New York City Free Loan Societies

By Samuel Seinfel, 1917

It is generally conceded that poverty and its attending miseries, while not entirely curable, are to a large extent preventable. The really deserving poor, if rendered prompt and judicious relief without the stigma of charity, are eventually restored to the ranks of the self-supporting, self-respecting members of the community. To effect this result is the purpose of the Free Loan Societies. It is justly claimed that the work of these societies has been of great value and far-reaching importance in the cause of preventive and constructive relief rendered to the deserving poor.

Loans do not rob the poor man of his self-respect; he does not feel degraded in receiving this form of help. What the banks do for the rich and middle classes, a Free Loan Society does for the small tradesman and mechanic. It relieves borrowers of great inconvenience and privation, prevents their falling victims to ravaging loan-sharks, and this id done without elaborate formalities or unnecessary delays and with a courtesy that is reciprocated in prompt and scrupulous repayment.

The oldest existing Free Loan Society in New York City, and, as far as is known in the United States of America, was organized in 1892 and is only twenty-five years in existence. But there were from time immemorial Gemilath Chasodim societies in every Jewish community in Europe. Though similar in purpose, loaning money without interest, these Gemilath Chasodim societies were in method and extent as unlike the Free Loan societies in this country as the “Heckdesh” [hospice] of a small Jewish European town is unlike the modern, well equipped hospital.

In the year 1917, the several Free Loan Societies of Greater New York made about thirty thousand loans amounting to approximately one million dollars. About 77% of the amount and number of loans was made by the largest society with its three branches, located in Harlem, Bronx and Brownsville. This society loans in denominations of from $5 to $300. Most of the others loan in amounts up to $50, a few up to $100, and only one up to $200. All loans are made on notes endorsed by responsible people, without charge of interest or expense of any kind, the borrowers repaying the loan in weekly installments.

The borrower of $10, $15, or $25 invariably wants his loan to pay overdue rent, doctors’, grocers’, or butchers’ bills. In these cases, the loans are least effective; the borrower remains just as poor after the loan as before. The loans of $100 and over, however, are usually applied for by small tradesmen, students, and young professional men. The small businessman through such a loan is enabled to retain his credit in the commercial world, and continue his struggle for independence. The same is true of the student and professional man.

Loans of larger denominations, therefore, accomplish the most constructive and durable good, and it is in this direction that the smaller societies should aim to improve and extend their work. A still greater and further reaching achievement would be the merger of all the Free Loan Societies of New York into one great society with branches in every Jewish section of the city. This would not only reduce the losses, small as they are, and the average cost per loan, but would eliminate the great and only evil now existing among them – duplication.

The achievements of the Free Loan Societies cannot fail to fill one with enthusiasm for the cause. From the immigrant who needs a footing in this new world to the troubled merchant who has to be tided over some difficulty in meeting obligations, all are relieved from embarrassment and humiliation, not in a spirit of pauperism, nor as objects of charity, but with courteous treatment and genuine desire to keep alive self-reliance, self-respect, and independence. No better method has yet been evolved to solve so practically the great problem of pauperism . . .

Hebrew Free Loan Society, Inc. (established 1892)
Central Office, 108 Second Ave., Tel. 8516 Orchard
Branches: 69 East 116th St., 1321 Boston Road, Bronx; 1878 Pitkin Ave., Brooklyn

Established more than twenty-five years ago, this society has been the practical embodiment of the idea of self-help in charitable relief work. Instead of giving alms to persons who have found the struggle for a means of livelihood too severe, the society loans money in sums ranging from $5 to $300, to applicants, without distinction of nationality, religion or race, on notes endorsed by reputable businessmen, without charge of interest or expense of any kind, the borrower repaying the loan in weekly installments. Over 80% of the loans have been made without requiring that the endorsers have a commercial rating. The expenses of the office, and losses, are covered by members’ dues and donations. The records of the society show that almost 97% of the loans are repaid by the borrower, and less than 2% by the endorsers. Of these 2%, over one-half is ultimately returned to the endorsers through the society, or through the borrowers themselves.

During the fiscal year January 1st to December 31st, 1916, the society made 24,330 loans, aggregating $711,940. The returns in weekly installments amounted to $704,087.07. Receipts for 1916 from members’ dues, donations, and bequests, totaled $45,000.92; expenses including all branches, $24,500.49. During the fiscal year, January 1st to December 31st, 1917, this society made 23,403 loans aggregating $765,400. The returns in weekly installments amounted to $745,105.50. Receipts from Federation of Jewish Philanthropic Societies, $36,904.20. Expenses including all branches $23,615.52. Losses on loans, $2,910.50. Total capital of the society amounts to $241,637.69. To meet the increased demands for free loans, two new branches have been opened during the last year, one in the Borough of the Bronx, at 1321 Boston Road, and one in the Borough of Brooklyn, at 1878 Pitkin Avenue . . .