
 in an amount equal to one-tenth of its capital stock, but not less than 
 the sum of $5,000, with the Supt. of Banks, to be approved by him 
 for the faithful observance of all general provisions of law regulating 
 business corporations within the State of New York and the provi- 
 sions of this act. Said bond shall be executed by a domestic or for- 
 eign corporation, authorized by the Supt. of Insurance to transact 
 within the State the business of surety insurance as surety. At the 
 time of filing such bond, such corporation shall also file with the Supt. 
 of Banks a certified copy of its certificate of incorporation. Upon the 
 filing of such certified copy of the certificate of incorporation and the 
 filing and approval of the bond hereinbefore provided for, the Supt. 
 of Banks shall issue to the corporation a license to transact business 
 under this act, which license shall terminate on the 31st day of March 
 in the following calendar year. This act shall not apply to the coun- 
 ties of Monroe and Westchester. 
 
 Section II. Said bond shall be renewed and refiled annually in 
 January of each year and shall be approved by the Supt. of Banks and 
 a new license issued on or before the first day of March; or the cor- 
 poration shall within twenty days thereafter cease doing business and 
 proceedings for a dissolution shall be instituted by the Attorney Gen- 
 
APPENDICES. 41 
 
 eral at the request of the Supt. of Banks. Every such corporation shall 
 also in January of each year make a report for the previous calendar 
 year to the Supt. of Banks, giving such information as he shall require, 
 which report shall be verified by the oath of the president or secretary; 
 and it shall make such other and further reports under the like oath 
 as the said superintendent shall demand at any time. The Supt. of 
 Banks shall cause every such corporation to be examined at least once 
 In every year and may cause it to be examined as often as he deems 
 it necessary; and it shall make such other and further reports under 
 the like oath as the said superintendent shall demand at any time. 
 The Supt. of Banks shall cause every such corporation to be examined 
 at least once in every year and may cause it to be examined as often 
 as he deems it necessary; and the examiners appointed by him shall 
 be given free access to all books, papers, securities and other sources 
 of information in respect to the said corporation; for which examina- 
 tion a reasonable charge shall be imposed by the Supt. and paid by 
 the said corporation within twenty days after notice of the charge 
 shall have been mailed to the corporation at the last address given 
 by it. If any such corporation shall knowingly violate any of the 
 provisions or restrictions of this act, the said bond shall be forfeited 
 and shall be collected by suit by the Supt. of Banks in the name of 
 the people of the state, which suit shall be conducted by the Attor- 
 ney General; and a reward of $250 shall be paid by the state to the 
 person first giving information and furnishing legal proof of such vio- 
 lation. Corporations organized under the provisions of this act shall 
 be subject to the supervision of the Supt. of Banks; and the general 
 provisions relative to the supervision of moneyed corporations con- 
 tained in Article I of the Banking Law shall be applicable to them, 
 in so far as they are not inconsistent with the provisions of this act. 
 All expenses incurred by the Supt. of Banks in preparing and furnish- 
 ing suitable blanks, stationery and forms, in preparing and keeping 
 suitable records, £or clerical service and such other expenses as 
 may be Incident to such supervision, shall be paid by said corporations 
 in such proportions as the Supt. may deem just and reasonable. The 
 expenses incurred and the services performed on account of any such 
 corporation shall be charged to and paid by the corporation for whom 
 they were incurred and performed. All moneys received by him in pay- 
 ment of such charges shall be deposited and paid by him into the 
 Treasury of the state to reimburse all sums advanced from the Treas- 
 ury for such expenses. If any such corporation shall fail to pay such 
 charges as herein required, including charges for examination, the 
 Supt. shall report to the Attorney General the failure of any such 
 corporation to pay such charges and the Attorney General shall there- 
 upon bring an action in the name of the people for the recovery of 
 such charges. All such charges, including the charges made for ex- 
 amination shall be a preferred claim against the assets of any such 
 corporation upon its dissolution or upon its making a general assign- 
 ment for the benefit of creditors. If it shall appear to the Supt. of 
 Banks from any examination or report that the capital stock of any 
 such corporation is Impaired, or that it has violated its charter or any 
 law of this state; or is conducting its business in an oppressive or 
 unauthorized manner; or is by payment of excessive salaries, excessive 
 rents or any other means, attempting to evade the provisions of this 
 act relative to a reduction in the rate of interest, which such corpora- 
 
42 CHATTEL LOAN BUSINESS. 
 
 tion may legally charge, he may, by an order made over his hand and 
 official seal, direct any such corporation to make good such impair- 
 ment of capital; or to discontinue the illegal, oppressive or unauthor- 
 ized methods and practices mentioned in such order; or to discon- 
 tinue the payment of the excessive salaries, rents or other expenses, 
 by means of which an attempt to evade the provisions of this act is 
 apparent. If any such corporation shall not comply with such order 
 within twenty days after the same shall have been mailed to the last 
 address filed by such corporation in the banking department, the Supt. 
 shall communicate the facts to the Attorney General, who shall there- 
 upon commence an action for the dissolution of the corporation; and 
 the corporation shall upon proof of failure to comply with such order 
 be dissolved and a permanent receiver therefor appointed. 
 
