Notes

 

The following abbreviations will be found in the Notes:

BAK—Baker Library, Historical Collections, Harvard University, Allston, MA

CITI—Citigroup Archives, New York City, NY

RSF—Manuscript Division, Library of Congress, Washington, D.C.

NARA—National Archives, College Park, MD

NOW—Schlesinger Library, Historical Collections, Harvard University, Cambridge, MA

An Introduction to the History of Debt

1. William R. Hayward, Money: What It Is and How To Use It (Cambridge: Houghton Mifflin, 1917), 20.

2. Fannie Mae, more officially known as the Federal National Mortgage Association (FNMA), was created by the federal government in 1938 to buy and sell federally insured mortgages. The importance of FNMA in forging American mortgage markets will be discussed beginning in chapter 3.

3. See Martha L. Olney, Buy Now, Pay Later: Advertising, Credit, and Consumer Durables in the 1920s (Chapel Hill: University of North Carolina Press, 1991) for an insightful discussion of the growth of installment credit. This argument may seem functionalist on first glance, but the chapter elaborates the unexpected ways in which this outcome occurred contingently.

4. Robert M. Collins, More: The Politics of Economic Growth in Postwar America (New York: Oxford University Press, 2000), 38. As Collins has shown, above all else, the postwar economy was based on an assumption of growth. What Collins has not shown was how this intellectual framework translated into the real-world, everyday institutions under which people acted out their economic lives.

5. Elizabeth Warren, Teresa Sullivan, Jay Lawrence Westbrook, The Fragile Middle Class (New Haven: Yale University Press, 2000); Elizabeth Warren, Teresa Sullivan, Jay Lawrence Westbrook, As We Forgive Our Debtors: Bankruptcy and Consumer Credit in America (New York: Oxford University Press, 1989).

6. Much of the literature on consumer credit has focused on a cultural or inflationary explanation of the rise in consumer debt in the 1970s. See, for instance, Daniel Horowitz, The Morality of Spending: Attitudes toward the Consumer Society in America, 1875–1940 (Baltimore: Johns Hopkins University Press, 1985); Robert Manning, Credit Card Nation (New York: Basic Books, 2000); Bruce Schulman, The Seventies (New York: Free Press, 2001); Juliet Schor, The Overspent American (New York: Basic Books, 1998); Lloyd Klein, It’s in the Cards: Consumer Credit and the American Experience (Westport, Conn: Praeger, 1999); Brett Williams, Debt for Sale (Philadelphia: University of Pennsylvania Press, 2004); David Evans and Richard Schmalensee, Paying with Plastic: The Digital Revolution in Buying and Borrowing (Cambridge: MIT Press, 1999); and Joseph Nocera, A Piece of the Action: How the Middle Class Joined the Money Class (New York: Simon & Schuster, 1994).

7. For a critical, yet less historically grounded view, see Williams, Debt for Sale. Similarly, Robert Manning refers to the “architects of the Credit Card Nation” as if the decades of long-term planning finally came to fruition in the 1980s (Manning, Credit Card Nation, 86.) I find the unintended nature of the economy both more believable and more terrifying than any plot.

8. Historians, sociologists, and economists refer to this process by any number of different labels such as “financialization,” ‘post-Fordism,” “postindustrialism,” and many other neologisms. I have attempted as much as possible to keep these terms, with all their accumulated debates, out of the text. Scholars have tended to focus more on describing this transition’s effect on people rather than explaining why and how this transition occurred. I hope, in some partial way, to contribute to an explanation of personal debt’s role in this change.

9. Lendol Calder’s Financing the American Dream (Princeton: Princeton University Press, 1999) stands out as the foremost history of credit in the twentieth century, and even it ends in the 1930s. His self-described intention was a “cultural history” not a history of the “growth of certain industries,” so it is somewhat unfair to criticize him for not producing the book he did not intend to write. Profit and production drive capitalism and to neglect them, even intentionally, I think overlooks key causal transformations in consumer credit, distorting the logic of its rise and the magnitude of its change. The social and cultural history of debt cannot, I think, be divorced from the business and politics of debt.

