In The Price of Misfortune, Daniel Platt highlights the critical role consumer debt played in defining the meaning of freedom in the late-nineteenth and early twentieth century U.S. For Americans in this period, debt provided “opportunity and convenience” but also threatened “compulsion and submission” (7). Law offered a tool to draw lines between acceptable coercion and intolerable impingement on freedom. In so doing, it also defined the boundaries of economic personhood, determining who deserved protection from debt’s downsides.
Platt’s book balances engagement with the experiences of debtors with attention to how these experiences translated into legal and political action. He draws on a wide array of sources including, newspapers, family account books, business manuals, legal treatises, judicial opinions, legislative debates, and archival material. Platt’s engagement with the historiography is similarly wide ranging but accomplished with a light touch that keeps the book focused.
Platt’s story begins after the Civil War. Although Americans had abolished imprisonment for debt in the 1830s, they recognized the “lingering traces of incarceration” in the coercion that creditors could exercise over debtors in default (15). The abolition of slavery made this coercion especially troubling. Platt identifies the Peonage Act, the Bankruptcy Act of 1867, and state laws exempting certain debtor property from seizure as examples of the desire by reformers to place critical “limits on the market” designed to protect Americans’ right to labor freely and provide for their families (16). The Peonage Act prevented even “voluntary” servitude from binding debtors, bankruptcy gave a “right to exit” otherwise unbreakable obligations, and exemption statutes allowed debtors to protect homesteads or the tools of their trade from seizure (19, 28). These statutes provided critical limits on the obligations of debtors, even as the importance of finance grew.
Platt also charts the limits of these and other reforms. For one, “lawmakers and courts struggled to determine how and whether to bring the promise of debtor’s rights to wives” (41). Platt describes the important roles married women played in accounting for and managing the “domestic economy,” in relating to creditors, and in advising their husbands in financial matters (45). In the context of broader struggles with debt, the Married Women’s Property Acts take on new significance as part of broader attempts to define a wife’s “promissory capacity” and to incorporate women as a “distinctive type of economic actor” expected to moderate the risk-taking inclinations of their husbands (53, 67).
Debt also defined freedom for African American farmers in the South (95). Platt charts how Reconstruction era efforts that had allowed Black people to use credit to their benefit floundered as the Redeemers implemented legal tools to limit Black freedom (79). Surety laws let employers pay fines that courts assessed against those who could not afford them. In exchange, the employer could force the person whose fine they had paid to work off their “debt.” False-pretense laws classified the failure to repay advance wages as criminal fraud. Employers could therefore threaten those who did not fulfill employment contracts with jailtime. These laws exposed Black southerners to significant limits on their freedom. Platt illustrates that even successful legal challenges to coercive laws had their limits. His inspired reading of the U.S. Supreme Court’s decision in Bailey v. Alabama (1911) highlights how the court’s justification of its opinion “in the basic principle of freedom in debt” managed to turn a decision that struck down Alabama’s false-pretense law for violating the Thirteenth Amendment into a “performance of reunion” that failed to address the racial discrimination at the heart of the South’s coercive debt practices (91, 92).
Platt’s book illustrates that many other Americans’ low wages also left them “balanced on the edge of solvency” (100). Some reformers who recognized this problem focused not on improving wages but on working to improve lending. They believed that “ethical lenders could temper market forces” and they organized “philanthropic banks” designed to provide a reputable and more affordable alternative to loan sharks for the small loans workers needed to get by (111, 106). Eventually these same reformers came to embrace “reputable capitalists” lenders as well (113). They encouraged states across the country to enact the Uniform Small Loan Law, which opened the door for more mainstream financial institutions to offer personal loans (113). These actions not only supported the rise of the personal loan industry but also premised debt – rather than wage increases or other structural reforms – as the solution to wage-earners’ financial struggles.
The Price of Misfortune concludes with an analysis of the rise of New Deal policies that exemplified a shift from the late nineteenth century emphasis on “governing the reach of the market” to “governing the market itself” (124). This shift reflected a belief that a proper understanding of the risks of lending could help protect creditors. Platt shows how this shift did not change the exclusionary tendencies of debt regulation. Borrowers’ racial, ethnic, or religious backgrounds, or their residence in segregated areas, made them bad risks from the perspective of lenders. Agencies like the Federal Housing Administration accepted discrimination against people who lived in minority neighborhoods, because the instability of home values in those areas was something they believed that risk adverse lenders could not safely ignore.
As Platt recognizes, the “tensions between finance and freedom” he identifies persist today (154). The Price of Misfortune offers important perspective on these tensions and should encourage scholars of law and society to continue to mine the intersection of law, culture, and politics in their exploration of debt’s burden.
