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Turning Wages into Capital Differentiation on the Market for Unsecured Loans in the United States, 1900-1945

Published online by Cambridge University Press:  18 November 2021

Simon Bittmann
Simon Bittmann*
Affiliation:
CNRS – Université de Strasbourg [[email protected]].
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Abstract

In this article, we show how interpretive battles about compliance can lead to regulatory differentiation and, in turn, market segmentation. To do so, we study the evolution of unsecured lending in the United States, between 1900 and 1945. In the early 20th century, a large segment of the workforce relied on their wages to access credit: this required the “legal coding” of labor income into capital, where lenders would offer advances in exchange for a lien over future revenues. Regulating these transactions raised conflicts between Progressive reformers, lenders and, after 1929, federal regulators, which spanned over five decades. The historical comparison of three states—Illinois, New York and Georgia—, shows that local discussions revolved around three outcomes—legal status, pricing method and collateralization—, the issue of which led to distinct regulatory paths and market configurations at the state level. Finally, the New Deal policies created an additional strand of federal coding, furthering market divides between unregulated payday lenders, non-bank credit companies, and commercial banks. On financial markets, discussions about compliance often revolve around calculative technologies, and we suggest this as a possible crossing point between STS analyses of capitalization devices and Pistor’s theory of capital modulation.

Résumé

Résumé

Dans cet article, nous montrons comment les batailles interprétatives relatives à la conformité (compliance) peuvent conduire à une différentiation réglementaire et, par suite, à une segmentation du marché. Pour ce faire, nous étudions l’évolution des prêts personnels aux États-Unis, entre 1900 et 1945. Au début du xxe siècle, une fraction croissante de travailleurs s’appuient sur leur salaire pour accéder au crédit: cela nécessite le « codage légal » des revenus du travail en capital, un processus permis par l’intermédiation de prêteurs qui offrent des avances en échange d’un droit de saisie. La réglementation de ces transactions soulève de nombreux conflits, à cheval sur cinq décennies, entre différents réformateurs progressistes, les prêteurs et, après 1929, les régulateurs fédéraux. L’analyse historique comparative de trois États – l’Illinois, New York et la Géorgie – montre que les discussions locales ont porté sur trois dimensions – le statut juridique et le prix de ces crédits, ainsi que le collatéral fourni – dont l’issue a conduit ceux-ci sur des trajectoires juridique et marchande divergentes. Enfin, les politiques du New Deal créent une strate supplémentaire de codage au niveau fédéral, accentuant les divisions du marché entre prêteurs sur salaire non réglementés, agences de crédit non-bancaires et banques commerciales. Sur les marchés financiers, les débats autour de la conformité concernent souvent les technologies de calcul, et nous suggérons cela comme un point de rencontre entre les analyses de sociologie des sciences, portant sur le processus de capitalisation, et celles proposées par Katharina Pistor, autour de la notion de codage juridique.

Zusammenfassung

Zusammenfassung

In diesem Artikel zeigen wir, wie Interpretationskämpfe um die Einhaltung von Vorschriften zu einer regulatorischen Differenzierung und damit zu einer Marktsegmentierung führen können. Dazu untersuchen wir die Entwicklung der unbesicherten Kreditvergabe in den Vereinigten Staaten in den Jahren zwischen 1900 und 1945. Im frühen 20. Jahrhundert war ein Großteil der Arbeiterschaft auf Löhne angewiesen, um Zugang zu Krediten zu erhalten: Dies erforderte die „legale Kodierung“ von Arbeitseinkommen in Kapital, bei der Kreditgeber Vorschüsse im Austausch für ein Pfandrecht auf zukünftige Einnahmen anboten. Die Regulierung dieser Transaktionen führte zu Konflikten zwischen fortschrittlichen Reformern, Kreditgebern und, nach 1929, den Bundesaufsichtsbehörden, die mehr als fünf Jahrzehnte andauerten. Ein historischer Vergleich dreier Bundesstaaten – Illinois, New York und Georgia - zeigt, dass sich die lokalen Diskussionen um drei Ergebnisse drehten - rechtlicher Status, Preisbildungsmethode und Sicherheiten –, die zu unterschiedlichen Regulierungswegen und Marktkonfigurationen auf bundesstaatlicher Ebene führten. Schließlich schuf die Politik des New Deal eine zusätzliche Ebene staatlicher Kodierung, die die Marktaufteilung zwischen unregulierten Zahltagskreditgebern, Nicht-Bank-Kreditunternehmen und Geschäftsbanken vertiefte. Auf den Finanzmärkten drehen sich die Diskussionen über Compliance oft um Computertechnologien, und wir schlagen vor, dass dies eine mögliche Schnittstelle zwischen den Analysen der Wissenschafts- und Technologiestudien zu Kapitalisierungsschemata und Katharina Pistor‘s Theorie der Kapitalmodulation darstellt.

Keywords

RegulationConsumer financeCapitalizationEconomic sociologyUS historyRégulationCrédit à la consommationCapitalisationSociologie économiqueHistoire des États-UnisRegulierungKonsumkreditKapitalisierungWirtschaftssoziologieGeschichte der Vereinigten Staaten
Type
Research Article
Information
European Journal of Sociology / Archives Européennes de Sociologie , Volume 62 , Issue 2 , August 2021 , pp. 213 - 248
Copyright
© European Journal of Sociology 2021

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