Hostname: page-component-586b7cd67f-gb8f7 Total loading time: 0 Render date: 2024-11-28T02:06:29.147Z Has data issue: false hasContentIssue false
  • English
  • Français

An Unlikely Alliance: How Experts and Industry Transformed Consumer Credit Policy in the Early Twentieth Century United States

Published online by Cambridge University Press:  01 December 2015

Elisabeth Anderson ,
Bruce G. Carruthers  and
Timothy W. Guinnane
Get access Rights & Permissions [Opens in a new window]

Abstract

Despite the recently demonstrated importance of consumer credit for the economic health of nations and families, little is known about the history of consumer credit markets and their regulation. An important chapter in the history of consumer credit regulation came between 1909 and 1941, when policy experts at the Russell Sage Foundation (RSF) engaged in a national campaign to transform small loan markets and policy in the United States. Concentrating its efforts on state-by-state passage of the Uniform Small Loan Law, the foundation's political success hinged upon an alliance with the American Association of Personal Finance Companies. While most scholarship portrays experts as being dominated or co-opted by industry, our case provides a countervailing example. Far from controlling RSF experts, lenders became dependent on the foundation for legitimating their political lobbying and their business activities. We explain how the foundation built its expert reputation through a process of reputational entrepreneurship, and we trace how RSF experts deployed this reputation as a power resource in their negotiations with small loan lenders.

Type
Articles
Information
Social Science History , Volume 39 , Issue 4 , Winter 2015 , pp. 581 - 612
Copyright
Copyright © Social Science History Association, 2015 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Abbott, Andrew (1988) The System of Professions: An Essay on the Division of Expert Labor. Chicago: University of Chicago Press.CrossRefGoogle Scholar
Agnew, Elizabeth N. (2004) From Charity to Social Work: Mary E. Richmond and the Creation of an American Profession. Urbana: University of Illinois Press.Google Scholar
American Association of Small Loan Brokers (1918) “Adopted by the American Association of Small Loan Brokers at a Meeting of the Executive Council at Hotel McAlpin, New York City, April 24, 1918.” Library of Congress Russell Sage Foundation Archive, Box 33.Google Scholar
Anderson, Elisabeth (2008) “Experts, ideas, and policy change: The Russell Sage Foundation and small loan reform 1909–1941.” Theory and Society 37 (3): 271–310.CrossRefGoogle Scholar
Atlanta Constitution (1927) “Expert Here Aids ‘Loan Shark’ War.” July 9. Library of Congress Russell Sage Foundation Archive, Box 16.Google Scholar
Asheville, NC Times (1930) “The Remedy for ‘Loan Sharks.’” March 30. Library of Congress Russell Sage Foundation Archive, Box 42.Google Scholar
Babson Institute (1923) “The Loan Shark.” September 4. Library of Congress Russell Sage Foundation Archive, Box 139.Google Scholar
Banfield, Edward C. (1961) Political Influence: A New Theory of Urban Politics. New York: Free Press.Google Scholar
Barr, Michael S. (2012) No Slack: The Financial Lives of Low-Income Americans. Washington, DC: Brookings Institution.Google Scholar
Barrow, Clyde W. (1993) Critical Theories of the State: Marxist, Neo-Marxist, Post-Marxist. Madison: University of Wisconsin Press.Google Scholar
Bartley, Tim, and Schneiberg, Marc (2002) “Rationality and institutional contingency: The varying politics of economic regulation in the fire insurance industry.” Sociological Perspectives 45 (1): 47–79.CrossRefGoogle Scholar
Wm, B. B.. (1917) “Review of interest tables for small loans, by Arthur H. Ham.” Publications of the American Statistical Association 15 (18): 698.Google Scholar
Berman, Elizabeth Popp, and Pagnucco, Nicholas (2010) “Economic ideas and the political process: Debating tax cuts in the U.S. House of Representatives, 1962–1981.” Politics and Society 38 (3): 347–72.CrossRefGoogle Scholar