Other important books are Horowitz, The Morality of Spending, and Olney, Buy Now, Pay Later. Horowitz makes broad claims concerning moral thinking about debt but relies on a very narrow source base of a select few intellectuals and regionally specific budget surveys from the industrial North. Olney’s arguments are very persuasive but focus primarily on the household installment buying decisions in the 1920s. I agree with her findings, but think that to understand the history of debt in the 1920s we need to look beyond the household to the firm. Like Calder, however, they both end before the World War II. Lewis Mandell’s The Credit Card Industry: A History (Boston: Twayne Publishers, 1990) neglects the larger institutional, economic, and political context of the origin of the credit card, misattributing the origins of its practices with the bank and not the department store.

10. Cultural studies, of course, emerged as field deeply enmeshed with economic questions, most importantly with questions of class and control. As critic Terry Eagleton has noted, there has been a drift away from the material in the past thirty years within cultural studies, diluting the original importance of the field. See Terry Eagleton, After Theory (New York: Basic Books, 2004).

11. The history of American capitalism has witnessed a surging interest in the past few years. Important books of the 1990s, like William Cronon’s Nature’s Metropolis (New York: W.W. Norton, 1992), William Leach’s Land of Desire (New York: Pantheon Books, 1993), and Thomas Sugrue’s The Origins of the Urban Crisis (Princeton: Princeton University Press, 1996) began to synthesize capitalism and the new social history, but the past few years have witnessed a true renaissance in the history of American capitalism. Sven Beckert’s The Monied Metropolis (New York: Cambridge University Press, 2001), Lizabeth Cohen’s A Consumers’ Republic (New York: Knopf, 2003), Jefferson Cowie’s Capital Moves (Ithaca: Cornell University Press, 1999), David Freund’s Colored Property (Chicago: University of Chicago Press, 2007), Alison Isenberg’s Downtown America (Chicago: University of Chicago Press, 2004), Meg Jacobs’ Pocketbook Politics (Princeton: Princeton University Press, 2007), Robert Johnston’s The Radical Middle Class (Princeton: Princeton University Press, 2003), Jennifer Klein’s For All These Rights (Princeton: Princeton University Press, 2003), Shane Hamilton’s Trucking Country (Princeton: Princeton University Press, 2008), Marc Levinson’s The Box (Princeton: Princeton University Press, 2008), Bruce Mann’s Republic of Debtors (Cambridge: Harvard University Press, 2003), Bethany Moreton’s To Serve God and Wal-Mart (Cambridge: Harvard University Press, 2009), Stephen Mihm’s A Nation of Counterfeiters (Cambridge: Harvard University Press, 2008), just to name a few, have all attempted to put labor and business back at the center of modern American history, but have not emphasized financial history.

12. For a few examples, see Rose-Maria Gelpi, The History of Consumer Credit: Doctrines and Practices (New York: St. Martin’s Press, 2000); Ralph Harris, Margot Naylor, and Arthur Seldon, Hire-Purchase in a Free Society (London: Hutchinson & Co., 1961); and Victoria De Grazia, Irresistible Empire: America’s Advance through Twentieth-Century Europe (Cambridge: Harvard University Press, 2005).

13. See Gunnar Trumbull, Consumer Capitalism: Politics, Product Markets, and Firm Strategy in France and Germany, Cornell Studies in Political Economy (Ithaca: Cornell University Press, 2006).

Chapter One
Making Credit Modern

1. Charles de B. Claiborne, “Finance Companies—The Banker’s Viewpoint” (speech given at the annual meeting of the National Association of Sales Finance Companies, December 6–8, 1932, Ninth Annual Meeting), Addresses at Annual Meeting, 1927–1937, National Association of Sales Finance Companies, Baker Old Class Collection, Historical Collections, Baker Library, Harvard University, 2, BAK.

2. The tax code reflected the idea that all consumer borrowing was for convenience, in that it assumed that all interest-rate borrowing must be a business loan. All forms of interest—assumed to be only for business loans—were deductible. Today’s mortgage deduction is but a residual of this older conception of borrowing. Not until 1986 were nonhousehold mortgage debts excluded from deductions.

3. Important exceptions to this assertion existed in rural areas, particularly in the sharecropping South, where profitability mattered less than social power.

4. “Mackey: Early History,” folder “1917 Mackey Syndicate,” box 123, Russell Sage Foundation Papers, Manuscript Division, Library of Congress, Washington, D.C., 1–3. Hereafter I will refer to the Russell Sage Foundation collection as RSF.