 Section III. Every such corporation shall have the general powers 
 of a business corporation as provided by law and shall be subject to 
 all the duties, obligations and restrictions of a business corporation 
 so far as applicable thereto and shall have the following additional 
 powers: It shall be entitled to act as pawnbroker within such county 
 and shall be subject to and entitled to all the benefits and provisions 
 of the laws of the state and of all ordinances of the city in which it 
 is located concerning pawnbrokers; except that it shall not be re- 
 quired to obtain a license or file any bond other than that provided 
 for in the first section of this act, and it may lend money to such 
 persons within such county as shall be deemed by it in need of pecun- 
 iary assistance and may take as security for the payment of any such 
 loan either a pledge or a mortgage of any personal property without 
 the actual delivery to it of the property pledged or mortgaged together 
 with other lawful securities. It shall be entitled to charge and receive 
 upon each loan made by it without the actual delivery to it of the prop- 
 erty pledged or mortgaged, which charge shall include all services of 
 every character in connection with said loan, except upon the fore- 
 closure of its security, interest or discount at a rate not exceeding 
 two percentum per month. It may also charge for the first examina- 
 tion of the property to be pledged or mortgaged and for drawing and 
 filing the necessary papers and for all other expenses a sum not ex- 
 ceeding $2, if a loan of more than §50 shall actually be made, and a 
 sum not exceeding $1 if a loan of $50 or less shall actually be made; 
 but no further charge for examination of the property or for drawing 
 or filing papers or for any services or expenses or upon any pretext 
 whatsoever, beyond the said charge for interest or discount shall be 
 made upon any renewal or extension of the loan or any transfer or 
 change of the loan or upon any other occasion within one year from 
 the date of the original loan or oftener than once in each period of 
 twelve months thereafter. No loan greater than $200 shall be made 
 under the authority of this section, nor shall any one person owe 
 any such corporation more than $200 for principal at one time. 
 
 Section IV. No such corporation shall in any year declare or pay 
 dividends on its capital stock amounting to more than ten percentum. 
 The Supt. of Banks, upon ascertaining that any such corporation has, 
 during the previous calendar year, made a net profit amounting to 
 more than ten percentum on its capital, shall have authority, after ten 
 days' notice to the corporation, to make an order reducing the rates 
 
APPENDICES. 
 
 43 
 
 of interest, discount and charges which such corporation may lawfully 
 charge or receive upon loans, to such sums as will in his judgment 
 produce a net return of ten percentum on its capital stock. Any order 
 made under this section shall take effect at such time not less than 
 one month after it is made as the order shall name and shall remain 
 in force until revoked. Except in the City of New York, no such 
 corporation shall make any loan in any other county than that in which 
 its principal business office is located, nor take securities on property 
 located in any other counties. 
 
 Section V. In any such county no person or corporation other than 
 corporations organized pursuant to this act shall directly or indi- 
 rectly charge or receive any interest, discount or consideration greater 
 than the legal rate of interest upon the loan, use, or forbearance of 
 money, goods or things in action, less than $200. in amount of value, 
 or upon the loan, use, or sale of personal credit in any wise, where 
 there is taken for such loan, use or sale of personal credit, any secur- 
 ity upon any household furniture, apparatus or appliances, sewing 
 machine, plate or silverware in actual use, tools or implements of 
 trade, wearing apparel or jewelry. The foregoing prohibition shall 
 apply to any person who, as security for any such loan, use or for- 
 bearance of money or for any such loan, use or sale of personal credit 
 as aforesaid, makes a pretended purchase of property from any person 
 and permits the owner or pledgor to retain the possession thereof, or 
 who, by any device or pretense of charging for his services or other- 
 wise, seeks to obtain a larger compensation in any case hereinbefore 
 provided for. Any person and the several officers of any corporation 
 who shall violate the foregoing prohibition shall be guilty of a mis- 
 demeanor and upon proof of such fact, the debt shall be discharged 
 and the security shall be void. But this Section shall not apply to 
 licensed pawnbrokers making loans upon the actual and permanent 
 deposit of personal property as security, nor shall this section affect 
 in any way the validity or legality of any loan of money or credit 
 exceeding $200 in amount. 
 