Block, Fred, and Evans, Peter (2005) “The state and the economy,” in Smelser, Neil J. and Swedberg, Richard (eds.) The Handbook of Economic Sociology, 2nd ed. Princeton, NJ: Princeton University Press: 505–26.Google Scholar
Bourdieu, Pierre (1984) Distinction: A Social Critique of the Judgment of Taste. Cambridge, MA: Harvard University Press.Google Scholar
Bremner, Robert (1956) From the Depths: The Discovery of Poverty in the United States. New York: New York University Press.Google Scholar
Brint, Steven (1990) “Rethinking the policy influence of experts: From general characterizations to analysis of variation.” Sociological Forum 5 (3): 361–85.CrossRefGoogle Scholar
Brint, Steven (1996) In an Age of Experts: The Changing Role of Professionals in Politics and Public Life. Princeton, NJ: Princeton University Press.Google Scholar
Brown, Dorothy M., and McKeown, Elizabeth (1997) The Poor Belong to Us: Catholic Charities and American Welfare. Cambridge, MA: Harvard University Press.CrossRefGoogle Scholar
Calder, Lendel (1999) Financing the American Dream: A Cultural History of Consumer Credit. Princeton, NJ: Princeton University Press.CrossRefGoogle Scholar
Clemens, Elisabeth S. (1997) The People's Lobby: Organizational Innovation and the Rise of Interest Group Politics in the United States, 1890–1925. Chicago: University of Chicago Press.Google Scholar
Crocker, Ruth (1999) “‘I Only Ask You Kindly to Divide Some of Your Fortune with Me’: Begging letters and the transformation of charity in late 19th century America.” Social Politics 6 (2): 131–60.CrossRefGoogle Scholar
Crocker, Ruth (2006) Mrs. Russel Sage: Women's Activism and Philanthropy in Gilded Age and Progressive Era America. Bloomington: Indiana University Press.Google Scholar
Dallas Craftsman (1930) “The Menace of the 42 Per Cent Loan Sharks.” January 31. Library of Congress Russell Sage Foundation Archive, Box 48.Google Scholar
Dallas News (1927) “Will Confer on Loan Shark Law.” September 20. Library of Congress Russell Sage Foundation Archive, Box 48.Google Scholar
Domhoff, G. William (2009) Who Rules America? Challenges to Corporate and Class Dominance. New York: McGraw-Hill.Google Scholar
Domhoff, G. William, and Webber, Michael J. (2011) Class and Power in the New Deal: Corporate Moderates, Southern Democrats, and the Liberal-Labor Coalition. Stanford, CA: Stanford University Press.Google Scholar
Fine, Gary Allen (1996) “Reputational entrepreneurs and the memory of incompetence: Melting supporters, partisan warriors, and images of President Harding.” American Journal of Sociology 101 (5): 1159–93.CrossRefGoogle Scholar
Fligstein, Neil (2001) The Architecture of Markets: An Economic Sociology of Twenty-First-Century Capitalist Societies. Princeton, NJ: Princeton University Press.CrossRefGoogle Scholar
Fligstein, Neil (2005) “The political and economic sociology of international economic arrangements,” in Smelser, Neil J. and Swedberg, Richard (eds.) The Handbook of Economic Sociology, 2nd ed. Princeton, NJ: Princeton University Press: 183–204.Google Scholar
Fourcade, Marion (2009) Economists and Societies: Discipline and Profession in the United States, Britain, and France, 1890s to 1990s. Princeton, NJ: Princeton University Press.CrossRefGoogle Scholar
Franklin, Donna L. (1986) “Mary Richmond and Jane Addams: From moral certainty to rational inquiry in social work practice.” Social Service Review 60 (4): 504–25.CrossRefGoogle Scholar
Glenn, John M., Brandt, Lilian, and Andrews, F. Emerson (1947) Russell Sage Foundation 1907–1946. New York: Russell Sage Foundation.Google Scholar
Granovetter, Mark (2005) “Business groups and social organization,” in Smelser, Neil J. and Swedberg, Richard (eds.) The Handbook of Economic Sociology, 2nd ed. Princeton, NJ: Princeton University Press: 429–50.Google Scholar
Ham, Arthur (1909) The Chattel Loan Business. New York: Charities Publication Committee.Google Scholar
Ham, Arthur (1911) “Papers Read before Charities Conference: Paper by Arthur Ham, Agent of the Russell Sage Foundation.” November 4. Library of Congress Russell Sage Foundation Archive, Box 4.Google Scholar
