Morris Plan Bank

AAA

DEFINITION of 'Morris Plan Bank'

A type of bank first established in 1910 to lend money to individuals who couldn't obtain loans from mainstream banks. Fidelity Savings & Trust Co. was the first Morris Plan bank. By 1931, there were 109 Morris Plan banks; however, that number declined after the economy recovered from the Great Depression and commercial banks began offering similar loans.

INVESTOPEDIA EXPLAINS 'Morris Plan Bank'

Named after the Morris Plan's founder, Virgina lawyer Arthur Morris, Morris Plan banks had a unique lending strategy. They did not require collateral for loans, but instead considered the character and community standing of applicants by requiring two endorsers. All three were required to fill out an application covering character, financial history, employment and wages. If the loan was granted, the borrower ended up paying a relatively high rate of interest.

RELATED TERMS
  1. Bank Reserve

    Bank reserves are the currency deposits which are not lent out ...
  2. Tax Accounting

    Accounting methods that focus on taxes rather than the appearance ...
  3. Endorser

    A person who is authorized to sign a negotiable security in order ...
  4. Bank

    A financial institution licensed as a receiver of deposits. There ...
  5. Collateral

    Property or other assets that a borrower offers a lender to secure ...
  6. Interest Rate

    The amount charged, expressed as a percentage of principal, by ...
Related Articles
  1. Promissory Notes: Not Your Average IOU
    Personal Finance

    Promissory Notes: Not Your Average IOU

  2. Getting A Loan Without Your Parents
    Retirement

    Getting A Loan Without Your Parents

  3. Payday Loans Don't Pay
    Options & Futures

    Payday Loans Don't Pay

  4. Different Needs, Different Loans
    Options & Futures

    Different Needs, Different Loans

Hot Definitions
  1. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  2. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  3. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  4. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  5. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  6. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
Trading Center