The National Bankruptcy Archives

[We've recently had our attention drawn to this important collection at the Biddle Law Library of the Penn Carey Law School.  DRE]

In October 2000, the Biddle Law Library and the American College of Bankruptcy collaborated to create a special collection entitled the National Bankruptcy Archives (NBA), a national repository of materials relating to the history of debtor-creditor relations, bankruptcy and the reorganization of debt. The NBA collects records from the American College of Bankruptcy as well as from other organizations whose activities have been relevant to the history of bankruptcy and insolvency legislation, regulation, and administrative and judicial determination. The NBA also houses papers of individuals who have influenced the field, and other collections documenting the history of bankruptcy law.

den Hollander's "Court, Credit, and Capital"

Maurits den Hollander, Tilburg University, has published Court, Credit, and Capital: Amsterdam's Insolvency Legislation in the Dutch Golden Age (Cambridge University Press).  It appears in Studies in Legal History, a book series sponsored by the American Society for Legal History.

Seventeenth-century Amsterdam was a city of innovations. Explosive economic growth, the expansion of overseas trade, and a high level of religious tolerance sparked great institutional, socioeconomic and legal changes, a period generally known as "the Dutch Golden Age." In this book, Maurits den Hollander discusses how insolvency legislation contributed to the rise of a modern commercial order in seventeenth-century Amsterdam. He analyzes the procedure and principles behind Amsterdam's specialized insolvency court (the Desolate Boedelskamer, 1643) from a theoretical perspective as well as through the eyes of citizens whose businesses failed. The Amsterdam authorities created a regulatory environment which solved insolvency more leniently, and thus economically more efficiently, than in previous times or places. Moving beyond the traditional view of insolvency as a moral failure and the debtor as a criminal, the Amsterdam court recognized that business failure was often beyond the insolvent's personal control, and helped restore trust and credit among creditors and debtors.

Here are some encomia:

"Amsterdam's ‘golden age' has long fascinated economic historians. They have undertaken close studies of its unique organizations, e.g., the Wisselbank and the Vereenigde Oostindische Compagnie, in an attempt to explain the tremendous growth and vitality of the city and its surrounding region. Maurits den Hollander's important study of Amsterdam's Desolate Boedelskamer makes a significant contribution to this literature. By documenting how a specialized legal organization could alter the resolution of insolvency cases, promoting composition rather than dissolution and therewith engendering trust rather than conflict, it raises profound questions about the function of economic institutions. This book should be required reading for scholars in the field."

Thomas Max Safley, Professor Emeritus of History, University of Pennsylvania

"This book is simply superb. Den Hollander offers a study of insolvency in the booming Dutch economy of the seventeenth century that is both a first-rate piece of socio-economic analysis and a consummate exercise in social history."

James Q. Whitman, Yale Law School

Blaakman's "Speculation Nation"

Michael A. Blaakman, Princeton University, has published Speculation Nation: Land Mania in the Revolutionary American Republic (University of Pennsylvania Press):

During the first quarter-century after its founding, the United States was swept by a wave of land speculation so unprecedented in intensity and scale that contemporaries and historians alike have dubbed it a “mania.” In Speculation Nation, Michael A. Blaakman uncovers the revolutionary origins of this real-estate bonanza—a story of ambition, corruption, capitalism, and statecraft that stretched across millions of acres from Maine to the Mississippi and Georgia to the Great Lakes.

Patriot leaders staked the success of their revolution on the seizure and public sale of Native American territory. Initially, they hoped that fledgling state and national governments could pay the hefty costs of the War for Independence and extend a republican society of propertied citizens by selling expropriated land directly to white farmers. But those democratic plans quickly ran aground of a series of obstacles, including an economic depression and the ability of many Native nations to repel U.S. invasion. Wily merchants, lawyers, planters, and financiers rushed into the breach. Scrambling to profit off future expansion, they lobbied governments to convey massive tracts for pennies an acre, hounded revolutionary veterans to sell their land bounties for a pittance, and marketed the rustic ideal of a yeoman’s republic—the early American dream—while waiting for land values to rise.

