Petitioner was convicted of "loansharking" activities,
unlawfully using extortionate means in collecting
and attempting to collect an extension of credit, in violation of
Title II of the Consumer Credit Protection Act, and his conviction
was affirmed on appeal. He challenges the constitutionality of the
statute on the ground that Congress has no power to control the
local activity of loansharking.
Title II of the Consumer Credit Protection Act is
within Congress' power under the Commerce Clause to control
activities affecting interstate commerce, and Congress' findings
are adequate to support its conclusion that loansharks who use
extortionate means to collect payments on loans are in a class
largely controlled by organized crime with a substantially adverse
effect on interstate commerce. Pp. 402 U. S.
426 F.2d 1073, affirmed.
DOUGLAS, J., delivered the opinion of the Court, in which
BURGER, C.J., and BLACK, HARLAN, BRENNAN, WHITE, MARSHALL, and
BLACKMUN, JJ., joined. STEWART, J., filed a dissenting opinion,
p. 402 U. S.
MR. JUSTICE DOUGLAS delivered the opinion of the Court.
The question in this case is whether Title II of the Consumer
Credit Protection Act, 82 Stat. 159, 18 U.S.C. § 891 et
(1964 ed., Supp. V), as construed and applied to
petitioner, is a permissible exercise by Congress of its powers
under the Commerce Clause of the Constitution.
Page 402 U. S. 147
Petitioner's conviction after trial by jury and his sentence
were affirmed by the Court of Appeals, one judge dissenting. 426
F.2d 1073. We granted the petition for a writ of certiorari because
of the importance of the question presented. 400 U.S. 915. We
affirm that judgment.
Petitioner is one of the species commonly known as "loansharks"
which Congress found are in large part under the control of
"organized crime." [Footnote 1
"Extortionate credit transactions" are defined as those
characterized by the use or threat of the use of "violence or other
criminal means" in enforcement. [Footnote 2
] There was ample evidence showing petitioner
was a "loanshark" who used the threat of violence as a method of
collection. He loaned
Page 402 U. S. 148
money to one Miranda, owner of a new butcher shop, making a
$1,000 advance to be repaid in installments of $105 per week for 14
weeks. After paying at this rate for six or eight weeks, petitioner
increased the weekly payment to $130. In two months, Miranda asked
for an additional loan of $2,000, which was made, the agreement
being that Miranda was to pay $205 a week. In a few weeks,
petitioner increased the weekly payment to $330. When Miranda
objected, petitioner told him about a customer who refused to pay
and ended up in a hospital. So Miranda paid. In a few months,
petitioner increased his demands to $500 weekly, which Miranda
paid, only to be advised that, at the end of the week petitioner
would need $1,000. Miranda made that payment by not paying his
suppliers; but, faced with a $1,000 payment the next week, he sold
his butcher shop. Petitioner pursued Miranda, first making threats
to Miranda's wife and then telling Miranda he could have him
castrated. When Miranda did not make more payments, petitioner said
he was turning over his collections to people who would not be nice
but who would put him in the hospital if he did not pay.
Negotiations went on, Miranda finally saying he could only pay $25
a week. Petitioner said that was not enough, that Miranda should
steal or sell drugs if necessary to get the money to pay the loan,
and that, if he went to jail, it would be better than going to a
hospital with a broken back or legs. He added, "I could have sent
you to the hospital, you and your family, any moment I want with my
Petitioner's arrest followed. Miranda, his wife, and an employee
gave the evidence against petitioner, who did
Page 402 U. S. 149
not testify or call any witnesses. Petitioner's attack was on
the constitutionality of the Act, starting with a motion to dismiss
The constitutional question is a substantial one.
Two "loanshark" amendments to the bill that became this Act were
proposed in the House -- one by Congressman Poff of Virginia, 114
Cong.Rec. 1605-1606, and another one by Congressman McDade of
The House debates include a long article from the New York Times
Magazine for January 28, 1968, on the connection between the
"loanshark" and organized crime. Id.
at 1428-1431. The
gruesome and stirring episodes related have the following as a
"The loanshark, then, is the indispensable 'moneymover' of the
underworld. He takes 'black' money tainted by its derivation from
the gambling or narcotics rackets and turns it 'white' by funneling
it into channels of legitimate trade. In so doing, he exacts
usurious interest that doubles the black-white money in no time;
and, by his special decrees, by his imposition of impossible
penalties, he greases the way for the underworld takeover of entire
There were objections on constitutional grounds. Congressman
Eckhardt of Texas said:
"Should it become law, the amendment would take a long stride by
the Federal Government toward occupying the field of general
criminal law and toward exercising a general Federal police power,
and it would permit prosecution in Federal as well as State courts
of a typically State offense."