APPENDIX II. 
 
 Provision of the Penal Code of New York : 
 
 Section 378. A person who takes security upon any household 
 furniture, sewing machines, plate or silverware in actual use, tools or 
 implements of trade, wearing apparel or jewelry, for a loan or for- 
 bearance of money or for the use or sale of his personal credit, condi- 
 tioned upon the payment of a greater rate than six percentum per 
 annum, or who, as security for such loan, use or sale of personal 
 credit, as aforesaid, makes a pretended purchase of such property 
 from any person upon the like condition, and permits the pledger to 
 retain the possession thereof, is guilty of a misdemeanor. 
 
APPENDIX III. 
 
 The Business Corporation Law of New York. Chapter 460 
 of the Laws of 1896 : 
 
 Section II. Three or more persons may become a stock corpora- 
 tion for any lawful business purpose or purposes other than a moneyed 
 corporation or a corporation provided for by the banking, the insur- 
 ance, the railroad and the transportation corporation laws, by making, 
 signing, acknowledging and filing a certificate which shall contain: 
 
 1. The name of the proposed corporation. 
 
 2. The purpose or purposes for which it is to be formed. 
 
 3. The amount of the capital stock and if any portion be pre- 
 ferred stock, the preferences thereof. 
 
 4. The number of shares of which the capital stock shall con- 
 sist, each of which shall not be less than five nor more than one 
 hundred dollars, and the amount of capital not less than $500 with 
 which said corporation will begin business. 
 
 5. The city, village, or town in which its principal business office 
 is to be located. 
 
 6. Its duration. 
 
 7. The number of its directors, not less than three nor more than 
 thirteen. 
 
 8. The names and post office addresses of the directors for the 
 first year. 
 
 9. The names and post, office addresses of the subscribers and a 
 statement of the number of shares of stock which each agrees to take 
 in the corporation. 
 
 The certificate may contain any other provisions for the regulation 
 of the business and the conduct of the affairs of the corporation, and 
 any limitation upon its powers and upon the powers of its directors 
 and stockholders which does not exempt them from any obligation or 
 from the performance of any duty imposed by law. 
 
APPENDIX IV. 
 
 The Maryland Law. Chapter 208 of the Laws of 1902 : 
 
 AN ACT regulating the loan of money, when, as security for such loan,, 
 a lien is taken upon household furniture and effects, musical in- 
 struments, typewriters and sewing machines, in use or located in 
 any dwelling house, by repealing and re-enacting with amend- 
 ments Section 7 of Article 49, of Code of Public General Laws, title 
 "Interest and Usury," as the same was re-enacted by Chapter 404 
 of the Acts of the General Assembly of Maryland, passed at its 
 January session in the year 1900. 
 
 Section 1. Be It Enacted by the General Assembly of Maryland, 
 that Section 7 of Article 49, of the Code of Public General Laws, title 
 "Interest and Usury," as the same was enacted by Chapter 404, of the 
 Acts of the General Assembly of Maryland, passed at its January 
 session in the year 1900, be and the same is hereby repealed and re- 
 enacted, so as to read as follows: 
 
 Section 7. It shall not be lawful for any individual, partnership, 
 association or corporation lending money within the limits of this 
 State, and taking as security for the repayment thereof, a lien upon 
 any household furniture and effects, musical instruments, typewriters 
 and sewing machines or any other personal chattels, whether such 
 lien shall be in the nature of a conditional sale, chattel mortgage, bill 
 of sale, whether recorded or unrecorded, or any other lien of any 
 character whatsoever, to have or charge for the use of money so loaned 
 more than the lawful rate of interest thereon, as fixed by the provisions 
 of Section 57 of Article 3 of the Constitution of the State of Maryland, 
 and that no additional sums either in the way of bonus or otherwise, 
 shall be required or exacted of the borrower or borrowers; and further, 
 that no charges for examination or valuation of property offered, in- 
 surance of same, and preparation, execution and recording of neces- 
 sary papers shall be imposed, except as follows: For examination or 
 valuation of property offered for security for loan and preparation of 
 papers (both included), the sum of five dollars, where the amount 
 loaned does not exceed fifty dollars; six dollars where the amount ex- 
 ceeds fifty dollars and equals one hundred dollars or less; and five 
 per centum additional of the excess over one hundred dollars, where 
 the amount loaned exceeds one hundred dollars and equals one thou- 
 sand dollars or less; and two and one-half per centum additional of 
 the excess over one thousand dollars where the amount loaned exceeds 
 one thousand dollars; for necessary affidavits, recording papers, rev- 
 