When the land business crashed in the late 1790s, scores of “land mad” speculators found themselves imprisoned for debt or declaring bankruptcy. But through their visionary schemes and corrupt machinations, U.S. speculators and statesmen had spawned a distinctive and enduring form of settler colonialism: a financialized frontier, which transformed vast swaths of contested land into abstract commodities. Speculation Nation reveals how the era of land mania made Native dispossession a founding premise of the American republic and ultimately rooted the United States’ “empire of liberty” in speculative capitalism.

--Dan Ernst

Ramnath's "Boats in a Storm"

Kalyani Ramnath, University of Georgia, has published Boats in a Storm: Law, Migration, and Decolonization in South and Southeast Asia, 1942–1962 (Stanford University Press):

For more than century before World War II, traders, merchants, financiers, and laborers steadily moved between places on the Indian Ocean, trading goods, supplying credit, and seeking work. This all changed with the war and as India, Burma, Ceylon, and Malaya wrested independence from the British empire. Set against the tumult of the postwar period, Boats in a Storm centers on the legal struggles of migrants to retain their traditional rhythms and patterns of life, illustrating how they experienced citizenship and decolonization. Even as nascent citizenship regimes and divergent political trajectories of decolonization papered over migrations between South and Southeast Asia, migrants continued to recount cross-border histories in encounters with the law. These accounts, often obscured by national and international political developments, unsettle the notion that static national identities and loyalties had emerged, fully formed and unblemished by migrant pasts, in the aftermath of empires.

Drawing on archival materials from India, Sri Lanka, Myanmar, London, and Singapore, Kalyani Ramnath narrates how former migrants battled legal requirements to revive prewar circulations of credit, capital, and labor, in a postwar context of rising ethno-nationalisms that accused migrants of stealing jobs and hoarding land. Ultimately, Ramnath shows how decolonization was marked not only by shipwrecked empires and nation-states assembled and ordered from the debris of imperial collapse, but also by these forgotten stories of wartime displacements, their unintended consequences, and long afterlives.

--Dan Ernst

Policy-Relevant History

As mentioned in my last post on presentism, in researching City of Debtors, I tried to follow where my sources led me.

This approach led me to some unexpected finds that I would likely have ignored if I had approached the materials with an argument already in hand. For example, I did not expect to discover small-dollar lenders passionately arguing about the proper method for disclosing their charges to borrowers in the 1930s and 40s. The so-called “Rate Restatement Debate” pitted one faction of licensed lenders against another as the industry debated how to compete with banks and other financial institutions in the small-dollar loan market. I argue that the debate revealed fissures within the business community and waning support for regulations that had governed the industry for decades. Now that the business had attained some degree of legitimacy and the broader ideas about state oversight of the marketplace were shifting, many lenders no longer saw the need for strict disclosure requirements and other legal controls. (For those seeking more details, I describe the Restatement debate in Chapter Three of the book and in an article just published in the April 2018 issue of the Journal of Policy History on the long history of “truth in lending.")

Such historical conclusions can inform policymaking. For example, drawing on the above insights, we now know some conditions that are likely to promote industry support for regulation and also some conditions that may cause business to chaff against legal restraints. Based on this research, policymakers who seek industry support for regulation might consider if those conditions are present today and, if not, whether they can take steps to create a climate that is more hospitable to industry support for their proposals.

Likewise, City of Debtors identifies a few recurring stumbling blocks that past lending reform campaigns have encountered over the course of the twentieth century. First, it describes the difficulty of regulating these loans and lenders at the state level in a world where capital and lenders moved easily across borders and the federal government exercised minimal oversight. Second, it identifies a further obstacle to effective regulation: the inability of policymakers to decide whether small loans should be regulated in the same way as other forms of consumer credit, or instead merit special treatment. Finally, my research shows how the problem of small-sum loans has been inextricably linked with the problems of poverty and poor relief, which has compounded the complexity of the puzzle. States had a particularly strong interest in protecting small-sum borrowers, since a bad bargain could turn a poor debtor into a “pauper,” reliant on the government for financial support. On the other hand, states did not want to do away with small-sum credit entirely because these loans could act as a private safety net, allowing workers to manage financial shortfalls and make big-ticket purchases without the aid of state support, employer aid, or private charity.

