By Eli Jelly-Schapiro
September 13, 2011
Though nominally fictional, this inter-generational story is rooted in actual places, and in actual historical moments–spaces and times of significant import to the twentieth-century history of debt and credit in particular, and capitalism in general. Our first fictional life–let’s give it a name: Davis Johnson–begins in the Caribbean, in the Bahamas, around the turn of the century.
The grandson of a slave, Davis is working as a pineapple cultivator. The year is 1915, the time of the First World War, and Davis is twenty. Though far-removed from Europe’s inter-imperial killing fields, Davis is subject to the economic violence of empire, the stark inequities of agrarian production in the colonies. Slavery was abolished by the British empire in 1834, but the organization of labor in post-emancipation, early-twentieth-century Bahamas retains many features of the slave economy.
“I Owe My Soul . . .”
Davis sometimes lends his own baritone to choral renditions of Aunt Molly Jackson’s “Hard Times in Coleman’s Mine,” a tune which describes, in a yearning cadence, the subtle seasonal shades of a workaday life: “In the summertime we eat cornbread and collard greens/ In the wintertime we eat cornbread and pinto beans.” Perhaps the most famous coal song, Merle Travis’s “Sixteen Tons,” intones the plaintive line “I owe my soul to the company store,” an enduring phrase, and one that speaks to the fact that the company store is not just a center of conviviality, but also a crucial site of company authority, the place where wages are transformed into debt obligations.
Payed only monthly, Davis is often forced to take an advance on his future wage–which comes in the form of company scrip that can either be redeemed at the company store–where prices are inflated–or at an independent merchant who significantly discounts the scrip. A study conducted by the New Deal National Recovery Agency, during the early years of Davis’s mining career, found some coal miners that hadn’t received any cash payment in fifteen years. Though Davis’s experience in Holden is not quite so extreme, he does fall once again into a cycle of seemingly interminable indebtedness. The debt that befalls Davis ensures, for his coal company employer–as it did for his landlord in the Bahamas–a rooted, dependent labor force, minimized labor costs, and captive retail market.
Mere weeks after the Act’s passage, previously non-union Logan Country, where Davis lives and works, is organized from one end to the other. By that fall, a new bargaining agreement is established across the eastern coal industry, which institutes a minimum wage and forty-hour week, and which prohibits the payment of wages in scrip. This first union contract and subsequent agreements help Davis emerge from the cycle of debt, and even set aside some savings. Retiring in 1960, Davis lives out the rest of his days in West Virginia, modestly but without fear of privation, before passing away in 1965. Davis is survived by his wife, and by his son, Matthew, to whom we now turn as our story embarks on a different trajectory.
Real wages begin to decline across the economy, industrial jobs begin to disappear or move overseas, and capital mobilizes for an all-out assault on organized labor. The election in 1980 of Ronald Reagan–and his epochal busting, the following year, of the Air Traffic Controllers union–further accelerates the anti-labor revolution. Every new UAW contract brings with it new concessions, and in 1990, at the age of 60, Matthew is forced to take an early retirement. He finds a new job at a non-union plant, making half of what he did before. Commuting each day from Seven Mile south to Dearborn, cutting through the wary heart of a shrinking city, Matthew listens to music: early Motown records whose sunny disposition conceals real pain–a metaphor, it occurs to him, for America at the close of the Cold War; or Bruce Springsteen’s Nebraska, an elegiac, love-worn response to Reagan’s “morning in America”–a dawn that never arrived for Matthew–and a record with recurring references to “debts that no honest man could pay.” Struggling to settle their accounts, Springsteen’s characters turn to crime, or to the last-chance promise of the blackjack table. Matthew takes a more mundane route. To make ends meet, Matthew and his wife–herself a recently retired homecare worker–take out a second mortgage, and accumulate significant credit card debt. The family is soon underwater. Their house is foreclosed upon and they are forced to declare bankruptcy. Their mortgage, it turns out, is now owned by GM’s financial services wing, GMAC. And Matthew’s credit card is issued by GE Money Bank.
Payday lending offices, latter-day cousins of the lending practices that left grandfather Davis in perpetual debt, advance cash against the borrower’s next paycheck, at interest rates of up to 30 percent (or 500 percent annually). In the early 1990s, there were fewer than 200 payday lending offices nationwide; today there are greater than 20,000, and payday lending is a $40 billion a year industry. Initially the domain of a few eccentric entrepreneurs, beginning around the turn of the millennium Wall St. institutions aggressively moved to establish their own stake in the payday loan sector. Wachovia, Sarah’s employer, was one of the first big-time banks to invest in the payday lending industry. Now nearly every major U.S. financial institution has some interest in payday lending. Poverty is big business. Despite recent attempts, primarily at the state level, to reintroduce interest rate caps on consumer loans, payday lending companies have survived and prospered during the latest financial crisis, as the percentage of Americans who live paycheck-to-paycheck–about half–continues to rise.
Sarah has not been so fortunate. She was one of the thousands of Wachovia employees laid-off when the corporation was purchased by Wells Fargo in 2008, with government assistance, in the wake of the subprime mortgage crisis. Wells Fargo is today the payday lending industry’s largest creditor, with a financial interest in five out of the six biggest payday loan companies. Once working in service of payday loan firms, Sarah is now a customer, struggling and failing to stretch her unemployment insurance–supplemented by part-time work at a neighborhood deli–from one month to the next, an impossible task made yet more difficult by her escalating student-loan debt.
The union card, as Thomas Geoghegan recently put it, has been displaced by the credit card.