Origins of The Concept
In 1910, attorney Arthur J. Morris (1881-1973) opened the Fidelity Savings and Trust Company in Norfolk, Virginia, which made small loans to working people under a concept he called "Morris Plan."
Under this lending approach, would-be borrowers had to submit references from two people of like character and earnings power to guarantee the borrower's creditworthiness, and agreed to repay the loan through the purchase of Installment Thrift Certificates in weekly installments equal to the face value of the loan, less origination and investigative fees.
Morris Plan pioneered the use of automotive financing (through arrangements between the Morris Plan Company of America, essentially a holding company for Morris Plan banks, and the Studebaker Corporation) and, through the subsidiary Morris Plan Insurance Society, credit life insurance (as allowed for the loan to be repaid in case the borrower died during the term of the loan, with any residue going to the estate).
Read more about this topic: Industrial Loan Company
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