Ham, Arthur (1912a) “The Supreme Court and the Loan Shark.” The Survey, January 13. Library of Congress Russell Sage Foundation Archive, Box 38.Google Scholar
Ham, Arthur (1912b) “Hard Times for the Loan Sharks.” The Survey, November 30. Library of Congress Russell Sage Foundation Archive, Box 37.Google Scholar
Ham, Arthur (1913a) “Court of Appeals on the Loan Shark.” The Survey, January 11. Library of Congress Russell Sage Foundation Archive, Box 38.Google Scholar
Ham, Arthur (1913b) “No Relief in Sight for the Loan Shark.” The Survey, January 11. Library of Congress Russell Sage Foundation Archive, Box 38.Google Scholar
Ham, Arthur (1913c) “Remedial Loans Law for the District of Columbia.” The Survey, February 13. Library of Congress Russell Sage Foundation Archive, Box 38.Google Scholar
Ham, Arthur (1921) “The Trend and Progress of the Movement to Improve Small Loan Conditions: Address before the Seventh Annual Convention of the American Industrial Lenders’ Association.” September 23. Library of Congress Russell Sage Foundation Archive, Box 2.Google Scholar
Ham, Arthur (1911) “Remedial loans as factors in family rehabilitation.” Conference of Charities and Correction National Proceedings 1911: 305–11.Google Scholar
Ham, Arthur (1912) “Remedial loans: A constructive program.” Proceedings of the Academy of Political Science in the City of New York 2 (2): 109–17.CrossRefGoogle Scholar
Ham, Arthur (1921) The Trend and Progress of the Movement to Improve Small Loan Conditions. Harrisburg, PA: American Industrial Lenders' Association.Google Scholar
Hammack, David C. (1994) “A Center of Intelligence for the Charity Organization Movement: The Foundatio's Early Years,” in Hammack, David C. and Wheeler, Stanton (eds.) Social Science in the Making: Essays on the Russell Sage Foundation, 1907–1972. New York: Russell Sage Foundation: 1–34.Google Scholar
Heclo, Hugh (1974) Modern Social Politics in Britain and Sweden: From Relief to Income Maintenance. New Haven, CT: Yale University Press.Google Scholar
Henderson, Leon (1925) Speech before the American Association. Library of Congress Russell Sage Foundation Archive, Box 4.Google Scholar
Henderson, Leon (1929a) “Why Sage Foundation Okayed 42% Law.” St Louis Post-Dispatch, February 19. Library of Congress Russell Sage Foundation Archive, Box 28.Google Scholar
Henderson, Leon (1929b) “Russell Sage Loan Defended.” Wilmington Journal, March 6. Library of Congress Russell Sage Foundation Archive, Box 14.Google Scholar
Henderson, Leon (1929c) “Small Loans Bill Is Defended by Leon Henderson.” Wilmington Every Evening, March 6. Library of Congress Russell Sage Foundation Archive, Box 14.Google Scholar
Henderson, Leon (1929d) “Truths vs. Half-Truths about the USLL: Justification of the Rate Employed.” March 6. Library of Congress Russell Sage Foundation Archive, Box 48.Google Scholar
Hilborn, Walter (1928) “W. S. Hilborn Defends Higher Interest Rates under Small Loan Law.” St. Louis Times, June 22. Library of Congress Russell Sage Foundation Archive, Box 28.Google Scholar
Hijiya, James A. (1980) “Four ways of looking at a philanthropist: A study of Robert Weeks de Forest.” Proceedings of the American Philosophical Society 124 (6): 404–18.Google Scholar
Hodson, Clarence (1919) “Draft of Ideal Loan Shark Statute.” Library of Congress Russell Sage Foundation Archive, Box 2.Google Scholar
Household Finance Corporation (1929) “The Uniform Small Loan Law Proposed for the District of Columbia.” December 15. Library of Congress Russell Sage Foundation Archive, Box 14.Google Scholar
Hyman, Louis (2011) Debtor Nation: The History of America in Red Ink. Princeton, NJ: Princeton University Press.Google Scholar
Illinois Association of Personal Finance Companies (1935) “The Personal Finance Business in Illinois.” Library of Congress Russell Sage Foundation Archive, Box 16.Google Scholar
Iowa Association of Personal Finance Companies (1935) “The Personal Finance Business in Iowa.” Library of Congress Russell Sage Foundation Archive, Box 18.Google Scholar
