MONEY-LENDERS' CHARGES

Evening Post, Volume XCIV, Issue 83, 5 October 1917, Page 2

MONEY-LENDERS' CHARGES

10 THB BWTOB. Sir, —Most prejudices die bard, but' surely none is harder to kill than that which exists against money-lenders, especially if a Jew is concerned. Even many of those people who believe that they are broadminded still retain some inward feeling that money-lending is scarcely a "respectable!' undertaking, although at the same time these people • have a great awe of the "respectability" or prestige of our great banking institutions. Yet what else bnt money-lending is the basis of the business of tho ba-nkß? ;, . ' The recent references in Parliament to the rates of interest charged .by some money-lenders have revived the feeling in certain quarters against those who loan money to people financially embarrassed. From Auckland to the Bluff the old reproaches, "vampires," "Shylocks," "blood-suckers," etc., are reechoed, and the money-lender is condemned offhand by those who at heart really wish to be just. Knowing your desire for fair play, Sir, I ask permission to outline briefly the case for the defence, and hope to prove that, far from being the heartless persecutor he is usually represented to be, \ a moneylender is engaged in a clean, honourable calling, and is.far too often the victimised party. ■' ' . It is first necessary to recall' that moneylending is a commercial business equally with the sale of groceries, meat, clothing, or any other commodity, one man selling cash as another man may sell sugar. What is usually termed a moneylender's, "interest" is really his "profits." Nor is this profit excessive, and, indeed, compared to that made by the grocer, butcher, or baker, etc., is small. Where the public mind, is led astray is in the fact that .the rate of interest or profit made by .a moneylender is always' calculated, by. the public at so much per annum, instead of at so much per day, as in other businesses. For instance, if a butcher was to sell his meat at a return of 10 per cent, on his gross outlay he would—especially in these days of the high cost of living-— be hailed as a philanthropist, but when a moneylender charges one-half per cent., he is derided as a heartless scoundrel, or similar epithets. Why should this be? A butcher will, say, sell for 5s cash meat which cost him 4s 6d, and is regarded as a good Samaritan. He repeats the transaction, say, every day for a year, with the result that at the ond of the period on his outlay of 4s 6d he has received in interest or profit 365 sixpences—£9, 2s 6d. What rate of interest or profit is that? A moneylender who similarly charged 6d per day for his 4a 6d in cash would be addressed in most unkind terms when ' the borrower found at the end of the year he had paid, over £9 in return. Why should one business man be praised and another condemned for. doing the same thing? Moreover, 4s 6d in cash is obviously worth 4s 6d : can anyone guarantee that 4s 6d invested |in meat is equally full value? I have'only quoted the butcher as an example, but the principle applies to kll commercial transactions. I am quoting facts, not opinions, arid if any accountant can disprove my assertion I am willing to forfeit £100 to the Red Cross Fund. I do riot wish to go into a'left of detailed figures as to me rates of interest charged by banks for money lent, but consider the following elementary every day transaction: A lands to' the bank £100 on deposit at 3 per cent. B borrows that £100 from the .bank and is charged 6 or 7 per cenlt. The bank, therefore, charges'£6 or £7 for what cost it £3 on the day's transactions. Is this over; 100 per cent, interest "heartless" or a reasonable profit? .',.'. . '.. ' One hears much of Ithe woes of the "victims" of a money-lender, but the latter has his full share of annoyances and grievances. In the first place he often has to lend on doubtful security, generally such as a bank would not look at. A man -with really good security, such'as land, goes to a bank; ithe man who visits a money-lender often has furniture only to offer. That cannot be locked up in the lender's safe as title deeds can. A money-lender sometimes finds that the security has vanished, or is covered by_a previous and undisclosed bill of sale. There is no cohesion between money-lenders, and a dishonest borrower has blen known to obtain money from various lenders offering Ithe same furniture to them all as security. Fraud is frequently experienced by the moneylender, but be is generally helpless. If he takes the matter to Court he is rarely successful, and he finds Ithat he has added to his loss. No 'business man makes so many bad debts as does a moneylender, and personally I am sorry I ever entered the business. Why don't I get out? That is easier said than done. It would take years to recover all the amounts outstanding, meanwhile the expenses would be going on much as usual, despite the fact that new business was being refused. It would surprise most people to know the extent of the expenses incurred by a moneylender. On the amount of his turnover it is much above the average proportion experienced by other traders. There are enquiries to be made, collectors to pay, office and clerical outgoing, advertising, and to these expenses must be added the bad debts made. I assert that .on his turnover a moneylender makes less profit than any other business man. ■ Another point is that a moneylender does not canvass for borrowers, apart from a little advertising. They come to him, and in my case clients are told clearly and distinctly what my terms will be. If the terms do not suit the would-be borrower is not pressed, but is invited to do business elsewhere. Nor if he comes to borrow, say £10, is he persuaded to have more. A moneylender usually wants the loan to be smaller than the first demand. In most businesses a customer is tempted to order beyond bis original intentions. Again one hears little about the many borrowers who are quite satisfied and who come again. One might write a lot more, but this letter is already too lengthy, but I hope "I have written sufficient to prove my claim that moneylenders do not ask exorbitant rates of interest, considering circumstances, and tliat no man need J)e ashamed of belonging-to the calling.— T am, etc., L. W. BALKIND. Ghristchurch, SndOctober.