Drawing on the above insights, policymakers might consider whether some or all of these stumbling blocks are impending their own efforts at reform. If so, they might then better target their energies at surmounting these challenges or lowering the barriers they present. As I have written elsewhere, this history can also serve to reframe the debate over the Consumer Financial Protection Bureau’s recent efforts to regulate payday lending and similar forms of consumer credit. In light of the long struggle among the states to regulate small-dollar loans, the CFPB’s rule looks more like a solution to an ongoing problem of state-level governance rather than a dramatic overreach by federal lawmakers and usurpation of states’ rights.

As I hope these examples show, historical research can play a role in policymaking and historians can speak to the present without engaging in presentism. The historian’s role is to help tease out what lessons for the present we can draw from our study of the past, while taking care to avoid drawing false equivalencies between then and now.

The Meanings of Presentism

In my second post, I briefly described one of the central arguments in my book, which concerns why governing small-sum lending has proved to be especially tricky over the course of the past century. I mentioned that this argument is directed especially to policymakers and others concerned about present-day regulatory questions. In this post, I grapple with the problem of “presentism” in legal history.

Even before I attended my first graduate school class, I confronted the problem of presentism. After I described my proposed project to one member of the faculty, who I shall call Professor X, the professor replied that it sounded awfully “presentist.” I did not fully understand the import of this label, having spent the previous seven years studying and working outside a History Department. But Professor X’s tone indicated that it was meant as a criticism – or at least as a provocation to defend my project.

After this charge was leveled against me, I did some research and quickly discovered that presentism, like so many –isms, is ambiguous. It can describe a multitude of practices, only some of which are widely scorned. For example, presentism can mean judging the past according to present-day moral standards or otherwise adopting “attitudes of temporal superiority,” in the words of historian Lynn Hunt. Most historians, myself included, agree that these judgments should be avoided. But, in labeling an entire project as presentist, Professor X could not have intended this meaning. Rather, I suspect that the professor was using presentist to mean “motivated primarily by present-day concerns” and “seeking to be relevant in our present moment.”

To this charge, I must plead guilty – with one caveat. History that is motivated by present-day concerns is not all “law office history” or “history lite,” which are both perjorative terms for when lawyers assemble cherry-picked historical evidence to support their legal claims. Law office history starts with a conclusion about the past (usually one that serves the author’s legal position) and then seeks evidence that will support the conclusion. Professor X likely feared that I would write law office history because I was coming to graduate school directly from practice. In response, I took this concern seriously and I consciously tried to avoid engaging in law office history.

My interest in the present has surely guided my choice of topics. (Would I have embarked on a project about the history of consumer credit regulation if I had not worked as a legal services lawyer defending low-income homeowners in danger of foreclosure during the subprime mortgage crisis?) But I strive to prevent my own values and views on present-day policy from driving my historical conclusions. Instead, over the course of researching City of Debtors, I tried to follow where my sources led me and hoped that they would yield conclusions about the past that would be of some value in policymaking. I’ll present a few examples in my next post.

Balancing Narrative and Analysis

In my two previous posts (here and here), I described one challenge of book writing: how to speak to two audiences with divergent interests and background knowledge about your topic. This post takes up a different writing challenge: how to balance narrative with analysis.

I am drawn to narrative history for a few reasons. For one, I understand storytelling as one of the key ways that human beings make sense of the world. As historian William Cronon observed decades ago, narrative is “our best and most compelling tool for searching out meaning in a conflicted and contradictory world.” Indeed, it is very hard to describe the past without organizing people, places, and events into a plot with a beginning, middle, and end. Narrative is nearly unavoidable. But even if it were possible to avoid storytelling, I would not. Stories serve an additional purpose in my work, which is to ground legal abstractions within lived experience. I have no interest in wage assignments, the “holder in due course” doctrine, or usury – apart from their impact on the daily lives of people struggling to make ends meet and the lenders who serve them. So, when recounting the birth of the organized small-dollar lending industry, I wanted to tell a story that put people at the center.