5. Ibid., 3.

6. Ibid., 3–4.

7. “Loan Shark Tells Business Tricks; Foiled By Bureau,” Tribune (Chicago) February 8, 1912, folder “1917 Mackey Syndicate,” box 123, RSF Manuscript Division, Library of Congress, Washington, D.C.

8. Roy Rosenzweig, Eight Hours For What We Will: Workers and Leisure in an Industrial City, 1870–1920 (Cambridge: Cambridge University Press, 1983), 53; Lizabeth Cohen. Making A New Deal (Cambridge: Cambridge University Press, 1990), chapter 2.

9. L. C. Harbison, “This List Shows 430 Occupations in which 6710 Borrowers Are Engaged,” folder “1917 Mackey Syndicate,” box 123, RSF.

10. L. C. Harbison, “Loans Made in Eight Offices in Illinois,” folder “1917 Mackey Syndicate,” box 123, RSF.

11. L. C. Harbison, Loan #6510, “No. 1,” 1916, folder “1917 Mackey Syndicate.”

12. Ibid., No. 1, Loan #6513.

13. Ibid., No. 1, Loan #6517.

14. Ibid., “No. 1” through “No. 6.”.

15. Ibid., No. 2, #7143; no. 6, #14036.

16. L. C. Harbison, untitled table of profits for offices, folder “1917 Mackey Syndicate.”

17. Harbison, “Loans Made in Eight Offices in Illinois.”

18. “Mackey to Fight Usury Case” Tribune (Chicago), March 4, 1910, folder “1917 Mackey Syndicate.”

19. Ibid.

20. Erd obituary, Journal (Chicago), folder “1917 Mackey Syndicate,” box 123, RSF.

21. “Fattens on ‘Loan Trust,’” Journal (Chicago), February 18, 1910, folder “1917 Mackey Syndicate,” box 123, RSF.

22. Ibid.

23. Ibid.

24. He was accused of usury for the owning of Fidelity Trust Company, which lent money to borrowers but took a chattel mortgage in return. Jennie Nicholson borrowed $50, which in return she gave a chattel mortgage on her piano and other household goods. Six months later, Fidelity demanded $89 from her, which she did not have. They repossessed the piano and sold it for $200. She demanded the difference and was ignored. She sued for the difference. Ironically, this very problem of the difference between amount owed and recouped was the crux of the issue for installment sellers in the 1920s as well. However, by the 1920s such schemes, though not that rate of interest, were legalized. In this particular suit, the case was settled out of court. Nicholson received $110. “Mackey to fight Usury Case,” folder “1917 Mackey Syndicate,” box 123, RSF; “John Mackey, Society Man, Hushes ‘Loan Shark’ Suit,” folder “1917 Mackey Syndicate,” box 123, RSF; For a discussion and definition of chattel mortgage please see note 146.

25. “Mackey Sees No Stigma On Loans,” News (Minneapolis), March 5, 1910, folder “1917 Mackey Syndicate,” box 123, RSF.

26. This account of the origin of the small loan reform movement is drawn directly from Calder’s Financing the American Dream, 124–35; Calder, 125 quoted in Glenn et al., Russell Sage Foundation, 1:3–11.

27. Calder, Financing the American Dream, 126.

28. Report of the Special Committee of International Government Labor Officials on the Enforcement of Laws Against Loan Sharks, (n.p., 1940), folder “Law Enforcement,” box 1, RSF, Part 1, 1.

29. Calder, Financing the American Dream, 127; Wassam retreated to the academy and though active academically on these matters did not possess the public political presence that Ham did.

30. Ibid., 130.

31. Ibid., 134.

32. Ibid., 133.

33. Ibid., 4.

34. Ibid.

35. Ibid., 13.

36. Ibid., 143.

37. Ibid., 134.

38. Bankers Capital Corporation, Industrial Banking: Its Contribution to Modern Business (privately published, 1928), folder “General,” box 147, RSF, 19.

39. Calder discusses, at length, the pains that these small loan lenders took to differentiate themselves morally from loan sharks. See Calder, Financing the American Dream, 135–47.

40. Joseph Budnowitz, “Pawnbroking: A Treatise on the History, Regulation, Legal Decisions, and a Comparison with Other Small Loan Agencies” (law thesis, Columbia University, 1931), folder “Levine: The Law of Pawnbroking,” box 1, RSF, 25.

