The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
Pollaek Foundation, Newton, Mass,, February 14, 1935. Hon. Marriner 0. E c c l e s , Federal Reserve Board, Washington, D. C. Dear Mr. Eccles: When I had lunch with you in Washington I spoke to you about the Bill introduced by Senator King for the regulation of small loans in the District. At your suggestion I wrote my objections to the Bill and sent a copy to Fritz Champ and a copy to Governor Dern. I asked Fritz to take it up with Senator King. I enclose a copy of my statement. With much appreciation of the opportunity you gave me for the talk in Washington, I am Faithfully, WTF:R I concerning proposed SmallLonn Law for the District of Columbia! Small Loan Law for the rict of Columbia, introduced in session by Senator (S.110£ and ! . .3463), would not achieve its! avowed purpose but on the contrary would deprive the most necessitous borrowers in the District of full services under protection of the law, Moreover the passage of this law would tend to discredit throurh^t the country the achievements of two generations of social 'Yorkers who have opposed the unlicensed operators and brought abou^ adoption in twentyj six states of the Uniform Small Loan Lav, as sponsored by the Russell Sag! Foundation. very year powerful organizations of unlicensed members work under cover in every state, either for the repeal of the Small Loan Law or for changes in the lav which would prevent reputable companies from doing business. The passage, in the nation*s capital, of a bill that seems to discredit the present Small Loan Lav; in twenty-six states would be used by illegal lenders in every state as an argument for undoing the notable achievements of the past twenty years. The sponsors of this bill ignore the previous studies and recommendations of the District Conrnissioners and the 3ub-Go:i:aittee. The bill introduced by Senator Capper (S.5629), in the Third Session of the 71st. Congress, was favored by the Committee, although no vote was taken by th< Senate. The bill introduced by Congressman Bowman, (H.R.9592), in the First Session of the 72nd. Congress, was recomended by the District Commissioners and by the Committee, but did not come to a final vote. These two bills ?:ere introduced again in 1934 and referred to tve Committee on District Affairs, but the Committee took no action. These two bills, unlike the one now before Congress (3,1162), are based on the principles which have been thoroughly tested during twenty-three years of experience with small loan legislation now covering twenty-six states. These principles have not yet cone to a vote in either branch of Congress though the; e been endorsed repeatedly by the District G Lssioners and by the Committee on District Affairs. Experience under the small loan laws proves that, even in f nost favorable localities, a maximum rate lower 3r Lonth on I first $100.00 and 2f9 on the next §200.00 (or a rate of 2f& on all loans up to JoOG.OO) does not achieve the purpose of providing necessitous borrowers with loans by licensed lenders. Indeed, even these rates do not guarantee full service to borrowers, because these rates do not cover the costs of making very small loans. In ever he maximum rate fixed by law as low as the rates in the proposed law, (S.1162), the law has driven licensed lenders out of business, and .: prevented necessitous borrowers from obtainin regulated services which the law was designed to provide. The rates specified in e proposed law are lower than the rate i ie a Is in ~rork State, while President Roosevelt was Governor of that state. - I The proposed lav, Moreover, legalizes special fees and discounting in advance. 'Experience in many states proves that provisions for special fees and for discounting idvance because of special expenses of operation In connection certain loans, to a large extent prevent the lav; from accomplishing its purpose. In the files of the Russell Sare Foundation is a long list of evasions of the lav in cases where, in the past, the lav has allowed special fees; and no v/ay has yet been found of preventing these evasion . ore is 1 . objection to the provisions in the proposed lav for higher rates for loans vhich are regarded as unusu "lazardous. In actual practice all se provisions open the way evasions and injure many more borrowers elp. Moreover, the proposed la^ mj • or rates than the Uniform Snail Loan Law. fciaxiraum rate per month, vhich is permitted in any of the v -six