This story appears in Chapter Two of the book, which begins shortly before World War One and the ends in the Great Depression. In this period, when the anti–loan shark campaign was increasing the pressure on the industry, small-dollar moneylenders had two options. They could either continue seeking out legal loopholes that would allow them to operate profitably in a hostile legal environment, or they could rewrite the rules to give legal sanction to their business. In my telling, these two paths generate two narratives: one that follows Jacob Brodie, the “king of the moneylenders,” and another that focuses on Clarence Hodson of Beneficial Finance and Frank R. Hubachek of Household Finance. Brodie followed the first path, running and hiding from the law, while Hodson and Hubachek took the second, charting a path to legal legitimacy by writing new lending regulations through the national trade association that they formed.

Brodie, Hodson, and Hubachek’s stories serve a few purposes. First, they help carry the reader from the beginning of the chapter to the end. Second, the stories themselves are a form of argument. By including only some events and people (and leaving out others), as well as by beginning and ending at certain moments in time, these stories presented a particular view of the past. In another telling of this same tale, Jacob Brodie might play the hero, fighting valiantly against restrictive and outdated lending regulations. But in my telling, Brodie is a foil for Hodson and Hubachek; Brodie’s legal evasions contrast with Hodson and Hubachek’s embrace of law reform as a path to legitimacy.

But I wanted the book to go beyond telling these stories. I also wanted to state explicitly the broader conclusions that my narrative supports. In Chapter Two, for example, I concluded that business has often embraced its own regulation when in search of stability and legitimacy, and that this embrace has the potential to shape the whole culture of an industry. (Subsequent chapters then explored other instances where the lending industry sought out legal controls, as well as those where it rejected new regulations because it no longer needed the legitimacy that state oversight can provide.) The puzzle was figuring out how to state my conclusions in the text of the chapter, without interrupting the narrative flow or abruptly switching into a different authorial voice in the middle of the chapter.

My imperfect solution to this puzzle was to use the chapter introduction and conclusion to state my analytical conclusions, situating my story within the literature on regulatory capture and regulatory arbitrage. As a result, the text of the chapter leans heavily towards narrative and is light on analysis – aside from the beginning and ending. (A different, and perhaps superior, solution would have been to thread the analysis throughout the chapter, inserting break paragraphs that stepped out of the story to analyze events and situate my findings within the context of ongoing academic debates.) I finished the manuscript wondering if I had gotten the balance right and still worried that I had not.

Now that the manuscript is in print, the balance that I selected is set. But I know that this is a challenge that I will surely confront again in my next project. So, LHB readers, if you have advice on the art of balancing narrative and analysis, please leave your thoughts in the comments.

One Way to Write for Two Audiences

How do you write one book that speaks to two distinct audiences? The easy answer to this question is short and sweet: don’t bother. You may miss the mark in both directions, ending up with a book that attracts few readers and pleases none of them. Yet, with this danger in mind, I decided to forge ahead.

When I first embarked on City of Debtors, as a graduate student writing a dissertation, I imagined the audience as my former self: a lawyer engaged with present-day questions about consumer credit regulation. But, as I progressed in my research, I became more attuned to the questions that interested the community of historians that surrounded me in graduate school and thereafter. If I tried to address both audiences, I figured that at least I’d end up with a book that pleased me and made full use of the knowledge and skills that I had acquired from graduate training, research, and teaching across law and history.

I first considered what lessons history could offer policymakers, commercial law scholars, and others focused on contemporary questions. The past did not offer a winning regulatory regime that could be reconstructed and transplanted into the present, I quickly determined. Each era’s method of policing small-sum lending arose within the context of its own legal and business institutions and ideas. Nor did history have an obvious and immediate relevance to the day-to-day work of practitioners in the field. In the realm of constitutional law, for example, interpretative arguments often depend on recovering the original meaning of the constitutional text. But in commercial law, the ambition of the present is often to abandon and move beyond past old, outdated practices. (In 1948, scholar Grant Gilmore celebrated the proposed Uniform Commercial Code, a core commercial statute, as a means for clearing the “historical underbrush” and providing “a freshly marked base line from which to start a new process of case-by-case development.”)