APPENDICES. 47 
 
 enue stamps and fire insurance premiums the amount actually to be 
 paid for same: provided, that the foregoing charges and interest as 
 herein provided may be deducted from the principal of the loan when 
 the same is made; and provided further that it shall not be lawful to 
 make any charges for renewals or extensions of loans, nor to divide 
 nor split up loans under any pretext whatsoever for the purpose of 
 requiring or exacting any other or greater charges than prescribed 
 herein; and provided that where a loan is paid off before maturity, in- 
 terest shall be rebated to the borrower or borrowers at the rate of 
 six per centum on the amount so paid, and any violation of the provi- 
 sions of this Act shall be a misdemeanor, and punishable by a fine 
 of one hundred dollars for the first offense, and of a like fine and im- 
 prisonment in jail for thirty days for the second and each subsequent 
 offense; and, further, the entire amount loaned shall be forfeited to 
 the borrower or borrowers, and the mortgage therefor given becomes 
 null and void. 
 
 Section 2. And he It Enacted, That this Act shall take effect from 
 the date of its passage. 
 
APPENDIX V. 
 
 The New Jersey Law. Chapter 96 of the Laws of 1904 : 
 
 AN ACT to provide for the incorporation and regulation of Provident 
 loan associations. 
 
 Provident Loan Associations Mat Be Formed. 1. Upon executing, 
 recording and filing a certificate pursuant to this act any three or more 
 persons, citizens of this state, may become an incorporated association 
 for the purpose of aiding such persons as shall be deemed in need 
 of pecuniary assistance by loans of money, at interest, not exceeding 
 two hundred dollars to any one person, upon a pledge or mortgage 
 of personal property. 
 
 Certificate of Incorporation. 2. The certificate of incorporation 
 shall be signed in person by all the subscribers to the stock named 
 therein, and shall set forth: 
 
 I. The name of the association; 
 
 II. The city or other municipality where it is to be located and its 
 business transacted, which shall be within this state; 
 
 III. The object for which it is formed; 
 
 IV. The amount of the total authorized capital stock of the asso- 
 ciation, which shall not be less than two thousand dollars, and the 
 number of shares into which the same is divided, and the par value 
 of each share; the amount of capital stock with which it is to com- 
 mence business, which shall not be less than one thousand dollars; 
 also the. number of shares subscribed for by each of the incorporators. 
 
 Name. 3. The name assumed by any such association shall not be 
 so nearly like that of any other association as to deceive the public 
 and the words "Provident Loan Association" shall form a part thereof, 
 and such name shall be approved by the commissioner of banking and 
 insurance. 
 
 Certificates to Be Recorded and Filed. 4. The certificate of in- 
 corporation shall be proved or acknowledged as required for deeds 
 of lands and recorded in the office of the clerk of the county where the 
 association is located, and after being so recorded shall be filed in the 
 department of banking and insurance, and said certificate, or a copy 
 thereof, duly certified by the commissioner of banking and insurance, 
 shall be evidence in all courts and places; upon making, recording and 
 filing such certificate the persons so associated and their successors 
 and assigns shall, from the date of such filing, constitute a body cor- 
 
APPENDICES. 49 
 
 porate by the name set forth in such certificate, with all the powers 
 mentioned in the first section of the act entitled "An act concerning 
 corporations" [Revision of 1896], except such powers as may be incon- 
 sistent with the provisions of this act. 
 
 Birectobs. 5. The business of every such association shall be man- 
 aged by its directors, who shall respectively be shareholders thereof; 
 they shall be not less than three in number, and shall be chosen an- 
 nually by the stockholders at the time and place provided in the 
 by-laws, and shall hold office for one year and until others are chosen 
 and qualify in their stead. 
 
 Officers. 6. Every such association shall have a president, sec- 
 retary and treasurer, who shall be chosen by the directors, and shall 
 hold their offices until others are chosen and qualify in their stead; 
 the president shall be chosen from among the directors; the secretary 
 shall be sworn to the faithful discharge of his duty and shall record 
 all the votes of association and directors in a book to be kept for that 
 purpose, and perform such other duties as shall be assigned to him; 
 the treasurer shall give bond in such sum and with such surety or 
 sureties as shall be required by the by-laws for the faithful discharge 
 of his duties; the association shall have such other officers, agents and 
 factors, who shall be chosen in such manner and hold their office for 
 such term, as shall be prescribed by the by-laws; all vacancies in the 
 board of directors or any office shall be filled by the board for the un- 
 expired term. 
 
