MONEY LENDERS’ RATES

Southland Times, Issue 19256, 21 June 1921, Page 6

MONEY LENDERS’ RATES

INTEREST REDUCED. GORE FARMER’S LOAN. (Special to the Times.) CHRISTCHURCH, June 20. The question whether the rate of interest charged by a money-lender was too high came before Mr S. E. McCarthy, S.M., at the Magistrate’s Court this morning. The plaintiff was David Stranaghan (Mr H. S. J. Goodman), money-lender, of Christchurch, who proceeded against Clement Camm Derrett (Mr C. S. Thomas), farmer, of Gore, for £155 10s, the amount of two loans made, together with a month’s interest thereon. Mr Goodman said his cleint had charged £2 10s~per month interest on the first £5O, and £5 per month on a subsequent £lOO. Later the monthly, interest was reduced to £5 10s for the total sum of £l5O. The whole question was whether the rate of interest charged was too high considering the circumstances. The rate was 60 per cent, at first, and later was reduced to about 44 per cent, on the two amounts together. Defendant was a man of the world and he had had a lot of commercial experience. When he borrowed the money from plaintiff he knew exactly what he was doing, and he made no objection to the amount of interest charged.

Plaintiff said he had carried on business as a money-lender in Christchurch for about forty years. In June, 1917, he advanced defendant a loan of £5O. Defendant agreed to pay £2 10s per month interest. He had paid this interest for a considerable time and never raised any objection that it was too high. Witness had no security. In November, 1918, he made defendant a further loan of £lOO, with interest at £5 per month. Later the total interest on the two sums was reduced to £6 10s per month, and then to £5 10s. To Mr Thomas: All that defendant received of the first loan was £47 10s. Witness deducted £2 10s for the first month’s interest. It was his usual practice where there was no security to charge interest in advance. He had not deducted £2 10s for commission. He was a personal, friend of defendant, but the loan was an ordinary business deal and not a mere friendly transaction. The amount of interest he charged was governed to some extent by the length of time for which the money was lent. He would charge up to 120 per cent, if he could get it. Derrett had paid the interest well until he stopped making payments. Mr Thomas said his contention was that the whole transaction was inequitable and would get worse if allowed to go on. Four years ago Derrett had received £47 10s in cash, and two and a half years ago £95. Since the first loan he -had paid £212, and yet plaintiff was still demanding £155; that | was, he wanted close on £4OO for the original amounts advanced. Defendant had actually paid 20 per cent, on the money and also repair the capital. Derrett, no doubt, was an intelligent business man, but they did not konw what circumstances had forced him to borrow the money When a business man got into difficulties it gave the money-lenders a chance to charge whatever interest they liked. In other words, the business man became an easy pigeon to the money-lender. Plaintiff had been harsh with defendant, who had paid up regularly. Defendant wanted io obtain relief, as the situation had become intolerable.

The evidence of defendant had been taken on commission at Invercargill. Mr McCarthy fixed the rate of interest at 37 per ce»t. on £l5O. This rate of interest, added to the principal, came tc> £316 10s. With the sum of £212 deducted for interest paid over the period of the loan the amount still owing came to £lO4 10s, and defendant was ordered to pay this amount.