But I found that my research did address two questions of contemporary interest: why has it been so difficult to regulate small-dollar lending and why have policymakers been unable to devise a regime of regulation for this industry that can stand the test of time? The book argues that there are three major reasons why governing small-sum lending has proved to be especially tricky over the course of the past century: the difficulty of policing a nationwide industry within a federal system of divided power (i.e., federalism), the challenge of drawing appropriate regulatory categories for various forms of lending, and the impossibility of disentangling concerns about small-dollar credit from those about the welfare state. I will discuss these arguments in more detail in a future post on legal history and “presentism.”

I also knew that historians would care less about the peculiar challenges of policing small-dollar loans, both today and in the past. For these readers, I considered how the dynamics I observed, in my one corner of the credit marketplace, might speak to bigger questions about the relationship between business and the state, as well as questions about the process of policymaking and how law develops over time. (I hoped that these questions might also interest non-historians, to the extent that they sharpen our understanding of the origins of present-day problems or how legal change happens over time.)

The book identifies four recurring patterns in the interactions between the small-dollar lending industry, state regulators, and advocates for reform. These are (1) the industry’s periodic support for law reform when in need of greater stability and legitimacy; (2) the regular reliance by reformers on private power as a supplement to state action; (3) the continual reshuffling of advocacy coalitions that brought together strange bedfellows in support of regulatory reform; and (4) the persistent influence of each era’s dominant ideas about the proper role of the state in the marketplace in reshaping the law. I will discuss the first pattern in my next post, which describes the challenge of balancing narrative and analysis.

The Challenge of Writing for Two Audiences

Thank you to the Legal History Bloggers for the invitation to share some of my thoughts this month.

In this post, I’ll briefly describe my recently published book, City of Debtors: A Century of Fringe Finance (Harvard, 2018) as well as the challenges of writing for two academic audiences: historians and commercial law scholars.

The book presents the first legal history of the small-dollar lending industry and its regulation in the United States, from the 1890s through the early twenty-first century. From this vantage point, it reconsiders our understanding of the history of business-state relations and the role of the state in the marketplace over time. It also offers some lessons for policymakers, lawyers, and scholars interested in present-day policy questions and regulatory reform.

I’ll start with the challenge of two audiences.

The book’s topic alone presents an immediate barrier to entry for many historians. (“What do you mean by small-dollar lending?” is a common question. I explain that these lenders offered working-class households small loans of a few hundred dollars in cash or credit to purchase households goods, much like modern payday lenders and rent-to-own stores.) If you tell an historian that you work on the civil rights movement or the history of constitutional law, there is an immediate spark of recognition because these topics have attracted significant public and scholarly interest over the past few decades. Small-dollar lending? Not so much.

To reach historians as well as readers outside the legal academy, I knew that the book would need to provide succinct explanations of the field’s legal jargon, such as “wage assignments,” and “chattel mortgage.” (To this end, I found it especially helpful for readers without any background in the field to review the manuscript, flagging terms in need of definition.) The book would also need to connect the story of one industry and its regulation to broader questions in the fields of legal and business history.

For the audience of consumer finance and commercial law scholars, the problem is reversed. These readers understand the jargon and the business of small-dollar lending, but history may be a harder sell. They might rightly ask: Why should those tackling current regulatory problems care about what happened over a century ago? I understood that to draw in these readers, the book would need to provide an answer to this question, preferably at the outset.

To meet these challenges, the book offers two sets of arguments: one directed primarily to historians and the other to commercial law scholars and practitioners. I’ll discuss those arguments in more detail in my next post.

Wilkinson-Ryan on Fleming, "The Rise and Fall of Unconscionability as the ‘Law of the Poor’"

Also at JOTWELL, Tess Wilkinson-Ryan (University of Pennsylvania) spotlights "The Rise and Fall of Unconscionability as the ‘Law of the Poor’," by Anne Fleming (Georgetown University Law Center). The article appeared in Volume 102 of the Georgetown Law Journal (2014). Here is a taste:

Who is best suited to police unfair terms—the market, the judiciary, or the legislature? Williams vs. Walker-Thomas Furniture has long been offered as a cautionary tale, but in her 2014 article, legal historian Anne Fleming takes on the standard narrative of judicial overreach and recasts the relationships among institutional actors in a reform movement. 

