Morris Plan Banks were part of a historic banking system in the United States created to assist the middle class in obtaining loans that were often difficult to obtain at traditional banks. They were established by Arthur J. Morris, a lawyer in Norfolk, Virginia, who noticed the difficulty his working clients had in getting loans. The first was started in 1910 in Norfolk, and the second in Atlanta in 1911. The plans established installment credit for customers. Lending required the borrower to provide references and proof of earnings to establish the borrower's credit worthiness. The banks gave depositors interest to secure funds for the loans. The banks were eventually organized as a New York-based banking organization and made small loans to moderate income families through banks in more than 100 U.S. cities. In 1917 credit life insurance plans were offered. Morris Banks made 1,760,000 loans in its first 12 years, amounting to about $320 million. The banks were affected by the Great Depression and changes to the banking industry in its aftermath.
Origins of the concept
In 1910, attorney Arthur J. Morris 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 Banks expanded to more than 100 locations in the United States. Morris Plans pioneered the use of automotive financing and, through the subsidiary Morris Plan Insurance Society, credit life insurance.
Officials
was secretary-treasurer and manager of the Canton, Ohio, Morris Plan Bank from its founding in 1916. He also was on the Board of Governors of the National Association of Morris Plan Bankers. In 1929, Waler Head took over as president of State Bank of Chicago and guided it through a merger with Foreman National. When Foreman National was acquired by First National Bank in 1931, Head resigned to become president of Morris Plan Corp. At the time, Morris Plan was the largest industrial banking system in the U.S., with $200 million in annual business and 800,000 customers.
Locations and bank building architecture
The Industrial Morris Plan Bank of Detroit opened in 1917, while its final location at the corner of Washington Boulevard and Grand River Avenue was completed and opened in 1926. The new Industrial Bank Building, with 25 floors and a "distinctive Modern Renaissance design," was one of many Detroit structures built on Washington Boulevard by architect Louis Kamper in the 1920's and 30's. Converted to apartments in 1981, it remains a significant historical and architectural landmark.
Morris Plan Bank in Indianapolis at 110 East Washington Street. It merged with Schloss Brothers Savings and Loan in 1936. A third of Marion County families had accounts. It was branchless until 1967 when the legislature allowed it to open branches. It was bought out by Firstmark Corporation in the 1970s. When that bank ran into trouble Morris depositors lost money.
Legacy
Morris graduated from the University of Virginia and made donations at the end of his life to help fund a law library constructed in 1974 and named for him.
