Nicholas Pang, Columbia University
This article examines how the expansion of credit markets through Small Loan Laws (SLL) led to a reconceptualization of bankruptcy, not as a conflict between creditors and debtors, but rather as primarily about unfortunate debtors. Employing a computational grounded theory analysis of the Congressional Record from 1879 to 1939, alongside archival data from the Russell Sage Foundation, this study demonstrates that in bankruptcy debates, nineteenth century legislators struggled over who was the moral “cause” of bankruptcy: creditors or debtors. However, Great Depression Era federal legislators largely refrained from attacking “loan sharks” and rather agreed that bankruptcy was status held by insolvent debtors absent creditor oppression. The enactment of state-level SLL contributed to this discursive shift among New Deal federal legislators. While SLL enactment led politicians to increasingly employ conflictual framings of “bankruptcy”, high bankruptcy rates in SLL states relates to a decrease in legislators’ focus on “bankruptcy.” This study illustrates that the construction of rational credit markets helps to produce a political acceptance of inequitable creditor-debtor relationships.
Presented in Session 163. Meaning Making and Cultural Significance