The Commonwealth of Massachusetts. REPORT. OFFICE OF THE SUPERVISOR OF LOAN AGENCIES, To the General Court of Massachusetts. In accordance with the requirements of section 1, chapter 727 of the Acts of 1911, I have the honor to submit the eighth report of this department. Since the United States entered the world conflict, the business of making loans by the licensed money lenders, at least by most of them, has been “looking up," according to the facetious assertion of one engaged in the business, because there was no other direction in which it could look, it being flat on its back. That this is unmistakably so is definitely shown by a comparative status of the business the year prior to this country's becoming identified with the great conflict and the year 1918. There were several reasons for the marked decline in the money-lending business of the licensed money lenders of this Commonwealth. With each new activity taken over by the national government there was increasing fear upon the part of the lenders, and a consequent further curtailment of their opportunity to effect loans. It was very early appreciated that the gathering in by the national government of certain lines of business made the employees under those circumstances immune from certain legal processes, often preventing the money lenders from taking legal measures to collect loans due them, and that the opportunities and privileges which had been theirs had been very greatly modified. There would be no assignments of wages accepted, no trustee process carried into effect, or other legal action taken where the debtor was employed by the national government, and this would apply also to State employees. Every would-be customer was noted carefully, to ascertain whether he was liable to the draft, and if so, unless he was particularly well known, or had been a customer who merited consideration, his appeal was not favorably received. Under these circumstances the loaning of so-termed salary or wage loans was markedly reduced, and for similar reasons those engaged in the lending of money on chattel mortgages were extremely chary to whom money was loaned. It is estimated that this combination of circumstances reduced the business at least 50 per cent., and in instances it ranged from that to 70 per cent. Under the conditions produced by the war, if any legal proceedings were commenced against a borrower while he was away, any one in his behalf had merely to state to the court that he was in the military service, and if the court believed that his ability to defend the action was materially affected by reason of such service, the court could grant a stay of the action until three months after his return, or for such shorter period as the court might think just. Judgment by default could not be taken against a borrower in his absence without a special order from the court. The court might appoint an attorney to protect his interests, and this attorney could not waive any of his rights nor bind him by his acts. If judgment was finally entered against a borrower the court could, nevertheless, require the plaintiff to file a bond to make good any loss that the borrower might suffer by reason of the judgment, if he should succeed in having the judgment set aside on his return. When the borrower returned he might apply to the court at any time within ninety days, and if the court believed that his rights had been injured, and that he had a just defence, the judgment might be set aside. If there was a mortgage on the property of a borrower in the service dated prior to March 8, 1918, and if he owned the property prior to his entering military service, the mortgage could not be foreclosed and the property sold in his absence without a special order from the court. If such an order was applied for, any one on his behalf merely had to state to the court that he was in the military service. If the court believed that his ability to comply with the terms of the mortgage was materi ceedings or make such other disposition of the matter as seemed to be just. Under these circumstances, therefore, the lender felt that it behooved him to take extra precautions and loan to no one excepting those who would be outside of the provisions stated. In many cases the lender was unable to have but a small amount of his money at work; therefore the return was meager, and practically all of them assert that for the past year and a half the money-lending business has been a decidedly losing proposition for them. It would be natural to presume that one of the reasons for the decline in the volume of business among the licensed money lenders was that many former borrowers who had been getting an ordinary wage had gone into munition plants and other lines of industry where very much higher wages were paid them than they had received before; therefore they had been placed in such an improved financial condition that they were not obliged to resort to borrowing. This is true to a considerable extent, although there are known to have been numerous cases where persons receiving much higher wages found they were not sufficient to meet their demands, as they were profligate in their expenditures, continued in an impecunious state, and were found to remain among the list of borrowers. But the main reason for the decline in business was due to the large number of men in the service, and those whom it