"Interest eats these people alive here; just sucks their life's blood—but it is not that alone. Not one in five knows how to arrange a loan. They permit themselves to be governed by some dealer, who, in almost every instant, is the worst grafter possible. They will make a loan with a life of three years, at eight per cent interest, and five per cent commission. Now you know that no loan running three years, on property that poor people are trying to buy on the installment plan, is practical. Yet that is the kind of loan that most of these cheap sharks offer to the masses of our people, who have no judgment. A Negro is unable, as a rule, to realize that three years is a very short time. He is compelled to learn by bitter experience. The worst feature of this is, that at the end of it, he is so discouraged, that often he does not benefit by this experience, because the failure has gotten his heart, and he is done for.
"At the end of three years, which seems like three days when they are trying to buy a home, the shark is around for a renewal of the mortgage, and must, therefore, collect another cash commission of five per cent. Think of it! In two-thirds of such instances, it takes every dime they have paid in those three years. Sometimes more. Now how can people pay for a home under such conditions! But there is another side of it. And it all comes from the inability of our people to see further than their noses.
"Almost all these purchases are made beyond the extension of the sewerage, often the water works, positively no street improvements, and side walks are rare; but, in three years, in order to boom the property, the promoter is active in bringing some of these improvements within reach of this property. That adds about one-half to two-thirds more to the cost of the property he is trying to buy. Moreover, when these people know anything, they will not buy a house built by these promoters, for it is nothing but the cheapest shell they can get to stand, but attractive from the outside. In two years, the occupant is fortunate if he doesn't have to build another.
"Then comes the great day. These people cannot pay that commission over again, and the loan company doesn't care to increase the loan, maybe, by including the commission in a new one. If they are unable to make arrangements with a bank, and that means they are going to deed them the property, seven cases in ten, foreclosure proceedings are instituted. The property is finally deeded by the sheriff to the mortgagee. Now here is another phase: This piece of property can then be sold quicker than before, for this reason: It is very easy to frame up a tale, to the effect that a party who was purchasing the place was a shiftless drunkard, or anything, and imagination can supply the rest; but, inasmuch as they had taken the property back, they are now offering it at a greatly reduced price and better terms. There are so many subtle ways of drawing people in, that it would take a volume to relate them all; but they come to the same in the end. Installment property at two thousand dollars can be bought for about twelve to not exceed fifteen hundred. Instead of commission and everything else, buying by the installment plan in this, and every overboomed southern town, costs from twice to three times what the property would actually cost, if the purchaser could pay half of the purchase price cash, for, in that way he could secure terms, and could pay interest rate on the remainder. In time he would get the same paid, and have his little home."
"And that, you feel, is the reason for all this foreclosure?" said Wyeth.
"That is the cause of it. Why, advertising property for foreclosure has become a feature of competition, between the three Negro papers in this town. They get more money out of that end, than they do from the advertisements through straight business, for the purpose of selling it originally."
"It would seem that the people would get on to such methods by and by," Wyeth commented.
"Some, of course, do, and avoid it; but you cannot imagine how many do not. It all comes about through a lack of general intelligence. Too many of our people do not read anything; are, therefore, without any vision or judgment of their own. They don't know. And, of course, are made the goats of those who do."
"So that explains why a portion of this town to the west, and which is occupied almost exclusively by our people, has such dreadful streets and no sidewalks whatever."
"That's it. They will, perhaps, have none for the next twenty-five years. Too much property is being bought, and so little is being paid for, that it is a continual change about."