SOCIAL IMPLICATIONS OF THE SMALL LOAN LAWS OF THE UNITED STATES
| Author | Robert W. Kelso |
| DOI | http://doi.org/10.1111/j.1468-2230.1948.tb00079.x |
| Date | 01 April 1948 |
| Published date | 01 April 1948 |
SOCIAL, IMP1,ICATIONS
OF
THE
SMALL
LOAN
LAWS
OF
THE
UNI'I'k!D
S'l'A'i'lCS
THE
small loan law
as
developed in the United Statcs is a device
which seeks, through regulation of cash loans, to protect the
necessitous borrower from usurious practices.
In
its basic philo-
sophy it casts
a
cloak
of protection about the institution of the
family. In its method it providcs
a
process
by which small cash
loans may
be
made and interest charged suficient to aflord a
reasonable profit to the lender, and no more.
All but five of the States of the Republic haye such regulatory
laws, now closely approaching uniformity in their provisions.'
Continuous effort is being carried on in the remaining jurisdictions
.
to
enact such
p
statute.
But in nine of the States with regulatory statutes, the law-for
one reason
or
another-is largely ineffective
2;
and in thrcc more-
Nevada, Arizona and Dclaware-it is still
far
from satisfactory. As
such statutory provisions regulating the internal affairs of the State
fall within the legislative prerogative of the States rather than of
the federal government,
it
is only by separate and uniform enact-
ment by the forty-eight legislatures that complete coverage can be
had.
The nature of these laws is best set out by tracing the history
and the reasoning of their development. Until early in the present
century the several States relied wholly upon the statutes already
on their books limiting interest to a definite maximum, usually
(i
per
cent. Inasmuch
as
small loans cannot be handled on a business
basis at such
a
low
rate, illegal practices in lending small sums at
exorbitant rates became general
:
salary buying, garnishee
process,
and like practices resulting finally in positive efforts to suppress thc
evil.
Massachusetts passed a law in
1011
imposing some important
restrictions.
As
early
as
1007
the Russell Sage Foundation-a
philanthropic trust-began to
make
field surveys of conditions
in
the consumer credit field, reaching
such
conclusions by
1016
as to
bring out the first draft of
a
proposed uniform small loan
ILW
for
State ad~ption.~
1
Montann,
X.
and
8.
Dnkotn,
linnsas and
Soiillr
Carolinn.
Monlaiin
reports
a
new
statiitc
as
this article
pocs
to
prcss.
See
a
scrviccable
pntnplilet
(Xo.
37)
of
the
Pollok
Foiitidotiott
/or
Bcottottiic
Ilcscorclr
(ijlli
cd.,
hov.
1.
1046),
Jaffrcy.
N.
H.
*
Alabntna, Arkansas, Dclaware, Georgia, Mississippi, Tcnnessec,
Tcxns,
Norllr
Carolina
and
Wyoming.
3
A
compact and
able
nccounl
of
this
evoliition
of
the uniforiri
lam
inn
be
found
in
Imc
nttd
Contctnporory
Prollenis,
Duke
University, Ihrliani,
Norti
Carolina,
Vol.
8,
So.
1,
\\'inter
1041,
Hubnclrcli,
pp.
108-146.
143
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