Jersey City Chamber of Commerce (1914) “Egan Loan Shark Law Goes into Effect.” Press release, April 22. Library of Congress Russell Sage Foundation Archive, Box 30.Google Scholar
Jersey Journal (1913) “Say Martin Bill Is Just What the Loan Sharks Want: So Says Arthur H. Ham, Expert for Interchurch Federation Which Is Fighting Money Lenders.” February 28. Library of Congress Russell Sage Foundation Archive, Box 30.Google Scholar
Kearny Press (1914) “Law to Control Loan Sharks.” January 10. Library of Congress Russell Sage Foundation Archive, Box 30.Google Scholar
Kurzman, Charles, and Lynn Owens (2002) “The sociology of intellectuals.” Annual Review of Sociology 28: 63–90.CrossRefGoogle Scholar
LaGuardia, F.H. (1932) “Usury—The Curse of Humanity.” Brass Tacks 1 (2). Library of Congress Russell Sage Foundation Archive, Box 14.Google Scholar
Lagemann, Ellen Condliffe (1989) The Politics of Knowledge: The Carnegie Foundation, Philanthropy, and Public Policy. Middletown, CT: Wesleyan University Press.Google Scholar
Lagemann, Ellen Condliffe (1992) The Politics of Knowledge: The Carnegie Corporation, Philanthropy, and Public Policy. Chicago: University of Chicago Press.Google Scholar
Larson, Magali S. (1977) The Rise of Professionalism: A Sociological Analysis. Berkeley: University of California Press.CrossRefGoogle Scholar
Mayer, Robert (2010) Quick Cash: The Story of the Loan Shark. DeKalb: Northern Illinois University Press.Google Scholar
Massey, Douglas S. (2005) “Racial discrimination in housing: A moving target.” Social Problems 52 (2): 148–51.CrossRefGoogle Scholar
Merton, Robert K. (1968) “The role of the intellectual in public bureaucracy,” in Merton, Robert K. (ed.) Social Theory and Social Structure. Glencoe, IL: Free Press: 60–69.Google Scholar
Mueller, Dennis C. (2003) Public Choice III. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
Nelkin, Dorothy (1975) “The political impact of technical expertise.” Social Studies of Science 5 (1): 35–54.CrossRefGoogle Scholar
Newark News (1914) “Long Debates on Loan Shark Bill.” February 10. Library of Congress Russell Sage Foundation Archive, Box 30.Google Scholar
New York American (1924) “The Credit Union.” March 30. Library of Congress Russell Sage Foundation Archive, Box 139.Google Scholar
New York Association of Personal Finance Companies (1938) “Small Loan Legislation in New York.” Library of Congress Russell Sage Foundation Archive, Box 33.Google Scholar
New York Times (1913) “HONOR THE MEMORY OR ROBERT C. OGDEN: His Associates Pay Tributes.” October 27.Google Scholar
New York Times (1923) “HARDING PRESENTS ROOSEVELT MEDALS: President Pays Tribute to Miss Louisa Schuyler, Prof. H. F. Osborn and Gen. Wood.” June 16.Google Scholar
New York Times (1926) “CLEVELAND H. DODGE, PHILANTHROPIST, DIES.” June 25.Google Scholar
New York Times (1938) “MRS. F. J. SHEPARD DIES OF A STROKE: Former Helen Gould, Famous for Philanthropy, Stricken at Her Summer Home.” December 21.Google Scholar
New York Times (1940) “MRS. J. M. GLENN, 70, A WELFARE LEADER: Noted Worker in Several Fields Is Dead after Being Ill for Several Weeks.” November 5.Google Scholar
New York Times (1950) “J. M. GLENN IS DEAD; SOCIAL WORKER, 91: Served as General Director of the Russell Sage Foundation for Its First 24 Years.” April 21.Google Scholar
Nugent, Rolf (1933) “Three experiments with small-loan interest rates.” Harvard Business Review 12 (1): 35–46.Google Scholar
Nugent, Rolf (1935) “Speech by Rolf Nugent for Paramount News.” November 2. Library of Congress Russell Sage Foundation Archive, Box 33.Google Scholar
Nugent, Rolf (1940) “Notes on the History of the Foundation's Relationship with the American Association.” October 29. Library of Congress Russell Sage Foundation Archive, Box 4.Google Scholar
O’Connor, Alice (2001) Poverty Knowledge: Social Science, Social Policy, and the Poor in Twentieth-Century U.S. History. Princeton, NJ: Princeton University Press.CrossRefGoogle Scholar