 Associations Subject To Act Concerning Coeporations. 7. Every 
 such association shall be subject to and governed by the provisions of 
 "An act concerning corporations" [Revision of 1896], as to its first 
 meeting, the right of stockholders to vote by proxy, certificates of 
 stock and their transfer, the liability of stockholders for unpaid sub- 
 scriptions to stock and the method of enforcing the same, amendments 
 to the certificate of incorporation, the increase and decrease of its 
 capital stock, its voluntary dissolution, stockholders' meetings, election 
 of directors, insolvency proceedings, receivership and distribution of 
 its assets; except that all certificates required to be filed by it shall be 
 filed with the commissioner of banking and insurance. 
 
 Powers. 8. Every such association shall have the general powers 
 of a corporation formed under the "Act concerning corporations" [Re- 
 vision of 1896], and shall be subject to all the duties, obligations and 
 restrictions of such a corporation so far as applicable thereto, and 
 shall have the following additional powers: It shall be entitled to act 
 as pawnbroker, and shall be subject to and entitled to all the benefits 
 of all the provisions of the laws of this state concerning pawnbrokers, 
 except it shall not be required to obtain a license and file bond; it 
 may loan money to such persons as shall be deemed to be in need of 
 pecuniary assistance, and may take as security for the payment of 
 any such loan either a pledge or mortgage on personal property, to- 
 gether with other lawful securities; it shall be entitled to charge and 
 receive on each loan made by it interest or discount at a rate not 
 exceeding two per centum per month for a period of two months or 
 less and not exceeding one and one-half per centum per month for any 
 period after two months; but no such loan greater than two hundred 
 dollars shall be made, nor shall any one person owe such association 
 more than two hundred dollars of principal at any one time! "no direc- 
 
50 CHATTEL LOAN BUSINESS. 
 
 tor of any such association shall receive any compensation for his ser- 
 vices, either as a director or as an officer, nor shall any director or 
 stockholder be personally liable for any debt incurred by the associa- 
 tion. 
 
 Dividends. When Rates for Loans May Be Reduced by Commis- 
 sioner. 9. No such association shall in any year declare or pay divi- 
 dends on its capital stock amounting to more than six per centum; 
 after any such association shall have accumulated a surplus amounting 
 to fifteen per centum of its capital, the commissioner of banking and 
 insurance shall, upon ascertaining that such association has, during 
 the previous calendar year, made a net profit amounting to more than 
 six per centum on its capital, have authority to make an order reduc- 
 ing the rate of interest, discount and charges which said association 
 may lawfully charge and receive upon loans, to such sums as may, 
 in his judgment, produce the net return of six per centum on its capital 
 stock; any such order shall take effect at such time, not less than four 
 months after it is made, as the order shall name, and shall be in force 
 for one year unless sooner revoked. 
 
 Reports Required. 10. Every such association shall in the month 
 of January in each year file in the department of banking and insur- 
 ance on blanks to be provided by the commissioner of banking and 
 insurance, a report of its transactions, affairs and financial condition 
 at the close of business at the end of the preceding calendar year, such 
 report to be verified by the oaths of such officers and other persons as 
 the commissioner of banking and insurance may designate; and the 
 said commissioner may call for additional reports whenever he shall 
 deem it expedient. 
 
 Examinations and Proceedings Thereon. 11. The commissioner 
 of banking and insurance may also, at any time, make or cause to 
 be made an examination of the condition, business and affairs of any 
 such association as often as he deems it necessary; if it shall appear 
 to the commissioner of banking and insurance from any such examina- 
 tion or report that any such association is insolvent or has violated 
 any of the provisions of this act or of any law of this state, or is con- 
 ducting its business in an oppressive or unauthorized manner, or has 
 by tho payment of excessive salaries, excessive rents, or by any other 
 means attempted to evade the provisions of this act relative to a reduc- 
 tion in the rate of interest which such association may legally charge, 
 he may direct such association to discontinue or correct its objection- 
 able methods and practices, and upon such association failing to com- 
 ply with such directions, within a reasonable time, the attorney-general 
 of this state, upon request of such commissioner, may take proceedings 
 in chancery for the dissolution of said association, which court shall 
 have power to dissolve the same and appoint a receiver of its assets. 
 
 Fees. 12. Every such association shall pay to the commissioner of 
 banking and insurance, for the use of the state, the sum of ten dollars 
 for filing its annual report, and shall defray the expenses of any exami- 
 nation of its affairs as provided in this act, and' the said commissioner 
 may maintain an action for the recovery of such expenses in any court 
 of competent jurisdiction. 
 
 13. This act shall take effect immediately. 
 
 Approved March 28, 1904. 
 
APPENDIX VI. 
 
 List of the More Important Chattel Mortgage Loan Com- 
 panies operating - in New York City : 
 
 Anchor Realty Company, 31 West 42nd Street. 
 
 Acme Security Company, 289 Fourth Avenue. 
 
 Ariston Realty Company, 110 West 34th Street. 
 