In 1965, Judge Skelly Wright ruled that Ora Lee Williams’s contract to pay for furniture on a pro rata installment plan was subject to review for unconscionability—a moment of judicial activism that was later blamed for the decline and stagnation of the doctrine of unconscionability. Fleming pushes back against the standard narrative that Williams created a backlash against Wright’s ‘law of the poor’ – according to that simplistic story, “Judges ended up hurting the very people they were trying to help. In the face of incisive criticism, judicial enthusiasm for the doctrine of unconscionability quickly faded.” (Pp. 1387-1388.) Fleming’s argument reframes the Williams decision within a broader context of judicial, legislative, and popular pressure, tracing the revival of unconscionability back to the Uniform Commercial Code, enacted in Washington, D.C. in 1963.

Read on here.

Antonov on Debt in Imperial Russia

Sergei Antonov, Queens College CUNY/Columbia has published Bankrupts and Usurers in Imperial Russia:Debt, Property, and the Law in the Age of Dostoevsky and Tolstoy with Harvard University Press. From the publisher:

As readers of classic Russian literature know, the nineteenth century was a time of pervasive financial anxiety. With incomes erratic and banks inadequate, Russians of all social castes were deeply enmeshed in networks of credit and debt. The necessity of borrowing and lending shaped perceptions of material and moral worth, as well as notions of social respectability and personal responsibility. Credit and debt were defining features of imperial Russia’s culture of property ownership. Sergei Antonov recreates this vanished world of borrowers, bankrupts, lenders, and loan sharks in imperial Russia from the reign of Nicholas I to the period of great social and political reforms of the 1860s. 

Poring over a trove of previously unexamined records, Antonov gleans insights into the experiences of ordinary Russians, rich and poor, and shows how Russia’s informal but sprawling credit system helped cement connections among property owners across socioeconomic lines. Individuals of varying rank and wealth commonly borrowed from one another. Without a firm legal basis for formalizing debt relationships, obtaining a loan often hinged on subjective perceptions of trustworthiness and reputation. Even after joint-stock banks appeared in Russia in the 1860s, credit continued to operate through vast networks linked by word of mouth, as well as ties of kinship and community. Disputes over debt were common, and Bankrupts and Usurers of Imperial Russia offers close readings of legal cases to argue that Russian courts—usually thought to be underdeveloped in this era—provided an effective forum for defining and protecting private property interests.

Praise for the book:

“Sergei Antonov introduces us to an imperial Russia in which aristocratic sons borrowed from usurers for their military uniforms and gambling debts and landowners borrowed money from serfs they owned and had mortgaged as collateral for other loans. With imagination and rich detail, he shows how informal personal credit pervaded every aspect of culture, society, and government, undergirding the social order and an entire regime of private property ownership. Bankrupts and Usurers of Imperial Russia is a masterly addition to the new cultural and social history of debt.” -Bruce H. Mann

“Antonov is a pioneer in the use of sources about private moneylending as a lens onto the tsarist social order. He is a keen analyst of large-scale processes, but the book is also highly readable and brings everyday imperial Russia to life. Bankrupts and Usurers of Imperial Russia is an important scholarly intervention, one built on archival sleuthing, expertise in social and legal history, a skillful integration of Russian developments into a global context, and a solid familiarity with the Western, imperial Russian, Soviet, and post-Soviet Russian literature.” -Alexander M. Marti

“From humble peasants to wealthy aristocrats, Russian pre-revolutionary society was permeated by the bonds of debt. Antonov’s meticulously researched and beautifully written book uncovers the circuits of unofficial credit relations that existed outside of the state banking system. It tells the stories of tragic bankruptcies and prodigious fortunes, family strife, legal battles, and reconciliations between debtors and usurers. This is an important study that fundamentally recasts our understanding of the legal regimes, economy, and sociability of credit in imperial Russia.”-Ekaterina Pravilova

More information is available here.