Credit and the Promise of Frictionless Federalism

• In Event: 237 - Regular Session. Economic Sociology. Debit and Credit

Abstract

A growing literature has shown that credit policies are a commonly used form of social and economic policy in the US, but there are significant gaps in our understanding of the origins of this pattern. This paper addresses that gap by analyzing the development of the Federal Farm Loan Act of 1916 (FFLA). The FFLA designed an entirely new system of agricultural credit distribution in the US, and it set lasting precedents for the use of credit distribution as a policy tool of the federal government. Reviewing primary and secondary historical sources, I argue that progressive reformers in the early twentieth century strategically drew from European precedents to forge a moderate understanding of credit distribution as way of promoting growth without undermining individual initiative or requiring redistribution. In doing so, these reformers developed both a technical solution to longstanding problems with credit distribution, and also a moral justification for the use of credit as a non-paternalistic form of government policy. Altogether, this reveals not only how a particular progressive vision of a modern American political economy found expression in specific organizational forms of credit distribution, it also reveals that credit has classificatory qualities that are particularly useful in contentious political contexts.

Author

• Sarah Quinn, University of Washington