Move Over, Grant McConnell

Guest Blogger

For the Balkinization Symposium on Emily Zackin and Chloe Thurston, The Political Development of American Debt Relief (University of Chicago Press, 2024).

Carol Nackenoff

Nearly sixty years ago, Political Scientist Grant McConnell famously contended that, from the founding era, Americans have been so fixated on curbing the abuse of public power that they were blind to the insidious exercise of private power.[1]  Unaccountable private associations and pressure groups frequently captured regulatory agencies, shaping important aspects of public policy.  And governance in private organizations lacked limits that might protect against tyranny over minorities. McConnell worried about the erosion of American democracy and declining pursuit of the public interest. Referencing Louis Hartz,[2] McConnell asserted that American political thought has been distinctive in its views about the exercise of private power, when private power is noticed at all, since class is not part of the American political vocabulary.

McConnell earlier explored these ideas in The Decline of Agrarian Democracy (1953), where he examined the power wielded by an organized minority speaking in the name of “Agriculture” in the 20^th century.  This was partly the result of the accretion of power by the Farm Bureau Federation and large-scale farming.  The farmer as common man who ostensibly only reluctantly and occasionally joined with fellow farmers in group action was pushed aside in the twentieth century as vital decisions were made by a small group of larger farmers.  When small farmers engaged in movements in the late nineteenth century, they pursued broad goals that were consistent with the general welfare, including protesting concentrations of power with the development of capitalism.

In The Political Development of American Debt Relief, Emily Zackin and Chlöe Thurston reject the claim that citizens, states, and the federal government were blind to private power.  Government sometimes responded and increasingly offered some kinds of protection against the power of creditors. In seeking to recover debtors’ influence on American political development, the authors focus a good deal of attention on movements around farmer debt.  Looking at Shays Rebellion through this lens rather than access to credit or fights over the uses of paper money, the authors trace the gradual transformation of bankruptcy law and debt stays as the U.S. came to offer greater protection to these debtors. The power of creditors and the threat they posed to the freedom of debtors increasingly came to be viewed as a problem to be addressed by public policies, even if some of the early policies were short-lived.

“How is it that a nation so famously devoted to Lockean liberalism developed such an early form of economic protection for those unable to fulfill their legal obligations?” the authors ask (2). The Hartz thesis fails to be of use, and keeps scholars from seeing.  Political battles determined outcomes, not some creed of laissez-faire liberalism or conviction that all could rise through the ranks with hard work and perseverance. Battles were won in part by campaigns that changed beliefs and convinced others that farmer debtors in particular were unable to pay for reasons having nothing to do with irresponsibility. 

Elizabeth Sanders (Roots of Reform) has argued that politically mobilized farmers were responsible for most of the late nineteenth century legislation that enhanced national control over private economic power. Farmers in the Midwest, South, and West tried to forge alliances with urban laborers in opposition to northeastern industrial and financial capital.  In a variety of arenas including banking and credit reform, agrarian interests won significant policy victories and contributed to American state building without much support from organized labor. Zackin and Thurston argue that organized farmer debtors made an impact on American institutional development well before this.

The authors reveal the impressive power that an American political development approach brings to the subject. Zackin and Thurston demonstrate that social policy (even social welfare policy) evolved as a feature of the nineteenth century state; when looking at debt relief and bankruptcy law, this dates back to at least 1841.  Their approach allows us to see how both the federal and state governments were responsive under certain conditions.  Frequent economic disruptions in the nineteenth century help debtor farmers make the case that factors beyond their own control were leading to their economic ruin and undermining the freedom that defines citizens.  Defining social policy to include debt relief, this study challenges a large body of scholarship that focuses on the New Deal origins of the welfare state.

While the pre-New Deal Court negated quite a few debtor relief measures, particularly those offering retrospective relief, Zackin and Thurston see a kind of popular constitutionalism at work that helped reshape the meaning of the Constitution.  Even when faced with a hostile Court, farmers kept demanding debt stays and other debt relief measures, sometimes using direct action,  and states kept passing measures, recognizing that it would take time before the Court could weigh in. Meanwhile, relief would be available.  There was a kind of nullification of Court decisions afoot, if only short-lived, helping a number of debtors make it through an economic crisis.

The Political Development of American Debt Relief is rich with suggestions about where to look for nineteenth century state building.  A first (which should not be a surprise given recent attention given to this topic) is to look to the states.  Debtors seeking even temporary debt relief turned to the states wherein they resided.  With creditors increasingly located out of state (frequently in the Northeast), state politicians paid attention to these mobilized landowning farmers who were their constituents.

The second place from which to examine state building is to scrutinize what many APD scholars would call policy failures. Individual debt relief measures in the 1800s were often repealed when the legislative majority changed.  Short-lived debtor relief laws and debtor-friendly bankruptcy laws should be thought about in a different way, Zackin and Thurston argue, because  measures put in place even briefly at one moment of economic distress could be called up again in another round of policies decades later. They had not been discredited. This is partly because policies once enacted shifted the meaning of the Constitution’s contracts and bankruptcy clauses, and constitutional meanings, once highly contested, came to be widely accepted.

