Financing the American Family (ca. 1935)

[Music] contending with modern economic difficulties requires quite as high courage and as much Enterprise as was displayed by men and women of covered wagon days at that time money was not a necessity the Oldtimer traded his produce for everything from cloth and food stuffs to household Furnishings today it's a different story families in most cases depend upon a paycheck for the necessities of life there is an everpresent need for money when debts pile up because of sickness temporary unemployment pay cuts or improvidence cash may be needed for the emergencies of bra death travel or to take advantage of opportunities in education or business where can the self-respect employed family of today turn for Aid not to Nature as did the pioneer of 1833 it must turn somewhere what is the answer how much of a loan do you require Mr Brown well I figure about $300 are you a depositor here no I have no bank account what collateral can you offer for this loan Mr Brown I can offer only my record and my present salary I am very sorry Mr Brown but I'm afraid we can't accommodate you but I thought Banks were supposed to make loans they are but we can't afford to retail money in small Lots except occasionally to accommodate a depositor the average loan that we make is several thousand we are acquainted with our customers Financial condition so that it is only a matter of a few moments to make him a loan our cost would increase if we were to divide that loan between 50 or 100 people it would require a great many more officers and clerks to handle the details but I don't quite understand you well it's not only the time required to make a loan that we have the plan on but also the cost of collection you no doubt would like to repay your loan in small monthly install Ms and as we are only permitted to charge you the regular bank rate of interest the handling and collecting of your loan would show us a loss instead of a profit no banking institution can lend small sums at the bank rate and pay expenses so you see Mr Brown we can't solve your problem evidently this is not the answer then what is the answer all right children bedtime all right good night Mama good night good night Daddy good night honey night Daddy good night Sunny Mary I saw the banker today and all I got was reasons why Banks can't make small loans oh then what are we going to do JN we must have money to meet those overdue Grocery and doctor bills I don't know dear but we'll find some [Music] way Tuesday night in Chicago the household power of musical memories presented by the household Finance Corporation America's foremost family Finance organization well that's interesting I wonder what this household Finance Corporation is it may be the very thing we need I remember seeing one of their ads in the paper ladies and gentlemen the household manager in the days of our forefathers when commercial Banks were organized to finance Commerce and Industry maximum interest laws of 6 to 10% were provided then New Economic conditions of the Machine Age produced a crying need for family loans and legislators ignoring the retail nature of the business insisted upon a maximum rate so low that small loans could not be made profitably this left about 80% of our families without loan facilities to meet emergencies and refinance debts in 1916 after a survey the Russell Sage Foundation recommended that agencies be EST established under strict State supervision to lend without collateral or endorsers that a charge of not more than 3 and 1/2% a month simple interest be collected like rent on unpaid balances without fines fees or other charges that loans be limited to $300 or less 25 state governments have adopted legislation based on the Russell Sage Foundation uniform small loan law and serve 77% of the country's Urban population these laws license and supervise firms which loan money to families without requiring outside endorsers or bankable security these laws have been advocated by the leading Civic and Social Service organizations and have been endorsed and signed by such outstanding Governors as Franklin Roosevelt when governor of New York Frank Lowden of Illinois James Cox of Ohio and Woodrow Wilson When governor of New Jersey the family Finance business also has the endorsement of the banking Commissioners in these 25 States under their supervision there are over 3,500 State licensed offices one of the most important of these family finance companies is the household Finance Corporation operating in 95 American cities household has 148 offices in these cities during a recent 12- month period household made small loans to more than 300,000 families in various parts of the country practically every profession and trade listed in the United States census is served why do people borrow money household loans are made primarily for the purpose of helping families get out of debt 82% borrowed to pay family debts already contracted 9 and 1/10% of the families borrowed for business needs 2 and 81% for travel and Vacation 2 and 61% for education and two and 1/10% for moving and miscellaneous expenses of course it costs more to retail small sums of money than to lend large amounts the costs of investigating making collecting and bookkeeping are approximately the same for loans of different sizes but these fixed costs occur only one time when household borrows a million dollars from the bank they are repeated more than 5,000 times when household lends the million to over 5,000 people there are also 60,000 monthly collections in that many bookkeeping operations during a year you will always find household ready to give its customers the advantage of the lowest possible charges consistent with Sound business practice if in doubt ask any bank about household John that's the company whose ad I saw in the paper today oh where is it let me see it here it is that may be the very help we need Mr Mr and Mrs Brown investigated the household loan plan and phoned for a household representative to call on them after he had made sure of their honesty orderliness and good living habits and had listed their household equipment during a visit to their home they were called into the household office we now find them after a detailed but Pleasant interview with the household manager well Mr Brown we're satisfied as to your credit income and we're glad to make you the loan it will pay up all of those pressing debts after making your monthly payments you'll have more than 90% of your income left for current expenses there is your money and this is your payment book Thank you and you may depend on our making the monthly payments when they are due I'm confident of that your receipts show how promptly you've taken care of your other obligations and you know the more rapidly you pay off the loan the less it'll cost you that's true but if Mr Brown should get sick and we had no pay coming in what would happen we don't expect you to do the impossible if you do your part to the best of your ability I'm sure there'll be no difficulty well that's fair enough oh just a moment here's our money management booklet it'll help you get out of debt keep your budget balanced and assist you to live within your income we'll gladly help you with any of your financial problems bring them here to me or write to our research department at headquarters oh thank you thank you sir another family is on Solid Ground they are able to walk out of the household office with heads up and shoulders back ready to meet their creditors on an even footing household is a public service yet human organization its plan permits adjustment to the changing Financial circumstance ances of the customer if emergencies arise extensions may be granted if conditions improve the borrower may increase his monthly payment or pay the entire loan at once thus saving charges this is the answer to the small borrower problem the household Finance plan helps the family meet emergencies and refinance 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