Loans

A glum and docile crowd coagulated before one of the National City Bank's branches in Manhattan an early morning last week. Behind the bank's bolted doors and copper-framed windows employes pulled themselves tense with the expectation of rushing business, and glowed with pride at the immediate success of their President Charles Edwin Mitchell's new banking idea. President Mitchell had announced that this bank (biggest in the U. S.) would loan $50 to $1,000 at 6% interest to responsible employed persons, with no other security than their own signatures and the endorsement of two respectable friends. (All such loans to be repaid within a year.) Under such conditions the crowd outside the National City's office yearned to borrow. They were accommodated.

People have always needed money for personal emergencies. If they had no property real or personal to hypothecate, they could borrow on their personal credit only from usurers, who charged 20% and more interest.

In 1910 Arthur J. Morris, lawyer of Norfolk, Va., founded the first "Morris Plan" bank there. It loaned money at 7% interest to honest employed persons. Borrowers repaid loans by monthly installments. Now there exist "Morris Plan" banks in 109 cities. They have injured the usury business.

The success of "Morris Plan" banks made enterprising bankers study the field. In New York City the National City group made surveys ; in Buffalo the Marine Trust group (Chairman Elliott C. McDougal, President George Franklin Rand,* Vice-President, Seymour H. Knox). Last week the Marine Trust announced that it would loan money at 6%, without security, to salaried persons. Mr. Mitchell's National City had anticipated Buffalo by a day.

Other banks, of course, will follow. But none yet accommodates the needy borrower in every respect. If he has no willing friends to countersign his note to a "Morris Plan" (7%) or "National City-Marine Trust Plan" (6%) bank, he must pawn his household goods, automobile or other personal possessions with whatever moneylender he can wheedle, at the highest rate the lender dares command. Nor is it easy to get endorsers, since persons with sufficient money sense to become acceptable guarantors are not promiscuous with their signatures.

* Cousin of President James Henry Rand Jr. of Remington-Rand, office equipment.