41. Budnowitz makes the argument that pawnbroking is the only universal, sound system of lending for the truly poor who are either unemployed, without furniture for collateral or friends who can co-sign. Because pawnbroking never leads to the mainstream of lending, I haven’t discussed it very much. It is important to note that before the small loan reforms, pawnbroking, as well as loansharking, were very widespread in industrial America. See chapter 1 of Calder, Financing the American Dream, for more on pawnbroking.

42. Budnowitz, “Pawnbroking,” 25.

43. Ibid., 29.

44. Calder, Financing the American Dream, 147. Though Calder mentions the charity and profit motives of lenders, I am making a sharper and more pointed distinction. He does not drive home the point about the importance of ample capital.

45. Profits of Licensed Small Loan Companies, folder “Profits,” box 2, RSF.

46. “Mackey: Early History,” 4.

47. P. E. Leake to C. M. Hindall, March 30, 1929, folder “P. E. Leake–J. H. Taylor Correspondence,” box 124, RSF.

48. Ibid.

49. “Rufus DeWitt King, Booster of Georgia,” Atlanta Constitution, April 24, 1933, folder “R. Dewitt King–Geo. H. Rosenbusch,” box 123, RSF.

50. Untitled spreadsheet, folder “R. Dewitt King–Geo. H. Rosenbusch,” box 123, RSF.

51. “Big Four Loan Sharks Launch Chain System,” New York World, September 25, 1927, folder “R. Dewitt King–Geo. H. Rosenbusch,” box 123, RSF.

52. Security Bankers Finance Corporation, 1928 Annual Report, folder “R. Dewitt King–Geo. H. Rosenbusch,” box 123, RSF, 4.

53. Ibid.

54. Ibid., 7.

55. “Two Loan Sharks Coming to City,” New York World, September 26, 1927, folder “R. Dewitt King–Geo. H. Rosenbusch,” box 123, RSF.

56. William Shepherd, “They Turn Your Promise into Cash,” Collier’s, February 19, 1927, 52.

57. Ibid.

58. Ibid.

59. General Motors, Annual Report 1922, Historic Corporate Reports Collection, Historical Collections, Baker Library, Harvard University, 5–6. All General Motors and General Motors Acceptance Corporation annual reports are from the Historic Corporate Reports Collection at Baker Library.

60. Ibid., 5.

61. A similar transition happened in Europe with the introduction of the automobile. European finance companies modeled themselves on the American example. See Ralph Harris, Margot Naylor, and Arthur Seldon, Hire-Purchase in a Free Society (London: Hutchinson & Co., 1961), 23–24.

62. Martha Olney, “Credit as Production-Smoothing Device: The Case of Automobiles, 1913–1938,” Journal of Economic History 44 (June 1989): 377–91.

63. Henry Hodges, “Financing the Automobile,” Annals of the American Academy of Political and Social Science 116 (November 1924): 52.

64. Ibid.

65. T. E. Courtney, “The Future of Independent Finance Companies” (speech given at the annual meeting of the National Association of Sales Finance Companies, sixth meeting, 1929), Addresses at Annual Meeting, 1927–1937, BAK, 3–5.

66. General Motors, Annual Report 1924, 9.

67. Ibid., 2.

68. Ibid.

69. Milan Ayres, “Diversification and the Future of Financing,” (speech given at the annual meeting of the National Association of Sales Finance Companies, fifth meeting, 1928), Addresses at Annual Meeting, 1927–1937, BAK, 4.

70. C. D. Rasp, “Rebates to Dealers” (speech given at the annual meeting of the National Association of Sales Finance Companies, sixth meeting, 1929), Addresses at Annual Meeting, 1927–1937, National Association of Sales Finance Companies, BAK, 2.

71. T. E. Courtney, “President’s Address” (speech given at the annual meeting of the National Association of Sales Finance Companies, eleventh meeting, 1934), Addresses at Annual Meeting, 1927–1937, BAK, 5.

72. Arthur Newton, “Relations of Banking and Installment Sales Financing” (speech given at the annual meeting of the National Association of Sales Finance Companies, sixth meeting, 1929), Addresses at Annual Meeting, 1927–1937, BAK, 1.