 Adelphi Realty Company, 116 Nassau Street and 20 E. 120th Street. 
 
 Broadway Securities Company, 1181 Broadway. 
 
 Leslie Realty Company, 143 West 125th Street. 
 
 Riverside Security Company, 271 West 125th Street. 
 
 City Credit Company, 621 Broadway. 
 
 Bryant, 140 West 42nd Street. 
 
 Blakely, 101 West 66th Street. 
 
 Broadway Realty Company, 637 Broadway, Brooklyn. 
 
 Fidelity Loan Association, 140 Nassau Street. 
 
 Falk, 1451 Broadway. 
 
 Times Square Realty Company, Broadway and 41st Street. 
 
 Industrial Realty Company, 375 Fulton Street, Brooklyn. 
 
 London Realty Company, 1265 Broadway, and 150 Nassau Street. 
 
 Lion Realty Company, 356 Fulton St., Brooklyn. 
 
 Minerva Realty Company, 302 Broadway. 
 
 New Prospect Realty Company, 44 Court St., Brooklyn. 
 
 St. Bartholomew's Loan Association, 211 East 42nd Street. 
 
 Seifl, 217 West 125th Street. 
 
 Ussiker, 140 Nassau Street. 
 
APPENDIX VII. 
 
 Financial Statements of the Chattel Loan Association of Balti- 
 more City: 
 
 1907. 
 
 For year of September 30, 1907.— October 1, 1906, to September 30, 1907. 
 
 Earnings year ending September 30, 1907: 
 
 From Fees $7,407 . 17 
 
 Interest 2,571.84 
 
 Interest on Extensions 463 . 15 
 
 Recording risk 633 . 60 
 
 Gross Earnings $11,075 . 76 
 
 Expenses : 
 
 Printing and Stationery Acc't $270.89 
 
 Expense 625 . 94 
 
 Stamp 107 . 16 
 
 Legal Expense 277 . 05 
 
 Advertising 1,233 . 66 
 
 Salary 3,554.00 
 
 Rent 684.00 
 
 Carfare 91 . 74 
 
 Loss 409 .95 
 
 Insurance 105 . 91 
 
 Expenses exclusive of taxes 7,360.30 
 
 Taxes 205.15 
 
 Gross expenses $7,565 . 45 
 
 Dividend No. 15, paid April, 1907 1,692.63 
 
 Available for Dividend No. 16 1,538 . 75 
 
 Added to undivided profits 278.93 
 
 $11,075.76 
 
APPENDICES. 53 
 
 Analysis of earning year ending September 30, 1908: 
 
 Dividend No. , 2% per cent $1,692.63 
 
 Taxes 205 . 15 
 
 Losses 409 . 95 
 
 Available for Dividend No. , 2% per cent. 1,538.75 
 
 Added to undivided profits 278 . 93 
 
 $4,125.41 
 
 The net earnings available for dividends for 
 year ending September 30, 1907, have been for 
 six months ending April 1st, for Dividend 15. . $1,692.63 
 added to undivided profits 242.25 
 
 And for six months ending September 30, 1907, 
 
 available for Dividend No. 16 1,538.75 
 
 and added to undivided profits 36.68 
 
 $3,510.31 
 
 Number of loans made this year, 1,182. 
 
 Amount loaned, $95,379.52. 
 
 Amount repaid, $96,287.26. 
 
 Outstanding loans September 30, 1907, 
 
 For a total of $57,142.80, an average of $65.61 per loan. 
 
 Average amount loaned per month, $7,948.30. 
 
 Average amount repaid per month, $8,023.94. 
 
 Average number of loans made per month, 98%. 
 
 1908. 
 For year of September 30, 1908.— October 1, 1907, to September 30, 1908. 
 
 Earnings year ending September 30, 1908: 
 
 Balance from last year, undivided profits $274.93 
 
 From Fees $7,455 . 64 
 
 Interest 2,411 .96 
 
 " Interest on Extensions 157.66 
 
 " Recording risk 545.55 $10,845.74 
 
 Gross earnings $10,845 . 74 
 
 Expenses : 
 
 Printing and Stationery Acc't 259.23 
 
 Expense 802 . 10 
 
 Stamp 101.80 
 
 Legal expense 213 . 29 
 
 Advertising 926 . 79 
 
54 CHATTEL LOAN BUSINESS. 
 
 Salary 3,839 . 15 
 
 Rent 684.00 
 
 Carfare 102 . 31 
 
 Loss 398 . 79 
 
 Furniture and Fixtures 218 . 75 
 
 Expenses exclusive of taxes $7,546.21 
 
 Taxes 211.64 
 
 Gross expenses $7,757 . 85 
 
 Dividend No. 17, paid 4/10/08 1,538 . 75 
 
 Available for dividend No. 18 1,538 . 75 
 
 Added to undivided profits 10.39 
 
 $10,845.74 
 
 Analysis of earning year ending September 30, 1908: 
 
