What Is Debt Peonage?

Immigrant farm labor often gets caught up in debt peonage.
Immigrant farm labor often gets caught up in debt peonage. (Image: andjic/iStock/Getty Images)

Debt peonage reduces debtors to slave labor. For example, a debtor with no money agrees to work for the creditor free until her bill is paid off. Commonly, the creditor rigs the deal so that the worker finishes her labor with new debts that she has to work to pay off. By piling more debts on top of that, the creditor sees to it the free labor never stops.


Congress outlawed peonage in 1867, but the system didn't die. Employers would sometimes transport workers to a job site, then debit their pay for travel. That way the workers start off in debt. Employers would then add bills for room and board or company-store purchases at inflated prices. Some mine and textile mill-owners used these tactics to impose peonage on poor whites, blacks and immigrants. In the South, judges routinely imposed heavy fines for minor infractions on black men, which a local farmer or factory owner would then pay. In return, the men would have to work for free, forcing them into debt slavery that didn't end.

Peonage Continues

Although debt peonage is illegal in many countries, including in the United States, it still goes on. Human trafficking -- shipping people to another country to work as laborers or prostitutes -- is a major international industry. Debt peonage is one of the tools traffickers use to force workers to take jobs they don't want, frequently not the jobs the workers signed up for.

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