As the bounds of republican citizenship became increasingly inclusive of wage earners, African Americans, and women, the dilemma of debt and freedom increased in urgency. If abolition outlawed claims to future labor, did debts become voided checks? Were Americans free to bind themselves in any way they wished, or was slavery to the lender beyond democracy’s pale? These are the questions that reformers, legislators, and jurists debated after the Civil War. Daniel Platt’s The Price of Misfortune: Rights and Wrongs in Indebted America traces how Americans unwound these issues into an uneven patchwork of state laws and judicial decisions across the nation. After free labor’s ideological victory over southern slaveholders, the possibility of sacrificing freedom to bankers forced leaders to define the boundaries between free citizens and their debts. State homestead exemptions posed the most radical implications – that a certain portion of family estates were necessary firewalls protecting wives and children from indigence, and thus should remain inaccessible to creditors. The Peonage Act of 1867 nationalized the solution in debtors’ favor. Emancipatory language also informed the Bankruptcy Act of 1867, which transformed bankruptcy from something creditors used to dispossess debtors into a protection that debtors could invoke upon creditors. The liberal language of freedom and entrepreneurship merged with a conservative lexicon of family and dependence, coalescing into a modern ideology of debtors’ rights.
Platt treats seriously women’s role in family finance. Far from being incapacitated by the legal principle of coverture, women frequently were active agents in economic life. Platt documents women’s pecuniary labor via account keeping, budget making, earning extra income, and advising. Married Women’s Property Acts, passed in various states from the 1840s to the 1880s, carved out new legal space. Women held real estate apart from husbands, contracted property without those husbands, and shielded wages from creditors’ claims on husbands’ debts. These reforms were decidedly liberal. More conservatively, the homestead laws of thirty-three states protected one-third of estates from creditors until the wife’s death. Women could waive this privilege, however, and many did so for various motives, ranging from ambition to coercion.
Platt shows that if debt became impersonal and distant in the late nineteenth-century North, it remained all too personal and local in the Reconstruction Era and Jim Crow South. Absent competitive debt markets, law and custom coerced Black sharecroppers into personal lending arrangements that rolled over repeatedly into lifelong bonds. Reconstruction Era reforms briefly aligned poor white and Black voters in political power, prompting them to support homestead exemptions as well as the decriminalization of loan default. Redeemer Democrats preserved protections for land but removed them for personal possessions, negatively affecting landless sharecroppers. Platt highlights the U.S. Supreme Court case Bailey v. Alabama (1911), which ruled against criminalizing contractual default. Undeterred, southern states largely kept or expanded their relabeling of petty debt default as fraud throughout the Jim Crow Era.
Platt further analyzes the pre-1920s fight against usurious interest for the working poor. American states enforced moral ceilings on interest rates well after European governments lifted them. Reputable banks avoided small loans to wage workers, leaving the field to extralegal players whose rates, often disguised as fees, could exceed 100 percent. Enter the Russell Sage Foundation. The foundation encouraged strict prosecution of usurious lenders, established philanthropic lending institutions with investor returns capped at 6 percent, and supported the nascent credit union movement. Reformers, though, soured on these efforts a few years later. Instead, labor unions and lobbyist groups championed state-level Uniform Small Loan Laws (USLL), which tripled usury ceilings up to 42 percent. Nearly half of the states implemented USLL reform by 1925, and lenders responded. By 1928, some fifty banks offered no-collateral small loans as low as 6 percent. Lending transformed from a threat against freedom into a service for free workers. The capital thus tapped helped lay the foundation of the consumer credit society.
Platt links the New Deal’s regulation of lending with the emergence of mortgage redlining. Data collection seemed to make the economic world more rational and knowable, and social scientists and statistical aggregators became master craftsmen of this new interpretive trade. This transformation, in turn, gave New Dealers the confidence to treat debt not as a moral destabilizer but as a foundational pillar of American financial life. The Banking Act of 1933 and the National Housing Act of 1934 deputized ratings agencies and real-estate appraisal theorists to adjudicate risk, and enshrined race into an immutable law of accelerated depreciation that sanctioned redlining. Platt’s work makes this connection explicit and argues plausibly that such thought was causal to the regulatory state’s bureaucratization of racial discrimination in lending.
The New History of Capitalism is, depending on how one dates its origins, at least old enough to drive now, and Platt roots his narrative in that trendsetting paradigm’s core thesis: that capitalism is constantly under construction by way of language, law, and power. He details especially well how women’s pecuniary experiences were more versatile than the law allowed or Victorian ideologies espoused. Platt’s exposing of the accidental agency of reformers and data aggregators in pouring the foundation of a consumer credit society is insightful. This book does not, however, explore the holistic economic impact of shifting personal credit laws on the financial life of everyday families. After all, many Americans repaid loans and managed to advance or maintain their station. That Platt is uninterested in that broader picture is the natural culmination of a line of scholarship skewing toward failure, deadbeats, and misfortune. In that vein, Platt narrates the shifting legal rights of American borrowers in the Gilded Age and Progressive Era. In any case, Platt’s book is succinct, well-researched, skillfully composed, and deeply conversant in its interwoven historiographies. The author adds to our understanding of family financial life by contextualizing shifting laws on debt and freedom in the wake of abolition. Scholars interested in the histories of debt, progressive legal reform, and family economic life should read it carefully.
The above review was commissioned by Joseph Locke. Daniel Platt did not contribute to its editing or production.