"* * * *"
"I believe that Alexander Hamilton, though a federalist, would
be astonished that such a deep entrenchment on the rights of the
States in performing
Page 402 U. S. 150
their most fundamental function should come from the more
conservative quarter of the House."
Senator Proxmire presented to the Senate the Conference Report
approving essentially the "loanshark" provision suggested by
Congressman McDade, saying:
"Once again, these provisions raised serious questions of
Federal-State responsibilities. Nonetheless, because of the
importance of the problem, the Senate conferees agreed to the House
provision. Organized crime operates on a national scale. One of the
principal sources of revenue of organized crime comes from
loansharking. If we are to win the battle against organized crime,
we must strike at their source of revenue and give the Justice
Department additional tools to deal with the problem. The problem
simply cannot be solved by the States alone. We must bring into
play the full resources of the Federal Government."
The Commerce Clause reaches, in the main, three categories of
problems. First, the use of channels of interstate or foreign
commerce which Congress deems are being misused, as, for example,
the shipment of stolen goods (18 U.S.C. §§ 2312-2315) or of persons
who have been kidnaped (18 U.S.C. § 1201). Second, protection of
the instrumentalities of interstate commerce, as, for example, the
destruction of an aircraft (18 U.S.C. § 32), or persons or things
in commerce, as, for example, thefts from interstate shipments (18
U.S.C. § 659). Third, those activities affecting commerce. It is
with this last category that we are here concerned.
Chief Justice Marshall, in Gibbons v.
9 Wheat. 1, 22 U. S. 195
"The genius and character of the whole government seem to be
that its action is to be applied to all the external concerns of
the nation, and to
Page 402 U. S. 151
those internal concerns which affect the States generally, but
not to those which are completely within a particular State, which
do not affect other States, and with which it is not necessary to
interfere for the purpose of executing some of the general powers
of the government. The completely internal commerce of a State,
then, may be considered as reserved for the State itself."
Decisions which followed departed from that view; but, by the
time of United States v. Darby, 312 U.
, and Wickard v. Filburn, 317 U.
, the broader view of the Commerce Clause
announced by Chief Justice Marshall had been restored. Chief
Justice Stone wrote for a unanimous Court in 1942 that Congress
could provide for the regulation of the price of intrastate milk,
the sale of which, in competition with interstate milk, affects the
price structure and federal regulation of the latter. United
States v. Wrightwood Dairy Co., 315 U.
. The commerce power, he said,
"extends to those activities intrastate which so affect
interstate commerce, or the exertion of the power of Congress over
it, as to make regulation of them appropriate means to the
attainment of a legitimate end, the effective execution of the
granted power to regulate interstate commerce."
at 315 U. S.
Wickard v. Filburn, 317 U. S. 111
soon followed, in which a unanimous Court held that wheat grown
wholly for home consumption was constitutionally within the scope
of federal regulation of wheat production because, though never
marketed interstate, it supplied the need of the grower which
otherwise would be satisfied by his purchases in the open market.
] We said:
"[E]ven if appellee's activity be local, and though it may not
be regarded as commerce, it may still,
Page 402 U. S. 152
whatever its nature, be reached by Congress if it exerts a
substantial economic effect on interstate commerce, and this
irrespective of whether such effect is what might at some earlier
time have been defined as 'direct' or 'indirect.'"
317 U.S. at 317 U. S.
In United States v. Darby, 312 U.
, the decision sustaining an Act of Congress which
prohibited the employment of workers in the production of goods
"for interstate commerce" at other than prescribed wages and hours,
a class of activities
was held properly regulated by
Congress without proof that the particular intrastate activity
against which a sanction was laid had an effect on commerce. A
unanimous Court said:
"Congress has sometimes left it to the courts to determine
whether the intrastate activities have the prohibited effect on the
commerce, as in the Sherman Act. It has sometimes left it to an
administrative board or agency to determine whether the activities
sought to be regulated or prohibited have such effect, as in the
case of the Interstate Commerce Act, and the National Labor
Relations Act, or whether they come within the statutory definition
of the prohibited Act, as in the Federal Trade Commission Act. And
sometimes Congress itself has said that a particular activity
affects the commerce, as it did in the present Act, the Safety
Appliance Act, and the Railway Labor Act. In passing on the
validity of legislation of the class
last mentioned, the
only function of courts is to determine whether the particular
activity regulated or prohibited is within the reach of the federal
(Italics added.) Id.
at 312 U. S.