 Dividend No. 17, 2% per cent $1,538.75 
 
 Taxes 211 . 64 
 
 Losses 398 . 79 
 
 Available for dividend No. 18 1,538.75 
 
 Added to undivided profits 10.39 
 
 $3,698.32 
 
 The net earnings available for dividends for 
 year ending September 30, 1908, have been for 
 six months ending April 1st, for Dividend 
 
 No. 17 $1,538.75 
 
 added to undivided profits 292.37 
 
 And for six months ending September 30, 1908, 
 
 available for Dividend No. 18 1,538.75 
 
 and added to undivided profits 10.39 
 
 $3,380.26 
 Number of loans made this year, 1,210. 
 Amount loaned, $91,739.91. 
 Amount repaid, $91,932.85. 
 Outstanding loans September 30, 1908, 877. 
 For a total of $56,949.86, an average of $64.94 per loan. 
 Average amount loaned per month, $7,644.99. 
 Average amount repaid per month, $7,661.07. 
 Average number of loans made per month, 101. 
 
 Memoranda: Ten and one half years' work — May 13, 1898, to Sep- 
 tember 30, 1908: 
 
 Loans made, 9,709. Total amount loaned $881,663.01 
 
 Loans closed, 8,832. Total amount repaid 824,713.15 
 
 Total amount of money handled $1,706,376.16 
 
 Total open, 877. Amount outstanding loans, $56,949.86; an aver- 
 age of $64.94 each. 
 
 Eighteen dividends paid (including next dividend), $25,704.73, or 
 86 per cent, of our original capital of $30,000 — and 42 per cent, of our 
 present capital, $61,550.00. 
 
APPENDIX VIII. 
 
 Report of the Treasurer of the St. Bartholomew's Loan Asso- 
 ciation of New York for the year ending October 31, 1907: 
 
 Balance, October 31, 1906 $6,810.58 
 
 Receipts. 
 
 Installments on Loans $92,175 . 50 
 
 Interest on Loans 9,145 . 81 
 
 Fees on Loans 1,822 . 00 
 
 Fees on Applications Declined 89 . 00 
 
 Interest on Deposits 63.70 103,296.01 
 
 $110,106.59 
 
 Disbursements. 
 
 For 1,023 Loans $99,654.00 
 
 Stationery and Printing 185 . 66 
 
 Filing and Searches 263 . 20 
 
 Postage 162.00 
 
 Car Fares 117 . 60 
 
 Salaries 5,698 . 09 
 
 General Expenses 352 . 00 
 
 Application Fees Returned 16.00 
 
 State Examination and Tax 198 . 66 
 
 Dividends paid, 6 per cent 2,416.50 
 
 Advances to Borrowers 184 . 45 
 
 Balance in Bank October 31, 1907 858 . 43 
 
 $110,106.59 
 
 Earnings. 
 
 Interest on Loans $9,331 . 52 
 
 Fees on Loans 1,801 . 00 
 
 Interest on Deposits 63 . 70 
 
 Application Fees Declined 89 . 00 
 
 $11,285.22 
 
56 CHATTEL LOAN BUSINESS. 
 
 Expenses. 
 
 Salaries $5,698 . 09 
 
 Postage 162 . 00 
 
 State Examination and Tax 198.66 
 
 Filing and Searches 263 . 20 
 
 General Expenses 352 . 00 
 
 Stationery and Printing 185 . 66 
 
 Car Fares 117 . 60 
 
 $6,977.21 
 
 Net Earnings $4,308.01 
 
 $11,285.22 
 
 William A. Greer, 
 Treasurer. 
 
APPENDIX IX. 
 
 Financial Statement of the Citizens' Mortgage Loan Company 
 of Cincinnati, December 31, 1907: 
 
 Profit and Loss. 
 
 Preliminary fees, interest and expense charged 
 
 on loans $15,215 . 28 
 
 Profit and loss collections 201.70 
 
 Total $15,416.98 $15,416.98 
 
 From which deduct — 
 
 Preliminary fee returned $1 . 25 
 
 Interest returned 1,384.95 
 
 Total $1,386.20 $1,386.20 
 
 Gross earnings $14,030 . 78 
 
 General operating expense $6,525 . 10 
 
 Advertising 1,286 . 70 
 
 Tax and fee 477 . 40 
 
 Loss and loans 270 . 20 
 
 Depreciation in furniture and fixtures 147.50 
 
 Total $8,706.90 $8,706.90 
 
 Net earnings for 1907 $5,323 . 88 
 
 Assets and Liabilities. 
 