The third lesson about state building is to look at the judiciary. The judiciary as an institution took on new functions as a result of changes in bankruptcy law. The judiciary had to develop new administrative capacity as new options for voluntary bankruptcy were authorized. Bankruptcy remained a judicial process despite some effort to instead create an administrative agency in the twentieth century.  Bankruptcy judges sometimes gained further power to finalize judgments, though they were not considered Article III judges.

Zackin and Thurston point to the strong legacy of civic republicanism in these battles over debt relief. The ruinous power arrangements of the moment gave creditors over debtors threatened freedom, undermined citizenship, and was likened to slavery or vassalage. Those who were dependent on creditors’ goodwill were unfree; they were subject to private oppression, even to the point of incarceration, and it was government’s job to protect citizens from oppression from fellow citizens (47, 49).

If a principle of nineteenth century constitutional understanding was that no legislation favoring a particular social class was legitimate, as Howard Gillman argues in The Constitution Besieged, Zackin and Thurston nonetheless find that Congress often justified federal intervention in bankruptcy in class terms (47). Dependency, unfreedom, or subordination as a result of private economic arrangements was not acceptable. Government intervention was also sometimes envisioned as preventing a condition akin to enslavement. Such understandings of debt became increasingly widespread.

There were some unhappy consequences of these battles: while McConnell claimed that the nineteenth century common man farmer spoke often for the general interest, for Zackin and Thurston, the common man who benefitted was white. There were not only racial overtones in the analogies white farmer debtors made to enslavement; there were racial implications in the policies governments adopted. Race specified the chances of debt relief and how bankruptcy would be treated.  In the aftermath of the Civil War, for example, “[t]hese debtors’ claims and their political success, were cruelly ironic: while Congress endeavored to ‘emancipate’ landed white debtors by allowing them to discharge oppressive debts and maintain their homesteads, the federal government through the Freedmen’s Bureau equated freedom for formerly enslaved people with the ability to enter and fulfill ‘hard contracts’ to farm the land of white planters who had so recently been considered their owners” (71). Some debtors had their debts discharged while others were expected to submit to the harsh discipline of abiding by their contracts or paying creditors. The authors point to the role the Jim Crow South likely played in the development of the forms wage earner bankruptcy would take (113). For some Americans, debt policy was especially disciplinary and punitive.

Types of debtor politics were not created equal, either.  Consumer debtors (holding mortgages and increasingly, installment debt) in the twentieth century were far less organized around debt relief than were their nineteenth century farmer debtor predecessors and never attained comparable protections. The reasons have to do both with the “political geography of debt relief” and with the impact of economic structures on debtor politics (4).  Women and Blacks wanted access to credit and did not want to be seen as bad risks, and the labor movement itself was reluctant to prioritize debt relief, pushing a narrative of individual responsibility. There was a collective action problem when benefits were so diffuse.  Furthermore (and this is one theme in the volume), the  relative economic stability of the post-World War II era made it difficult to overcome the stigmatization of individual consumer debt.

The high-water mark for bankruptcy and debt relief came in 1978 with passage of what is considered one of the world’s most debtor-friendly laws (115).  It was not the strength of organized debtors but rather the weakness of organized creditors that held together the pro-debtor regime at this point, they argue (138). Zackin and Thurston claim that organized lawyers and policy experts were largely responsible, speaking for consumer debtors when these debtors were largely absent from the political arena. The authors do not question what kind of legislation emerges when experts speak on behalf of those who are not present at the table; are there not frequent pitfalls when some organized voices articulating the interests of groups they claim to speak for?  If pressure from below is a major explanatory factor in the history of debt relief and bankruptcy legislation, are we getting enough explanation for how such a generous bill came about?

In the 1980s, farmers were again plagued by debt and high interest rates, but with Reagan in the White House and with a Republican Senate, the tide had turned. By the 1980s, credit card companies held an enormous amount of consumer debt.  Mortgage lenders and several credit card giants pressed the creditor’s cause; the concentration of major actors on their side made concerted action easier (139).

In this compact but extraordinarily rich volume, the authors make the case that the Constitution’s contracts clause underwent change, as did the manner in which Congress understood its powers with regard to the bankruptcy clause. Zackin and Thurston appear to think this resettlement of meaning about the role government can play in altering debt and disrupting property claims is durable because constitutional battles faded. Looking to contemporary organizations that might take up a new battle for debtor protections and extend them to consumers, their conclusion is guardedly optimistic. The last few years have made me wonder, however, whether constitutional settlements really stay settled. We should not count the Roberts Court out: it is hard to imagine the current Court writing the Blaisdell opinion,[3] or even upholding it.

Carol Nackenoff

cnacken1@swarthmore.edu

Richter Professor of Political Science Emerita and

Senior Research Scholar, Swarthmore College