MORRIS PLAN, The. The Morris Plan of industrial loans and investments takes its name from a Southern lawyer, Arthur J. Mor ris, formerly of Norfolk, Va., but now of New York. Over 100 companies were organized to operate this plan within the nine years ended 23 March 1919; the capital invested was about $12,000,000, and the amount of money lent to about 660,000 borrowers was near $100,000,000. Loans are now running at the rate of $36,000, 000 a year. The urgent though unvoiced de mand for a special banking institution for the benefit of the industrial class — such as had existed on the continent of Europe for over half a century—was first met in this country by the Fidelity Savings and Trust Company, of Norfolk, modestly capitalized at $20,000, which began the operation of the Morris Plan on 23 March 1910. The Plan itself may be briefly described as follows: A man needs a small sum of money to tide him over some urgent financial difficulty. Be ing unknown at the commercial banks and having no securities he can borrow on, he has to rely on the generosity of a friend, trust to the tender mercies of a loanshark, or seek re lief at the counter of a Morris Plan company. Here, if his application is granted, for each $50 borrowed he pays $1 toward the cost of investigation, and gives a promissory note signed by himself and two friends who, as co-makers, guarantee his honesty and earning capacity. This note is discounted at the legal rate of interest, and for each $50 of his in debtedness the borrower agrees to pay $1 a week toward the purchase of a certificate of investment equaling the amount of his loan. At the end of 50 weeks he has paid for this certificate in full, and two weeks later he may cash it at the company's office and pay off his note, which is then due. He has not had to pawn his watch or mortgage his furniture, and instead of paying a ruinous' rate of interest to a disreputable money-lender he has dealt with honest people who have treated him fairly and squarely. When his debt is paid he may, if he wishes, subscribe for one. or more of the company's certificates of investment, bearing interest at 5 per cent from datg of payment, and pay for the same either witircash down or on the instalment plan; and these certificates will be available as security for future loans, in which case no endorsements will be neces sary. Many a man who begins as a borrower ends by becoming an investor in interest-bear ing Morris Plan certificates; but one does not have to be a borrower in order to buy them.
Most Morris Plan loans are made to wage earners or small-salaried workers, but many are made to individuals, firms or small corporations to extend their business.
The first Morris Plan companies were or ganized in the South, but to-day there are more of them in Massachusetts than in any other State, North Carolina coming second. They extend in the Atlantic States from Manchester, N. H., to Atlanta. Ga., and westward to New Orleans, Detroit, Chicago, Minneapolis, Denver, and the Pacific Coast. The New York Com pany, first capitalized at $100,000 and now at $1,000,000, began business on the last day of 1914; Cleveland's $500,000 company on 8 March 1916; the Boston company, similarly capitalized, three months later; Chicago's $1,000,000 bank began on 27 July 1917, and the half-million dollars Detroit and Los Angeles companies date from the closing months of 1917. The officers and directors of these companies are chosen from among the .nost representative bankers and other business men in each community. and local interests own a large majority of the stock in every case. A minority interest varying in amoun• but usually substantial is held by the Industrial Finance Corporation, a Virginia institution with headquarters in New York, capitalized at $3,700,000, and having as its president Gen. Coleman du Pont and as its vice-president and general counsel Arthur J. Morris from whom the Plan takes its name. The purpose of this corporation is to organize Morris Plan companies in response to the de mand from all parts of the United States, and to standardize and facilitate their operations. Early in 1919, the local companies began op erating the Morris Plan of Retail Trade Ac ceptances, by which retail dealers in articles of general utility are relieved of the burden of acting as bankers for customers requiring time for the liquidation of their accounts. This natural development of the original loan-and investment idea will vastly increase the business done by the Morris Plan banks.
A recent development is the formation of The Morris Plan Insurance Society to insure borrowers for the amount of their loans throughout the period of their indebtedness. From November 1917, when it began operat ing, to 31 March 1919 this Society issued over 28,000 policies for more than $4,000,000 of in surance.