was known were likely to be if hostilities continued. Thus virtually an embargo was placed upon may thousands of individuals who had been borrowers. Efforts were made by some of the lenders to collect either interest or the amount of the note from some borrowers who had gone into the service but had not gone overseas. An illustration of conditions as they existed is shown in the case of a lender who was owed a certain amount by a borrower who was in the service at Camp Devens. The delinquent was written to and asked if he could not do something to meet his obligation. It is keenly evident by his reply that he understood the situation fully, realized his rights while he was a soldier, and replied, at the same time offering advice, suggesting to the lender that he stop sending out dunning letters to men in the service and save the postage, which would be wasted if such a practice was to be continued, and invest it in war savings stamps. The suggestion in part, at least, was acted upon immediately, and the process of dunning soldiers was discontinued by that office, not to be resumed until its debtors in the service are discharged therefrom. LIBERTY BONDS. In the latter part of 1917 this office issued a rule that on loans on Liberty Bonds licensed money lenders should not collect more than 1 per cent. per month by rate of interest, whereas under their license they were entitled to 3 per cent. per month, but the position was taken that with such absolutely safe security 1 per cent. was in reality a liberal rate of interest. In the early part of the present year practically all of the licensed money lenders in this city were visited by individuals representing indirectly the Department of Justice, who sought to have those money lenders who were advertising to buy or sell Liberty Bonds, or loan money on them, refrain from advertising to that effect. The matter was taken up by this office with those interested in trying to induce the discontinuance of such advertising, and the Supervisor discussed the matter with representatives of the Department of Justice, who maintained that owners of Liberty Bonds had a perfect right to sell or borrow money on such security, and that there was no power to prevent them. The argument presented to the money lenders was that it was not patriotic upon the part of owners of bonds to sell or borrow upon them, and it certainly was not patriotic upon the part of the money lenders engaged in that branch of the business to insert glaring advertisements inducing them to do so. This office, realizing that the money lenders were violating no condition of their license, or the rules and regulations of this office, or of the statutes, but appreciating that the motives of those seeking the cessation of such advertisements were well based, then took the matter up with said money lenders, with the hope that the wishes of those opposed to such advertisements might be met in some part, and suggested to said lenders that in their advertisements they eliminate the word "Liberty," to which all of them In connection with this matter, the newspaper which was the principal advertising medium of the lenders dealing in bonds established a rule that no person or company could advertise in its columns who were dealing in Liberty Bonds unless they were licensed money lenders. Several persons or concerns not licensed were seeking to specialize in buying, selling and loaning on Liberty Bonds, and were dependent in a great measure for their business upon their advertisements. When this regulation was made by said paper those engaged in the business who were not licensed became applicants for a money lender's license in order that they might have access to the newspaper's advertising columns. But two licenses were issued to such concerns, one of which soon after ceased loaning money on such bonds, and bought and sold only. Those who sought to specialize in dealing in Liberty Bonds could get no more than 1 per cent. per month, which is the maximum rate of interest allowed by law for unlicensed dealers. They could get as high a rate without as with a license, but they were debarred the opportunity of advertising as they desired. Soon after the licensed dealers eliminated the word "Liberty" from their advertising, and learning that that was not satisfactory to those representing the interests of the Treasury Department, they held a meeting and voted to modify the size of their advertisements, making them far less conspicuous, and decided that each would use the same amount of space. It was but a short time before differences of opinion arose, the agreement was regarded as a "scrap of paper," and those breaking away from the compact advertised in a far more conspicuous manner than ever, which prompted every licensed money lender dealing in bonds to insert advertisements similar in size, with the result that the dealers in Liberty Bonds occupied a very conspicuous position in the columns of the newspapers carrying their advertisements. This led to renewed activities upon the part of representatives of the Treasury Department, who brought sufficient influence to bear upon the newspaper proprietor so that even the word "bonds" was stricken from the advertisements. The attitude taken by those opposed to the latter word was that there should be in evidence far more of a patriotic spirit upon the part of persons owning and dealing in |