THE SHADY SIDE OF MONEY-BORROWING.
A short time ago, an English County Court judge made some remarks on money-lending, which apparently were listened to by those who heard him with considerable interest, and perhaps with a certain amount of surprise. The case upon which he was adjudicating was one of those money-lending bills-of-sale transactions that so frequently come before County Court judges, and with which the public are unfortunately only too familiar. The judge said that he would take that opportunity of making some observations on the general question of money-lending, suggested by the particular case before him.
There was, he said, one important matter forgotten by persons who indiscriminately denounced money-lenders, which was, that ‘poor people must have loans.’ He did not see how, in special circumstances, they could get on without loans. Nor did he believe that borrowers were the innocent, ignorant victims—the deceived, foolish, and unsuspecting ‘flies’ lured into the ‘spider’s web’—that they generally were represented to be. He would say there what he had already said to the Government. The Board of Trade had requested all County Court judges to give their experience relative to usury, loan societies, and bills of sale. The object of the President of the Board of Trade in applying to County Court judges was of course to obtain guidance in some prospective and promised legislation on the above subjects, intended more effectually to protect inoffensive and worthy men from the wolves and Shylocks of society. The judge of whom we are speaking gave as his answer, that borrowers of money were quite competent to look after their own interests. His experience had led him to the conclusion that in bills-of-sale transactions there were as many knaves among the borrowers as there were among the lenders. For if the money-lender was often unscrupulous, extortionate, and ready to take every undue advantage of his needy clientèle; the borrower was as frequently a tricky, lying rogue, who misrepresented his circumstances, who rarely intended to repay the loan, and who thought there was nothing very far wrong in cheating and defrauding the Society or the person who lent him money.
He knew that his opinion was different from that of some of his brother-judges. But his experience in a large circuit, and extending over many years, had compelled him to come to this conclusion. In these most disagreeable trials, he had generally found that it was ‘diamond cut diamond.’ Often the borrower, by various means, got the money advanced on securities of insufficient value, occasionally on goods belonging to other persons; and the usurer never saw more than a small portion of his money again.
Being asked by counsel if he would give an opinion on newspapers inserting money-lending advertisements which were calculated to entrap the unwary, the judge declined, remarking that he did not feel it to be his duty to lecture the proprietors of newspapers on commercial morality.
Coming as these remarks do from a gentleman whose official position and long experience entitle him to speak with authority on this subject, they possess considerable weight. If they do not exactly throw entirely fresh light on this social evil, yet they reveal and emphasise a deplorable state of morality, or rather immorality, among a class of persons who perhaps hitherto have been considered fitter objects for pity than for blame. Many people who are always ready to hurl the fiercest anathemas at the head of a money-lender, have only words of sympathy and commiseration for the money-borrower. We think that usurers deserve all the severe censure which they get—they are the vampires and the vultures of society; at the same time, it seems indisputable that a certain class of borrowers are men of the loosest principles. They will resort to the meanest devices—to wilful misrepresentation, to fraud, to perjury, and even to forgery, in order to obtain loans of money, which they never can, and which in many cases they never intend to repay.
One common device of borrowers is to feign ignorance. Both principals and sureties do this. When pressed for payment in the court, they go into the witness-box and swear that they did not know the meaning of the document which they signed. The promissory-note or the bill of sale was not read over or explained to them. If this were true, their position would be strong; for the law directs that a bill of sale shall be explained to the person who gives it. Sometimes, of course, it is true that the holder of the bill of sale has taken a mean advantage of his client’s ignorance. But often it is untrue; for the Loan Office brings forward two or three witnesses who declare that the document was read over and explained to the defendant in their presence. The verdict in such cases is given against the borrower; and he is moreover liable to be indicted for perjury.
While on this point, we may express our astonishment that there are so many people foolish enough to sign documents which they do not fully understand; that there are so many persons who are constantly making themselves surety for sums of money, which, if called upon, they could not pay. Without going so far as to say that such people deserve all the punishment they get, when they have to suffer for their folly, we would earnestly warn everybody against these ruinous practices. No man should be bond for money which, if required to pay, he could not pay. Some men, acute enough on other subjects, are very simple in money matters. But simplicity and ignorance are not a sufficient excuse for acts of reckless stupidity. If persons do not know the purport of a document which they are asked to sign, they ought to know before signing it. In reference to sureties for loans of money, very often the explanation is patent enough. The pre-arrangement or stipulation between the persons is that the borrower shall give the surety a part of the money for signing the bond.
Another device of money-borrowers is to go in cliques, and for the different members of the same clique to become sureties for each other. For this scheme to be successful, of course the borrowers must apply to several Loan Societies. It does not always succeed; for money-lenders are usually very particular in making inquiries about their customers. But the probability is that if a clique of men apply for half-a-dozen loans, they will effect at least one or two. A plan almost identical with this is called ‘kite-flying.’ A few needy men, acquaintances, in position above the lowest classes, put their heads together to ‘raise the wind’ by manufacturing fictitious bills of exchange. As its name signifies, a bill of exchange represents a trade transaction. It is not a genuine bill unless there is exchange of some kind between two persons; work done, services rendered, or goods sold, by one person to another. Usually, the acceptor gives a two or three months’ bill for goods bought from the drawer. This simply means that it will be more convenient at the end of three months to pay for the articles purchased than to pay cash. But with those ‘kites’ there is no transaction of trade whatever; it is only a scheme to borrow money. The modus operandi is for one to ‘accept,’ another to ‘draw,’ and for the other members of the party to indorse the bill. They then issue, circulate, or discount this bit of blue paper, which has cost them one shilling, as a genuine trade bill, given in payment for goods bought by the acceptor from the drawer, worth, say, one hundred pounds. Of course respectable bankers will not discount these ‘kites;’ but money-lenders will, as they frequently take some collateral security.
Another very common practice among money-borrowers is for one man to be surety for a whole party. This is done in the following manner. Number one takes and furnishes a house in a respectable locality, representing himself as carrying on a thriving business in some specified trade. Number two applies for a loan, giving the name of number one for his surety. The agent of the money-lender goes to the house of number one. He sees that his house is well furnished, and that he seems to be doing a good business; so, either with, or sometimes without, a bill of sale, he advances the sum of money asked for. In large towns, this process is repeated with several Loan Societies whose offices are at a long distance from each other. If his clients come from another part of the city, the money-lender does not object; for he knows that some of his best customers do not like to borrow money in the neighbourhood of their homes. When those who got the money fail to pay one of their monthly instalments, the agent of the Loan Office goes again to number one, when he finds the house shut up, and the furniture and the surety missing. Or if any of the furniture be left, probably the landlord claims it for rent.