states v he Uniform Snail Loan Lav/, is •.. *, ereas the proposed bill permits a rate per month on,certain .11 loans, where fees are collected in advance, of over 40^. The !Triform Small Loan Lav;, under fire for many years in many states, has been tested in various courts. It provides no loop-holes. Lenders who wish evade that 1 been unable to find a to do it, in any state has made a reasonable attempt to enforce the lav. The proposed bill . . , >h var" ly in its phrasing fr the Uniform Small Loan Lav, is hi 1 T experimental. It has many features which probably are dangerous. It is impossible to tell in advance, hovever, what difficulties of administration would arise. • nee the original draft of the Uniform Small Loan La: de in 1916, the ] is been modified repeatedly b. issell Sage Founda>n in order to prevent evasions and abu. to make its language clear. The loner; experience 11 I Law and Lumerous interpretations e courts rive it a guarantee of fitness for its purpose which no ily experimental law can possibly have. proposed law should not be passed. 7i].: ' -'. Foster POLLA^ FOUNDATION FOR ECONOMIC RESEARCH NEWTON, MASSACHUSETTS was started in 1920 by Waddill Catchings. The purpose, as stated in the deed of trust, is to study "the means whereby industry may be so organized, and the products of industry so distributed, as to yield the people generally the largest possible satisfactions." The work of the Foundation still has to do solely with the original central purpose. The publications are concerned largely with various aspects of the problem of sustaining the purchasing power of consumers. The Foundation has made appropriations tofinancespecific researches at Harvard University, Yale University, and the University of Chicago. Since the beginning of the National Recovery Administration, the Foundation has endeavored to further the objectives of the Consumers Advisory Board, of which Board the Director is a member. THE POLLAK FOUNDATION The scope of the work of the Foundation is indicated bv the Pollak Books: i J "Business without a Buyer," by William Trufant Foster and Waddill Catchings "Real Wages," by Paul H. Douglas "The Road to Plenty," by William Trufant Foster and Waddill Catchings "Cycles of Unemployment," by William A. Berridge "Costs and Profits," by Hudson Bridge Hastings "Money," by William Trufant Foster and Waddill Catchings "Profits," by William Trufant Foster and Waddill Catchings "The Making of Index Numbers," by Irving Fisher "Is it Safe to WTork?" by Edison L. Bowers "The Problem of Business Forecasting," by Warren M. Persons, William T. Foster, and Albert J. Hettinger, Jr. "Population Problems," by Louis I. Dublin and others "Progress and Plenty," by William Trufant Foster and Waddill Catchings "Social Consequences of Business Cycles," by Maurice B. Hexter, with introduction by Allyn A. Young " Pollak Prize Essays," by R. W. Souter, Frederick Law Olmsted, C. F. Bickerdike, and Victor Valentinovitch Xovogilov The Pollak Books as well as the Pollak Pamphlets, may be purchased from the Foundation. For the first ten years, the funds were contributed solely by Waddill Catchings. Other donors have been Robert J. Caldwell, Edward A. Filene, Henry L. Shattuck, Committee on the Costs of Medical Care, Household Finance Corporation, Julius Rosenwald Fund, Twentieth Century Fund, Milbank Memorial Fund, and the Beneficial Management Corporation. The Foundation is a non-profit, educational institution. As such, it is exempt from Federal Government taxation; and gifts to the Foundation, under the law, may be deducted by the donors in computing taxable income. Contributions and bequests will be gladly received, to be used in carrying out the purposes of the Foundation as stated in the deed of trust. ADVISORY COUNCIL I WADDILL CATCHINGS, Lawyer, New York City GEORGE H. DERX, Secretary of War CARL F. DANNER, President of the American Hide and Leather Company PAUL H. DOUGLAS, Professor of Industrial Relations, University of Chicago HENRY I. HARRIMAN, President of the Chamber,of Commerce of the United States VIRGIL JORDAX, President of the National Industrial Conference Board ERNEST H. LINDLEY, Chancellor of the University of Kansas WABBKN M. PERSONS, Consulting Economist, New York City ROBERT F. WAGNER, Member of the United States Senate RICHARD H. WALDO, President of the McClure Newspaper Syndicate HENRY A. WALLACE, Secretary of Agriculture DIRECTOR WILLIAM TRUFANT FOSTER ASSOCIATE DIRECTOR LE BAROX RUSSELL FOSTER