That case is particularly relevant here, because it involved a
criminal prosecution, a unanimous Court holding
Page 402 U. S. 153
that the Act was "sufficiently definite to meet constitutional
at 312 U. S. 125
Petitioner is clearly a member of the class
in "extortionate credit transactions" as defined by Congress,
] and the
description of that class has the required definiteness.
It was the "class of activities" test which we employed in
Atlanta Motel v. United States, 379 U.
, to sustain an Act of Congress requiring hotel or
motel accommodations for Negro guests. The Act declared that
"any inn, hotel, motel, or other establishment which provides
lodging to transient guests' affects commerce per se."
Id. at 379 U. S. 247.
That exercise of power under the Commerce Clause was
"[O]ur people have become increasingly mobile, with millions of
people of all races traveling from State to State; . . . Negroes,
in particular, have been the subject of discrimination in transient
accommodations, having to travel great distances to secure the
same; . . . often they have been unable to obtain accommodations,
and have had to call upon friends to put them up overnight . . . ,
and . . . these conditions had become so acute as to require the
listing of available lodging for Negroes in a special guidebook. .
at 379 U. S.
In a companion case, Katzenbach v. McClung,
379 U. S. 294
ruled on the constitutionality of the restaurant provision of the
same Civil Rights Act which regulated the restaurant "if . . . it
serves or offers to serve interstate travelers or a substantial
portion of the food which it serves . . . has moved in commerce."
at 379 U. S. 298
Apart from the effect on the flow of food in commerce to
restaurants, we spoke of the restrictive
Page 402 U. S. 154
effect of the exclusion of Negroes from restaurants on
interstate travel by Negroes.
"[T]here was an impressive array of testimony that
discrimination in restaurants had a direct and highly restrictive
effect upon interstate travel by Negroes. This resulted, it was
said, because discriminatory practices prevent Negroes from buying
prepared food served on the premises while on a trip, except in
isolated and unkempt restaurants and under most unsatisfactory and
often unpleasant conditions. This obviously discourages travel and
obstructs interstate commerce, for one can hardly travel without
eating. Likewise, it was said, that discrimination deterred
professional, as well as skilled, people from moving into areas
where such practices occurred, and thereby caused industry to be
reluctant to establish there."
at 379 U. S.
In emphasis of our position that it was the class of
regulated that was the measure, we acknowledged
that Congress appropriately considered the "total incidence" of the
practice on commerce. Id.
at 379 U. S.
Where the class of activities
is regulated and that
class is within the reach of federal power, the courts have no
power "to excise, as trivial, individual instances" of the class.
Maryland v. Wirtz, 392 U. S. 183
392 U. S.
Extortionate credit transactions, though purely intrastate, may
in the judgment of Congress affect interstate commerce. In an
analogous situation, Mr. Justice Holmes, speaking for a unanimous
"[W]hen it is necessary in order to prevent an evil to make the
law embrace more than the precise thing to be prevented, it may do
Westfall v. United States, 274 U.
, 274 U. S. 259
that case, an officer of a state bank which was a member of the
Federal Reserve System
Page 402 U. S. 155
issued a fraudulent certificate of deposit and paid it from the
funds of the state bank. It was argued that there was no loss to
the Reserve Bank. Mr. Justice Holmes replied, "But every fraud like
the one before us weakens the member bank, and therefore weakens
the System." Id.
at 273 U. S. 259
In the setting of the present case, there is a tie-in between local
loansharks and interstate crime.
The findings by Congress are quite adequate on that ground. The
McDade Amendment in the House, as already noted, was the one
ultimately adopted. As stated by Congressman McDade, it grew out of
a "profound study of organized crime, its ramifications and its
implications" undertaken by some 22 Congressmen in 1966-1967. 114
Cong.Rec. 14391. The results of that study were included in a
report, The Urban Poor and Organized Crime, submitted to the House
on August 29, 1967, which revealed that "organized crime takes over
$350 million a year from America's poor through loan-sharking
113 Cong.Rec. 24460-24464. Congressman McDade
also relied on The Challenge of Crime in a Free Society, A Report
by the President's Commission on Law Enforcement and Administration
of Justice (February, 1967), which stated that loansharking was
"the second largest source of revenue for organized crime,"
at 189, and is one way by which the underworld obtains
control of legitimate businesses. Id.