73. Phillip Haberman, “The Finance Company: A Discussion Of Its Purposes And Functions:An Address Delivered Before Forum Of Philadelphia Chapter American Institute Of Banking” (speech given to the Philadelphia Chapter of the American Institute of Banking, April 1928), Pamphlet Collection of the Sales Finance Association, BAK, 3.

74. Ibid., 4.

75. Newton, “Relations of Banking,” 1.

76. Victor Brown, “Operating a Successful Independent Finance Company” (speech given at the annual meeting of the National Association of Sales Finance Companies, sixth meeting, 1929), Addresses at Annual Meeting, 1927–1937, BAK, 2

77. Duncan, “Finance Companies from the viewpoint of the company,” 1.

78. Haberman, “The Finance Company,” 3.

79. Ibid., 3.

80. Ibid., 3.

81. Newton, “Relations of Banking,” 1.

82. General Motors, Annual Report 1926, 10.

83. General Motors, Annual Report 1924, 5. Calculated by author.

84. General Motors, Annual Report 1919, 13; General Motors Acceptance Corporation, Ninth Annual Report, Annual Report 1928, 1.

85. General Motors, Annual Report 1923, 7.

86. General Motors, Annual Report 1925, 9.

87. General Motors Acceptance Corporation, Annual Report 1927, 1.

88. Shepherd, “They Turn,” 53.

89. Ayres, “Diversification and the Future of Financing,” 1.

90. General Motors, Annual Report 1926, 7.

91. General Motors Acceptance Corporation, Annual Report 1927, 2.

92. Ibid.

93. Ibid.

94. Ibid., 6.

95. Ibid.

96. Shepherd, “They Turn,” 53.

97. Federal Trade Commission, Report of the Federal Trade Commission on the Household Furnishings Industry, vol. 3, Kitchen Furnishings and Domestic Appliances, October 6, 1924 (Washington: GPO, 1925), 38., 270.

98. R. Schuppe, “Standardization in Financing Commodities Other Than Automobiles” (speech given at the annual meeting of the National Association of Sales Finance Companies, sixth meeting, 1929), Addresses at Annual Meeting, 1927–1937, BAK, 4.

99. Federal Trade Commission, Household Furnishings, 38.

100. Ibid.

101. Ibid., 39.

102. Ibid.

103. Ibid.

104. Ibid.

105. Ibid., 40.

106. Other examples of this exist as well. Commercial Investment Trust, for instance, had arrangements with Hoover for vacuum cleaners and Landers Frary & Clark for washing machines. Most large commercial credit companies seem to have aligned themselves with large manufacturers, from whom they could make the most money. Smaller manufacturers were left to their own devices. See ibid., 40–41.

107. Ibid. These motors were not for automobiles, but other motor-driven durables.

108. Ibid., 38.

109. Ibid., 272.

110. Ibid. This analysis combines information from the table on 270 with the information from the finance company “prospectus” on 272–73. I have inferred that the unnamed company referred to is the Purchase Corporation since the numbers used on 272–73 are identical to those on 270. In any case, it does refer to a finance company, if not the Purchase Corporation, as I have inferred, then another one that the Federal Trade Commission investigated.

111. Ibid., 273.

112. Ibid., 271.

113. “Terms of typical installment illustrations advised by finance companies with implied rates of interest paid by purchasers,” Table 76 in ibid., 270.

114. Ibid., 2.

115. Newton, “Relations,” 3.

116. Ibid.

117. General Motors, Annual Report 1929, 1.

118. “Display Ad No. 55,” New York Amsterdam News, November 29, 1922, 10.

119. GMAC v. Weinrich, 218 Mo. App. 68; 262 S.W. 425 (Mo. App, 1924).

120. Federal Trade Commission, Household Furnishings, vol. 1, 3.

121. Ibid., Vol. 1, “Table 48—Shares Of The Consumer’s Dollar,” 137.

122. Legal Aid Society (LAS, AR) (New York, NY), Forty-eighth Annual Report for the year 1923, Annual Report 1923, 50.

123. Ibid.

124. Ibid., 51.

125. Ibid.

126. Ibid., 50.

127. Ibid., 101.

128. Ibid., 102. It is impossible to know whether this higher fraction reflects the higher prices charge by installment houses or an actual higher volume of goods sold. Since the non-installment or lesser-installment houses turned over their inventory more frequently than the installment houses, it is an uncertain figure at best.