 Assets. 
 
 Outstanding with borrowers $75,739 . 00 
 
 Cash 1,487.17 
 
 Furniture and Fixtures 150.00 
 
 Total Assets $77,376.17 $77,376.17 
 
58 CHATTEL LOAN BUSINESS. 
 
 Liabilities. 
 
 Capital Stock $54,200.00 
 
 Bills Payable 5,000.00 
 
 Unearned Interest Account 11,502.29 
 
 Tax, Fees and Insurance Account 1,350.00 
 
 Undivided Profits 2,613.88 
 
 Undivided Profits, Dividend for 1907, payable 
 
 Feb. 1, 1908 2,710. 00 
 
 Total Liabilities $77,376.17 $77,376.17 
 
 Loans. 
 
 During the year 1907 loans were made to 2579 persons divided 
 among the following classes: 
 
 Mechanics and laborers 775 
 
 Clerks, salesmen and solicitors 731 
 
 Ry. and St. Ry. employees 247 
 
 City, county and U. S. Gov. employees 148 
 
 Merchants and contractors 284 
 
 Property owners 44 
 
 Professional people 60 
 
 Boarding house keepers 88 
 
 Female clerks and saleswomen 127 
 
 Seamstresses 75 
 
 Total 2579 
 
APPENDIX X. 
 Report of the Workingmen's Loan Association of Boston. 
 Income Account, March 31st, 1908. 
 
 Interest. $24,499 58 
 
 Profit and Loss 5,797 95 
 
 Collected on old accounts charged off 261 74 
 
 General Expenses $15,155 66 
 
 Interest, National Shawmut Bank 407 11 
 
 Interest, Mass. Hospital Life Ins. Co 1,250 00 
 
 State Tax 2,341 62 
 
 Dividend, No. 38, Oct, 15, 1907 3,750 00 
 
 Dividend, No. 39, April 15, 1908 3,750 00 
 
 Charged for bad accounts 786 69 
 
 Surplus for year 3,932 41 
 
 $30,966 38 $30,966 38 
 
 Trial, Balance, March 31st, 1908. 
 Assets. 
 
 Loans $215,826 64 
 
 Cash 13,555 88 $229,382 52 
 
 Liabilities. 
 
 Capital Stock ... $125,000 00 
 
 Notes Payable : 
 
 Hospital Life Ins. Co 25,000 00 
 
 Dividend No. 39 3,750 00 
 
 RiskFund 4,50172 
 
 Undivided Profits 4,122 92 
 
 Guaranty Fund, March, 1907 $63,075 47 
 
 Surplus for year 1907-1908 3,932 41 67,007 88 
 
 $229,382 52 $229,382 52 
 
6o 
 
 APPENDICES. 
 
 Mr. George W. Manson, an accountant selected by the Savings Bank 
 Commissioners, examined the books and accounts of the Company on Oct. 
 31, 1907. He reported that the books were found to be correctly kept, the 
 cash fully accounted for and the accounts of the Company in a proper 
 condition. 
 
 
 No. Loans 
 Made. 
 
 Interest. 
 
 Principal 
 Received. 
 
 Amount 
 Loans Made. 
 
 1907. 
 
 May 
 
 June 
 
 July 
 
 August 
 
 September 
 
 October 
 
 November . . . 
 
 December 
 
 1908. 
 
 January 
 
 February 
 
 March 
 
 169 
 156 
 170 
 167 
 184 
 172 
 190 
 184 
 206 
 
 205 
 169 
 190 
 
 $2,053 10 
 
 2.094 15 
 1,949 56 
 2,237 38 
 1,873 77 
 2,082 81 
 
 2.095 37 
 1,833 93 
 1,920 98 
 
 2,047 98 
 2,082 21 
 2,228 34 
 
 $15,758 90 
 16,084 24 
 13,367 04 
 15,147 22 
 13,626 93 
 14,135 91 
 16,504 46 
 12,231 75 
 12,514 07 
 
 13,309 43 
 13,481 58 
 
 14,752 42 
 
 $14,839 83 
 15,451 30 
 12,989 82 
 12,862 53 
 13,467 66 
 14,137 36 
 18,180 49 
 14,613 08 
 17,411 52 
 
 15,924 48 
 15,849 09 
 17,409 24 
 
 Totals 
 
 2,162 
 
 $24,499 58 
 
 $170,913 95 
 
 $183,136 40 
 
 Outstanding Loans. 
 
 Number. 
 
 Total Amount. 
 
 Average Amount. 
 
 3,585 
 
 $215,826 64 
 
 $60 20 
 
 Rate of interest charged borrowers, \% per month. 
 
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