Evening star. [volume] (Washington, D.C.) 1854-1972, 1913-06-14
The Loan Shark Law.

Declaration by the DlStrlct SupFchHo
Court that the new loan shark law, en-
acted by the last Congress, is unconstitu-
tional, on the ground that 1t Is discrim-
inatory. does not mean that legislation 10
prevent the extortion Of usurious interest
for small loans that will stand court
tests is not possible. On the contrary,
this decision, from which an appeal IS
already noted. will II it is sustained
show the way to the writing OF law
that will withstand judicial scrutiny.
That such a law will be enacted In the
event that this decision is finally affirmed
cannot be doubted.
Washington has suffered severely from
the operations Of usurers. who have made
great profits from the needy poor. They
have caused untold suffering, most of 1t
never brought to light. for the transac-
lions between borrowers and this class OF
lenders are almost always secret Heavy
sacrifices have been made to meet the IN
terest charges and TO try to pay on the
debts Sometimes suicide and even crime
have followed In the train OF these wicked
bargains made under cover of pernts-
sive law, or rather IN the absence OF
prohibitive, protective statute.
When. after long delay and with great
difficulty, the law that is now on test was
passed by the late Congress 1t was re-
garded as affording final relief. That it
would be stoutly resisted and Immediately
tested and If possible evaded was &C
cepted as assured. for the business at
which II was aimed is too profitable TO be
relinquished without struggle At once
upon the signing OF the Law il was ev!-
dent that those who had been working
this high-interest game in the District
were determined TO nuilify the statute ii
possible. Some of them moved to another
Jurisdiction. where they have tried TO
operate as principal establishments. leav-
ing their branches here. taking their
victims across the District boundary for
the formal transfer Of the funds In
some cases speedy motor ca-ry-alls are
operated for this purpose, running on
veritabie schedule. In other cases the
loan. companies have tried TO work as
before, remaining in the District, inter
posing between them and the law
transaction in the ostensible purchase OF
life insurance at rates meeting the DIFF
ference between the statutory interest
charge and that which had been formerly
extorted. Cases involving this course OF
procedure are now pending in court. but
IL the statute itself is declared inopera-
tive the basis for these prosecutions may
fail That direct loan shark" opera
lions have been proceeding in secret.
without subterfuge or device to cover
them. on the risk of detection and punish
ment, is also believed. But if the statute
were affirmed these operations would
eventually be uncovered and those en-
gagged In them dealt with so severely that
they would not be attempted again.
This legislation, which the first court
has now declared discriminatory and
therefore void. was designed for the pro-
lection Of the small borrower. It was
found to be necessary to give him secur-
ity almost against his own disposition.
and the fact that the subterfuges en-
ployed since the law went into effect
have awaited to bring into the net of
usury many borrowers indicates that
certain percentage Of needy people are
still willing to take their chances with
ting ready money. even when there are
legal-interest facilities within their reach.
This fact does not warrant suspension of
efforts in their behalf. 1t must be made
impossible for loan-shark work to be done
in Washington. even with Virginia or
Maryland bases Of operations II the
present law does not stand, another n ore
carefully drawn and embracing the fea-
lures Of interstate traffic which brief ex-
perience has brought to view as essen
tial must be enacted