129. Legal Aid Society (New York, NY), Fiftieth Annual Report for the Year 1925, Annual Report 1925, 56, 58.

130. Ibid., 56.

131. Ibid.

132. Ibid., 57.

133. Ibid. See also a description of this as a general industry practice in Federal Trade Commission, Household Furnishings Industries, vol. 1, 17.

134. LAS, AR 1925, 57.

135. Ibid.

136. Federal Trade Commission, Household Furnishings, vol. 1, 17.

137. LAS, AR 1923, 51.

138. Ibid., 52.

139. Federal Trade Commission, Household Furnishings, vol. 1, 129–30.

140. This argument runs counter to those made today by credit reformers, who believe that when loan originators hold on to the debts they will be more scrupulous in their lending practices. Clearly an incentive to avoid overlending is necessary, but removing the ability to resell debt can be pernicious as well.

141. Ronald Ransom, “Notes of Meeting with Association of Credit Apparel Stores,” June 2, 1942, folder “(Apr–Jun 10, 1942),” box “502.3 – Installment Sales Credit,” RG 82, National Archives, College Park, Maryland, 7.

142. Calder, Financing the American Dream, 151.

143. Archie Chadbourne, “Debt is the only adventure a poor man can count on,” American Magazine, (December 1927), 44.

144. Ibid., 45.

145. Gene Smiley, “A Note on New Estimates of the Distribution of Income in the 1920s,” Journal of Economic History, vol. 60, No. 4 (Dec., 2000): 1120–28.

146. Charles Hanch, “Should We Stop Installment Buying?: The Case for Installment Buying,” Forum and Century 77 (May 1927): 651.

147. Ibid., 665.

148. Samuel Crowther, “We’re Going to Stay Rich Now,” Collier’s, (January 30, 1926), 29.

149. See Calder, Financing the American Dream, 181, for his discussion of the “image of the female credit abuser” which does not as explicitly discuss the idea of guidance, control, and marriage, but does trace out a longer genealogy.

150. Anonymous, “Please Remit,” Saturday Evening Post. (November 11, 1922), 22.

151. Ibid.

152. Ibid.

153. Nancy Cott, Public Vows: A History of Marriage and the Nation (Cambridge: Harvard University Press, 2000), 167. Cott discusses how “marriage and motherhood were assumed to be every woman’s hope” and despite some vocal opposition from political activists, most women continued to see marriage and employment as mutually exclusive, with marriage being the preferred state, both economically and socially.

154. Albert Gregg, “People Who Are ‘Slow Pay,’” American Mercury, March 1920, 48.

155. Ibid., 105.

156. Katherine Sproehnle, “You Furnish The Girl,” Collier’s 77 (February 20, 1926), 30.

157. Ibid.

158. Ibid.

159. Ibid.

160. “Please Remit,” 88.

161. Samuel Reyburn, “Charge It,” Collier’s, (October 31, 1925), 25.

162. Gregg, “People Who Are ‘Slow Pay,’” 105.

163. Ibid.

164. Arthur Little, “Getting On In the World.” Saturday Evening Post 200 (December 24, 1927), 28.

165. Anonymous, “Debtor’s Cowardice,” Saturday Evening Post 194 (February 11, 1922), 23.

166. Ibid., 23.

167. Ibid., 23, 89.

168. Ibid., 89.

169. Ibid., 94.

170. Ibid., 93.

171. Ibid., 90.

172. Shepherd, “They Turn,” 9.

173. Ibid., 52.

174. William Shepherd, “People Are Honest,” Collier’s 80 (November 21, 1927), 32.

175. Collier’s, 77 (June 12, 1926), 20.

176. Ibid.

177. Ibid.

178. General Motors, Annual Report 1925, 9.

179. Couzens, “Installment Buying,” 81.

180. This finance system, historians have argued, helped turn all those European immigrants into “white” Americans. While I do not explicitly engage the history of race construction, I hope that the effects of this literature on my work are evident. See, in particular, Matthew Jacobson, Whiteness of a Different Color: European Immigrants and the Alchemy of Race (Cambridge: Harvard University Press, 1998), and George Lipsitz, The Possessive Investment in Whiteness (Philadelphia: Temple University Press, 1998).

