American Bonds: How Credit Markets Shaped a Nation

by Sarah L. Quinn

How the American government has long used financial credit programs to create economic opportunities

Federal housing finance policy and mortgage-backed securities have gained widespread attention in recent years because of the 2008 financial crisis, but issues of government credit have been part of American life since the nation's founding. From the 1780s, when a watershed national land credit policy was established, to the postwar foundations of our current housing finance system, American Bonds examines the evolution of securitization and federal credit programs. Sarah Quinn shows that since the Westward expansion, the U.S. government has used financial markets to manage America's complex social divides, and politicians and officials across the political spectrum have turned to land sales, home ownership, and credit to provide economic opportunity without the appearance of market intervention or direct wealth redistribution.

Highly technical systems, securitization, and credit programs have been fundamental to how Americans determined what they could and should owe one another. Over time, government officials embraced credit as a political tool that allowed them to navigate an increasingly complex and fractured political system, affirming the government's role as a consequential and creative market participant. Neither intermittent nor marginal, credit programs supported the growth of powerful industries, from railroads and farms to housing and finance; have been used for disaster relief, foreign policy, and military efforts; and were promoters of amortized mortgages, lending abroad, venture capital investment, and mortgage securitization.

Illuminating America's market-heavy social policies, American Bonds illustrates how political institutions became involved in the nation's lending practices.

Genres: Economics, Finance, Nonfiction, History, Business, Politics, Money

312 pages, Hardcover

Published July 16, 2019

Reviews

[Mehrsa · Rating 5 out of 5]

I took a highlighter all the way through this book--it was excellent and I will be recommending it widely among academic and policymaking circles. Also appreciated the citations to my own work.

[Austin Barselau · Rating 4 out of 5]

In American Bonds, Professor Sarah Quinn argues that the development of primary and secondary markets for federal credit-- both highly liquid and secure-- were an often overlooked but vital form of statecraft that has been used throughout US history to promote land development, home ownership, and even racial segregation. Quinn argues that such forms of credit allocation grew in direct response to political fragmentation from a burgeoning US political system and the complex social divides that lay underneath it. Naturally, credit became an instrument to resolve or at least paper over these disputes, and its extension took the path of least resistance, usually in the form of noncontroversial but nonetheless sprawling off-budget thickets of loan guarantees and direct credit. These arrangements, Quinn argues, underscored the unique "social logic" of federally-orchestrated US credit markets: a means of state-promoted financial development and risk redistribution (rather than direct wealth redistribution) that employed a variety of market-based channels (e.g., public-private partnerships and incentives) to circumvent both political veto points and jurisdictional boundaries.

In sum, Quinn provides an immersive look at a range of economic markets that were either directly or indirectly impacted by federal intervention. Her writing style is more academic and her content more abbreviated than I would have liked, considering the depth and breadth of lending programs that have been used throughout the history of the country. Quinn could have also structured the book to better track the chronology of credit programs, rather than according to their theme. The latter gives the book a less sequential and more unfocused dynamic. Besides those points, this book is highly successful at revealing a unique form of American statecraft that has critically contributed to the country's financial development.

[Ayyybel · Rating 4 out of 5]

while dry at points, it's an incredibly interesting history with some great humor.

[Elizabeth]

As heard on Planet Money:
https://www.npr.org/2022/04/29/109564...

[Pepe]

The details are hard to keep up, but they are so important to the stories of American financialization and the different (social) aspects of money!

[Richard Subber · Rating 4 out of 5]

Quinn writes in plain academic prose, and she has a lot to say.
“Credit” is a very polite way of saying “lending money,” which is a very polite way of describing what is elsewhere called “usury.”
It’s no surprise that lending money has been part of the social, economic, and political landscapes since money was invented, and certainly credit markets have always existed in America since colonial times.
American Bonds is a deeply engrossing text (it’s not a casual read) about how folks with money and businesses and the government have used credit availability for personal, corporate, and policy advantages. Credit has always been part of the American story.
You might try reading it a chapter at a time.
Read more of my book reviews and poems here:
www.richardsubber.com

[Tim · Rating 5 out of 5]

Credit markets are poorly understood by many Americans whose familiarity may be limited to what they know about their own mortgages. This book provides an important history that explains the development of that modern-day mortgage as well as the way politicians have utilized credit with the private sector. This history needs to be more widely known.

[Brian Agins · Rating 2 out of 5]

Dense