O’Connor, Alice (2007) Social Science for What? Philanthropy and the Social Question in a World Turned Rightside Up. New York: Russell Sage Foundation.Google Scholar
Oswego Daily Times (1901) “Yerkes’ Big Scheme: Chicago Promotor Has Captured London Subways: Will Americanize the System: The Syndicate Is Composed of British and United States Financiers, Maryland Trust Company the Agent in the Country.” June 7.Google Scholar
Providence Journal (1928) “Small Loan Laws Upheld by Expert: Russell Sage Foundation Director Opposes Three Bills before House.” February 22. Library of Congress Russell Sage Foundation Archive, Box 46.Google Scholar
Recchiuti, John Louis (2007) Civic Engagement: Social Science and Progressive-Era Reform in New York City. Philadelphia: University of Pennsylvania Press.Google Scholar
Robinson, L. N., and Nugent, Rolf (1935) Regulation of the Small Loan Business. New York: Russell Sage Foundation.Google Scholar
Rodgers, Daniel T. (1998) Atlantic Crossings: Social Politics in a Progressive Age. Cambridge, MA: Harvard University Press.CrossRefGoogle Scholar
Russell Sage Foundation (1920) “Endorsements Urging the Passage of Senate Bill No. 95, Known as the Uniforms Small Loan Law.” Library of Congress Russell Sage Foundation Archive, Box 16.Google Scholar
Schneiberg, Marc, and Bartley, Tim (2001) “Regulating American industries: Markets, politics, and the institutional determinants of fire insurance regulation.” American Journal of Sociology 107 (1): 101–46.CrossRefGoogle Scholar
Schweber, Libby (1996) “Progressive reformers, unemployment, and the transformation of social inquiry in Britain and the United States, 1880s–1920s,” in Rueschemeyer, Dietrich and Skocpol, Theda (eds.) States, Social Knowledge, and the Origins of Modern Social Policies. New York: Russell Sage Foundation: 163–200.Google Scholar
Shils, Edward (1965) “The intellectuals and the powers: Some perspectives for comparative analysis,” in Shils, Edward (ed.) The Intellectuals and the Powers, and Other Essays. Chicago: University of Chicago Press: 3–22.Google Scholar
Skocpol, Theda, and Finegold, Kenneth (1982) “State capacity and economic intervention in the early New Deal.” Political Science Quarterly 97 (2): 255–78.CrossRefGoogle Scholar
Skocpol, Theda, and Rueschemeyer, David (1996) States, Social Knowledge, and the Origins of Modern Social Policies. New York: Russell Sage Foundation.Google Scholar
Spillman, Lynn (2012) Solidarity in Strategy: Making Business Meaningful in American Trade Associations. Chicago: University of Chicago Press.CrossRefGoogle Scholar
St. Louis Globe-Democrat (1929) “Senate Body Refuses Cut on Interest, House Okayed: Russell Sage Foundation Expert Explains Why He Had Salary-Buying Feature.” May 9. Library of Congress Russell Sage Foundation Archive, Box 28.Google Scholar
Stegman, Michael A. (2007) “Payday lending.” Journal of Economic Perspectives 21 (1): 169–90.CrossRefGoogle Scholar
Stigler, George J. (1975) The Citizen and the State: Essays on Regulation. Chicago: University of Chicago Press.Google Scholar
Swedberg, Richard (2003) Principles of Economic Sociology. Princeton, NJ: Princeton University Press.CrossRefGoogle Scholar
Trenton American (1913) “Bill Is Attacked at Hearing Today.” April 9. Library of Congress Russell Sage Foundation Archive, Box 30.Google Scholar
Walters, Pamela Barnhouse, and Bowman, Emily A. (2010) “Foundations and the making of public education in the United States, 1867–1950,” in Anheier, Helmut K. and Hammack, David C. (eds.) American Foundations: Roles and Contributions. Washington, DC: Brookings Institution: 31–50.Google Scholar
Warren, Elizabeth (2010) “Redesigning regulation: A case study from the consumer credit market,” in Balleisen, Edward J. and Moss, David A. (eds.) Governments and Markets: Toward a New Theory of Regulation. New York: Cambridge University Press: 391–418.Google Scholar
Woloson, Wendy A. (2009) In Hock: Pawning in America from Independence through the Great Depression. Chicago: University of Chicago Press.CrossRefGoogle Scholar