Sarah Quinn, University of Washington

A growing literature has demonstrated the use of credit policy as a means of social and economic policy in the US, but there are significant gaps in our understanding of the origins of this trend. This talk addresses that gap by analyzing the origins of the first lasting federal credit policy, the Federal Farm Loan Act of 1916 (FFLA), which set precedents for the federal use of credit allocation. In the late nineteenth century Americans encountered the problem of credit via struggles to provide a stable flow of mortgage credit to farmers on the frontier. The talk analyzes three historical attempts to address this problem and the three distinct visions for the changing American political economy expressed in each effort: a laissez-faire approach using mortgage-bonds and fueling a mortgage craze, a populist solution envisioning communal credit distribution, and the progressive option that resulted in the FFLA. The talk also analyzes why the FFLA prevailed and the impact of its success in shaping American credit, arguing that the reformers in the “rural credits” movement who crafted the FFLA forged a moderate understanding of credit distribution as the proper domain of federal action. Together, these three cases reveal how the problem of credit markets expressed competing visions for America’s political economy. They also reveal the trial and error, negotiation, and institutional learning which preceded the emergence of federal selective credit as the norm in American credit regulation. Finally, the three cases show how the management of credit, from its inception, was founded on an organizational model that recast credit allocation as a non-paternalistic means for the federal government to provide opportunities without requiring sacrifice or redistribution from its citizens.