The Loan Shark Problem in the Southeastern States

Abstract

Because of the increase in problems associated with the business of money lending in the United States many of the states passed regulatory acts. The movement extended to the Southeastern area where all states, including Alabama, Florida, Georgia, Louisiana, Mississippi, Maryland, North Carolina, South Carolina, Tennessee, Virginia, and West Virginia, enacted legislation which established legal interest rates.1 These rates varied slightly, with all states now limiting the annual rate to 6 per cent except Georgia and Florida where interest rates were set at 7 and 8 per cent respectively. While 6 per cent per annum is the maximum contract rate in Maryland, North Carolina, Tennessee, Virginia, and West Virginia, the rate in writing is 7 per cent in South Carolina, 8 in Alabama, Georgia, Louisiana, and Mississippi, and Io per cent in Florida. The civil penalties imposed in actions on usurious contracts of course vary in the different states. Louisiana law contains no provision for civil penalties but in West Virginia, Virginia, Tennessee, and Maryland forfeiture of excess over legal rate may be had through legal action while forfeiture of all interest is provided for in the laws of Alabama, Florida, Georgia, Mississippi, South Carolina, and North Carolina. The laws of the latter state also provide for the forfeiture of double interest paid on loans made on household and kitchen furniture.