- City of Debtors: A Century of Fringe Finance by Anne Fleming
City of Debtors is a sterling example for graduate students and historians of how to tell a history of American political economy in the twentieth century at the state and municipal levels. Legal historian Anne Fleming has produced an indispensable resource for anyone who wants to learn about the history of small-sum lending, or the history of how commercial regulations are made and evaded, and her methods undoubtedly deserve to be imitated.
City of Debtors' greatest achievement is the way in which it calls attention to the ways in which the rules that govern American political economy have often been made at the state and municipal levels, which is a useful reminder for historians who have often focused much more attention on regulatory and legislative activity at the federal level. Fleming argues that New York State was often at the forefront of developing the nation's financial regulatory regime, and she provides convincing evidence of this across the book's seven chapters. As Fleming tells the reader in Chapter 2, it was a coalition of New York City lenders and the Russell Sage Foundation that drafted a Uniform Small Loan Law adopted by a string of states. New York State was also at the forefront of regulating sales finance practices such as selling goods on installment. As revealed in the book's fifth chapter, this was thanks in large part to the work of Persia Campbell, the state's consumer counsel from 1955 to 1958, who both secured passage of installment sales regulation in New York and helped other state governments set up consumer advocate offices.
Fleming is also adept at showing readers how individual states like New York struggled to police small-sum lending within their borders thanks to the challenges posed by American federalism. From the very first chapter, she deftly guides readers through the numerous ways in which lenders attempted to trick or force their borrowers to agree to have their loans executed in states with looser regulations. Fleming's discussion of federalism is at its best in the final chapter when she turns her attention to the post-1970 period. In this chapter, Fleming demonstrates how a combination of consumer legislation and financial deregulation that began to come out of Washington in the 1970s created both a "floor" and "ceiling" for lending regulation. Though no state could go below the regulatory threshold set out by congressional legislation, lenders could base their operations out of the states with the least restrictive regulations, and states began to compete with each [End Page 600] other to attract businesses by adopting favorable regulatory and tax laws. Fleming is not the first person to detail this post-1970s competitive federalism, but her explanation of it is clear and should be of great use to historians of this time period both as a reminder that they need to pay attention to state-level governance and as a model of how to do so.
Fleming's examination of the legal system's role in this history is no less skillful than her discussion of policy making. The book's third, fourth, and sixth chapters detail the periodic waves of litigation that followed regulatory action as borrowers and lenders competed via court action to determine the legal limits of small-sum lending and debt collection. Fleming demonstrates in these chapters that, as part of their duty to protect the "public welfare," individual judges could, and often did, invalidate contracts that were particularly abusive or that engaged in "unconscionable" price gouging. Despite some notable victories for borrowers, Fleming reminds readers that the law itself was often a last resort for both lenders, who could rarely afford representation unless they had access to legal aid, and borrowers, who preferred to work outside the courts whenever possible. This means that the borrowers who do appear in this book are an exceptional subset of the people who took out loans in New York, and readers who want to...