16 Mo. L. Rev. 251 (1951)
Illegal Lending in Missouri

handle is hein.journals/molr16 and id is 263 raw text is: ILLEGAL LENDING IN MISSOURI
JoE B. BIRKHEAD*
ROBERT M. MuRRAY**
WILLIAM C. LOCHMOELLER***
For over a half a century the Missouri legislature has struggled with
the problem of building a protective wall against the loan shark and illegal
lender1 That wall was breached as often as the loan shark found a weak
spot. The 1939 amendment to the Small Loan Law2 and the 1943 amend-
ment to the Loan and Investment Acts marked the final strengthening of
the wall and the defeat of the loan shark. Harbors of refuge and protection
heretofore afforded him had been eliminated. He was then definitely pushed
back beyond the borders of the state.
During the period from 1943 to July 1, 1946, all types of consumer in-
stallment loan business were licensed, regulated and supervised. Previous
to that period, illegal lenders had operated without licensing or supervision,
openly and notoriously from quarters in prominent downtown office build-
ings in metropolitan areas. They made loans to wage earners and persons in
the lower income brackets in amounts of $50.00 and less, charging rates
from 240 to 520 per cent per annum.4 These operators, many of them
*Of the Better Business Bureau, Kansas City. LL.B., University of Kansas;
member, Missouri Bar.
**Attorney, Kansas City. LL.B., University of Kansas City; member of the
Missouri and American Bar Associations.
***Attorney, St. Louis. LL.B., St. Louis University; member, Missouri Bar;
formerly prosecuting attorney of St. Louis City.
1. See Mr. Gisler's article, supra, tracing the historical steps in loan legis-
lation.
2. This amendment provided for an increase in rate of % per cent per month
on loans under $100.00 made by licensees, and the reenactment of Section 16 out-
lawing salary -buying. It was felt this increase in rate allowed licensees would en-
courage the making of little loans by licensees to persons previously exploited
by salary buyers and other types of loan sharks charging rates at 240% per. annum
and more.
3. This amendment plugged up loopholes in the Loan and Investment Act
by limiting the amount and frequency of fee charges and bringing the business
under the regulation and supervision of the Department of Finance.
4. It was found in 1938 there were about 60 salary buying offices in St. Louis
and 15 in Kansas City. These concerns were operating from the prominent office
buildings, freely advertising for business, and did not hesitate to use the courts
to enforce collections of their claims. There was nothing furtive about their op-
eration.
See Gisler and Birkhead, Salary Buying in Kansas City (published by the
Conference on Personal Finance Law, 1938); Snow, Rid Missouri of the Hi-Rate
240% Lenders (published by The Small Loans Committee of the Bar Association
of St. Louis, 1939).
(251)

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