The Congress also knew about New York's Report, An Investigation
of the Loanshark Racket (1965). See
1428-1431. That report shows the loanshark racket is controlled by
organized criminal syndicates, either directly or in partnership
with independent operators; that, in most instances, the racket is
organized into three echelons, with the top underworld "bosses"
providing the money to their principal "lieutenants,"
Page 402 U. S. 156
who in turn distribute the money to the "operators" who make the
actual individual loans; that loansharks serve as a source of funds
to bookmakers, narcotics dealers, and other racketeers; that
victims of the racket include all classes, rich and poor,
businessmen and laborers; that the victims are often coerced into
the commission of criminal acts in order to repay their loans;
that, through loansharking, the organized underworld has obtained
control of legitimate businesses, including securities brokerages
and banks, which are then exploited; and that,
"[e]ven where extortionate credit transactions are purely
intrastate in character, they nevertheless directly affect
interstate and foreign commerce. [Footnote 5
Shortly before the Conference bill was adopted by Congress, a
Senate Committee had held hearings on loansharking, and that
testimony was made available to members of the House. See
114 Cong.Rec. 14390.
The essence of all these reports and hearings was summarized and
embodied in formal congressional findings. They supplied Congress
with the knowledge that the loanshark racket provides organized
crime with its second most lucrative source of revenue, exacts
millions from the pockets of people, coerces its victims into the
commission of crimes against property, and causes the takeover by
racketeers of legitimate businesses. See generally
Cong.Rec. 14391, 14392, 14395, 14396.
We have mentioned in detail the economic, financial, and social
setting of the problem as revealed to Congress. We do so not to
infer that Congress need make particularized findings in order to
legislate. We relate the history of the Act in detail to answer the
impassioned plea of petitioner that all that is involved in
Page 402 U. S. 157
is a traditionally local activity. It appears, instead, that
loansharking in its national setting is one way organized
interstate crime holds its guns to the heads of the poor and the
rich alike and syphons funds from numerous localities to finance
its national operations.
Section 201(a) of Title II contains the following findings by
"(1) Organized crime is interstate and international in
character. Its activities involve many billions of dollars each
year. It is directly responsible for murders, willful injuries to
person and property, corruption of officials, and terrorization of
countless citizens. A substantial part of the income of organized
crime is generated by extortionate credit transactions."
"(2) Extortionate credit transactions are characterized by the
use, or the express or implicit threat of the use, of violence or
other criminal means to cause harm to person, reputation, or
property as a means of enforcing repayment. Among the factors which
have rendered past efforts at prosecution almost wholly ineffective
has been the existence of exclusionary rules of evidence stricter
than necessary for the protection of constitutional rights."
"(3) Extortionate credit transactions are carried on to a
substantial extent in interstate and foreign commerce and through
the means and instrumentalities of such commerce. Even where
extortionate credit transactions are purely intrastate in
character, they nevertheless directly affect interstate and foreign
Section 891 of 18 U.S.C. (1964 ed., Supp. V) provides in
"(6) An extortionate extension of credit is any extension of
credit with respect to which it is the understanding of the
creditor and the debtor at the time it is made that delay in making
repayment or failure to make repayment could result in the use of
violence or other criminal means to cause harm to the person,
reputation, or property of any person."
"(7) An extortionate means is any means which involves the use,
or an express or implicit threat of use, of violence or other
criminal means to cause harm to the person, reputation, or property
of any person."
That decision has been followed: Beckman v. Mall,
U.S. 597; Bender v. Wickard,
319 U.S. 731; United
States v. Haley, 358 U. S. 644
United States v. Ohio, 385 U. S. 9
MR. JUSTICE STEWART, dissenting.
Congress surely has power under the Commerce Clause to enact
criminal laws to protect the instrumentalities of interstate
commerce, to prohibit the misuse of the channels or facilities of
interstate commerce, and to prohibit or regulate those intrastate
activities that have a demonstrably substantial effect on
interstate commerce. But, under the statute before us, a man can be
convicted without any proof of interstate movement, of the use of
the facilities of interstate commerce, or of facts showing that his
conduct affected interstate commerce. I think the Framers of the
Constitution never intended that the National Government might
define as a crime and prosecute such wholly local activity through
the enactment of federal criminal laws.
In order to sustain this law, we would, in my view, have to be
able at the least to say that Congress could rationally have
concluded that loansharking is an activity with interstate
attributes that distinguish it in some substantial respect from
other local crime. But it is not enough to say that loansharking is
a national problem, for all crime is a national problem. It is not
enough to say that some loansharking has interstate
characteristics, for any crime may have an interstate setting. And
the circumstance that loansharking has an adverse impact on
interstate business is not a distinguishing attribute, for
interstate business suffers from
Page 402 U. S. 158
almost all criminal activity, be it shoplifting or violence in
Because I am unable to discern any rational distinction between
loansharking and other local crime, I cannot escape the conclusion
that this statute was beyond the power of Congress to enact. The
definition and prosecution of local, intrastate crime are reserved
to the States under the Ninth and Tenth Amendments.