Chapter Two
Debt and Recovery

1. Franklin Roosevelt, “Second Fireside Chat—‘What We Have Been Doing and What We Are Planning To Do,” May 7, 1933, The Public Papers and Addresses of Franklin D. Roosevelt, vol. 2 (New York: Random House, 1938), 160.

2. Franklin Roosevelt, “Inaugural Address,” March 4, 1933, ibid., 11–13.

3. Leon Henderson, “Small Loan Companies in Depression Periods,” The Robert Morris Associates (May 1932), Folder “Abuses,” Box 106, RSF, 240.

4. Roosevelt, “Second Chat,” The Public Papers, 165.

5. Though, of course, FDR did not have the easy access to data that we enjoy today. Our statistical rendering of the economy was itself a by-product of the New Deal.

6. Franklin Roosevelt, “Three Essentials for Unemployment Relief. (CCC, FERA, PWA),” Speech to Congress, March 21, 1933, The Public Papers, vol. 2, 80.

7. Economic Report of the President 1969 (Washington: GPO, 1969), 228. Recalculated from 1958 dollars to 2004 dollars.

8. Personality conflicts and internal politics no doubt mattered, but as I am more concerned with outcomes, I have focused on the intellectual history of the different positions and institutions.

9. Before the federal intervention in mortgage markets “the average family went along, budgeting for the interest payments on the mortgage, subconsciously regarding the mortgage itself as written for an indefinite period, as if the lender was never going to want his money back but would just be content to keep it out at interest forever. This impression, which the home owner built up when things were going fine, was strengthened by the fact that lenders most frequently did renew the mortgage over and over again when money was plentiful. They usually charged a fee for the renewal, which added to the high cost of financing, but even this did not give the home owners then any notion of the real dangers to their own financial stability to which this procedure could give rise in time of stress.” Federal Home Loan Bank Board, The Federal Home Loan Bank System, 1932–1952 (Washington: GPO, 1952), 3.

10. To amortize a loan means that every month the borrower pays back both the interest on the loan as well as some fraction of the principal. “Un-amortized” means that there is no structured way for borrowers to repay the borrowed funds. Borrowers have to exert discipline and save up the principal. It is standard today, but in this period was primarily found in installment purchasing plans, as made clear in chapter 1.

11. By the end of the decade, there did exist some mortgages amortized over ten years. But these mortgages were in the extreme minority. Overall, terms on mortgages were highly variable.

12. Congress, Senate, Committee on Banking and Currency, National Housing Act: Hearing on S. 3603, 73rd Cong., 2nd sess., May 16–24, 1934, 198.

13. Miles Colean, The Impact of Government on Real Estate Finance in the United States, Financial Research Program IV: Studies in Urban Mortgage Financing No. 2, (New York: NBER, 1950), 81.

14. Leo Grebler, David M. Blank, and Louis Winnick, Capital Formation and Residential Real Estate: Trends in Prospects, Studies in Capital Formation and Financing (Princeton: Princeton University Press, 1956), 163.

15. Carl F. Behrens, Commercial Bank Activities in Urban Mortgage Financing, Studies in Urban Mortgage Financing (New York: H. Wolff Book Manufacturing Co., 1952), 18–19.

16. Grebler et al., Capital Formation, 202.

17. New York Times, June 17, 1934.

18. Federal Housing Administration, Bulletin for Manufacturers, Advertising Agencies & Publishers (Washington: GPO, 1934), 5.

19. Ibid.

20. Ibid.

21. Ibid.

22. Congress, National Housing Act: Hearing on S. 3603, 217.

23. Franklin Roosevelt, “A Message Asking For Legislation to Save Small Home Mortgages From Foreclosure,” April 13, 1933, The Public Papers and Addresses of Franklin D. Roosevelt, vol. 2 (New York: Random House, 1938), 136.

24. The HOLC issued bonds to the original creditor in exchange for the mortgages. The HOLC then extended the terms of the mortgages.

25. C. Lowell Hariss, History and Policies of the Home Owners’ Loan Corporation, Studies in Urban Mortgage Financing (New York: H. Wolff Book Manufacturing Company, 1951), 17. Table 1.

26. Ibid., 21–22, Table 2.

27. Ibid., 23, 29.

28. Ibid., 31.

29. Ibid., 17, Table 1.

30. Ibid., 1, 10.

31. Ibid., 75, 101.

32. New York Times, December 16, 1934.

33. “Ickes Corporation To Rebuild Slums,” New York Times, October 29, 1933.

