Article — From the April 2009 issue

Usury Country

Welcome to the birthplace of payday lending

On a whitewashed church pew in Johnson City, I sat alone as James Eaton stood over me delivering a sermon. It was a Monday, and this was Eaton’s office. One of the inventors of payday lending—the business of making small, short-term loans from retail locations at steep rates—Eaton operates out of a converted service station, with a tarp sign in red and white: here’s where it all started. east tennes see’s first, oldest & finest. He had suggested we conduct our interview in his reception area, on the pew he brought up years ago from his wife’s childhood church in Alabama. I balanced my coffee cup perilously on the green-felt pew pad as I listened to him enumerate his own good works—his donations to a Bible college, his support for a rural congregation of evangelical Harley-Davidson enthusiasts. Eaton’s homily was heartfelt, if meandering and peppered with such biblical malapropisms as Jesus having “healed those leopards.” As he preached, customers kept trudging in past us to the counter, where they wrote postdated bad checks and walked away with twenties at several hundred percent interest, all transacted above a vast American flag dangling from the countertop.

“Good to see y’all!” Eaton greeted each customer, his chirpy voice cracking with enthusiasm. “Good to see you too,” generally came the more muted reply.

In his sermon, Eaton recounted a real-life Christmas Carol.“We opened up just before Christmas,” he said. “A grandmother brought a little girl in here, holding her hand. And I cashed her a hundred-dollar check, and I looked down at the little girl. I said, ‘Now what’s Santa Claus going to bring you for Christmas? What’s he going to put under your tree?’ And the grandmother looked at me and said, ‘Mr. Eaton, we had to decide whether we would put up a tree this year or the little girl would get a present.’ And I said, ‘I understand, I grew up that way.’ But I felt sorry. I took money out of my pocket and I said, ‘Go get that little girl a Christmas tree. Every little girl deserves a Christmas tree.’ They go off. The very next day here’s the woman pulling up with a Christmas tree sticking out of the back end of her car. The funniest thing, she comes in here, ‘Mr. Eaton, I don’t have anything to decorate the Christmas tree.’ So back in my pocket, handed her some more money, she goes on her way. That little granddaughter is cashing checks with me today.”

“She manages one of your stores?” I asked.

“She comes in and cashes checks,” he clarified.

It was to be a two-hour oration. As I sat on the pew, sipping my coffee and taking notes halfheartedly, my eyes wandered from the American flag behind Eaton to the poster over his left shoulder: Martin Luther King, preaching to the masses at the March on Washington. The best-known trope of King’s address that day was, of course, his famous “dream.” But King began his speech with a very different metaphor. “In a sense,” he said,

we’ve come to our nation’s capital to cash a check. . . . A bad check, a check which has come back marked “insufficient funds.” But we refuse to believe that the bank of justice is bankrupt. We refuse to believe that there are insufficient funds in the great vaults of opportunity of this nation. And so we’ve come to cash this check, a check that will give us upon demand the riches of freedom and the security of justice.

In King’s broader vision, the creditors were not simply the descendants of slaves but all Americans living in poverty, whose nation had made them promises long past due. Months before his death in 1968, King began planning a second march on Washington that would serve as culmination of a Poor People’s Campaign, an inter racial movement of blacks, Latinos, and Native Americans, as well as Appalachian whites. “When we come to Washington in this campaign,” King declared, “we are coming to get our check.” Rallying striking sanitation workers in Memphis just a few days before his assassination, King declared that “it is criminal to have people working on a full-time basis and a full-time job getting part-time income.” But in the decades since King’s speech, working full time for a part-time income has become the fate of greater and greater numbers of Americans. In fact, the U.S. minimum wage, adjusted for inflation, has never regained its 1968 value. The average income of a full-time worker at Walmart, today the nation’s largest private employer, is only slightly more than $17,000 a year. Fully 47 percent of Americans now report living paycheck to paycheck.

During the Gilded Age of the late nineteenth century, the race-based legal oppression of slavery was replaced with the economic bondage of sharecropping—a race-neutral system that ensnared blacks and whites alike. In his short lifetime, King helped lay waste to more legal barriers, those of racial segregation, but in the past twenty years a new, race-neutral form of economic exploitation has arisen in their place. This twenty-first-century sharecropping is called payday lending; and each indentureship under it begins, fittingly enough, with a bad check.

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is the author of The Trap: Selling Out to Stay Afloat in Winner-Take-All America. His last article for Harper’s Magazine, “Mall of America,” appeared in the July 2007 issue.

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