Debt Peonage
The pledge of a person's services as security for a debt or other obligation
Real World Example
During the Gilded Age between 1880-1920, debt peonage trapped many workers, especially sharecroppers, in a cycle of debt by requiring them to work off loans given for supplies and land use. This system was important because it kept many laborers, particularly African Americans and immigrants, economically dependent and unable to improve their living conditions. Debt peonage responded to the need for cheap labor after slavery was abolished but perpetuated economic inequality and exploitation. Today, similar cycles can be seen with predatory lending practices, such as payday loans, which charge high interest and trap borrowers in cycles of debt. For example, if someone takes out a payday loan to cover an emergency expense but can't pay it back quickly, they may end up paying much more in interest, mirroring the struggles faced by those in debt peonage.