34. Ibid., 101.

35. New York Times, October 29, 1933.

36. Federal Emergency Administration of Public Works, The American Program of Low-Rent Public Housing (Washington: GPO, 1934), 4–5.

37. “PWA Funds Build ‘Useful Projects,” New York Times, December 1, 1933.

38. New York Times, October 29, 1933.

39. Gail Radford, Modern Housing for America (Chicago: University of Chicago Press, 1996), 91; See chapter 4 for the best examination of the origin and collapse of the PWA housing program. Whereas Radford’s book sees the battles surrounding public housing as the most important aspect of the New Deal housing system, I focus on how New Deal housing policies remade private financial systems.

40. “Ickes Urges Billions For Larger PWA Plan,” New York Times, November 15, 1934.

41. Radford, Modern Housing for America, 91.

42. “Slum Aid Interest Declared Too High,” New York Times, January 28, 1934.

43. “7 Slum Projects Rescinded By PWA,” New York Times, March 11, 1934.

44. Harold Ickes, “2,886 Million Hours’ Work Provided by PWA Program,” New York Times, June 17, 1934.

45. Ibid.

46. Like most Fed economists in the 1920s, Riefler held that during a recession the Federal Reserve ought to extend less credit because member banks would have fewer investment opportunities. While counterintuitive today, this seemingly baffling theory, called the Real Bills doctrine, grew out of the longstanding belief that the proper role for federal credit was for productive business investment and not macroeconomic control. Some economists have blamed Riefler, as a key proponent of this doctrine, for the contractionary monetary policy that contributed to the Depression. Reversing his 1920s outlook, Riefler’s advice to Roosevelt’s inner circle encouraged the expansion of credit in a daring new way. (Allan H. Meltzer, A History of the Federal Reserve [Chicago: University of Chicago, 2004], 271–75.)

Allan Meltzer blames the “Riefler-Burgess doctrine” for the Fed’s policy in the late 1920s and early 1930s. In contrast, David Wheelock’s view is the Fed, instead of consciously pushing for a contractionary policy, misunderstood increased member borrowing as a sign of a expanding rather than a contracting economy, leading to fewer open market purchases. Confusion over information, rather than confusion over monetary theory, in his view, led to the contractionary Fed policies. (David C. Wheelock, “Member Bank Borrowing and the Fed’s Contractionary Monetary Policy During the Great Depression,” Journal of Money, Credit, and Banking 22, no 4 (1990): 411–14.)

47. Congress, National Housing Act: Hearing on S. 3603, 49.

48. Ibid., 50.

49. FHA, FHA Story in Summary, 1934–1959 (Washington: GPO, 1959), 4.

50. Ibid.

51. FHA, Architects, Contractors, Building Supply and Other Merchants (Washington: GPO, 1934), 4.

52. While Title I and Title II were implemented quickly, Title III of the National Housing Act, which authorized the FHA administer to charter private National Mortgage Associations, was not used until 1938. Private investors did not want to enter this field of buying and selling. Not until 1938 did Roosevelt request the Reconstruction Finance Corporation to provide the capital and management for a government-sponsored Federal National Mortgage Association (FNMA). (Federal National Mortgage Association, Background and History of the Federal National Mortgage Association (n.p., 1969), 4–7.)

53. FHA, Mutual Mortgage Insurance: Administrative Rules and Regulations under Title II of the National Housing Act (Washington: GPO, 1935).

54. Ibid., 3.

55. The lender paid 0.5 percent of the principal into the fund on the first day the mortgage took effect, and every year thereafter until the mortgage was paid off. The FHA classified mortgages into risk groups with similar maturity dates, so that excess fees paid into the fund could be returned in timely fashion and a fair manner. Everyone got all their money back if there were no defaults. (Ibid., 8–9).

56. Congress, National Housing Act: Hearing on S. 3603, 50.

57. “Sees ‘Rent Dole’ In Public Housing,” New York Times, October 28, 1934.

58. FHA, Architects, Contractors, 4.

59. Congress, National Housing Act: Hearing on S. 3603, 162.

60. Ibid., 157.

61. Ibid.

62. New York Times, August 20, 1934. That is, individual loans could be reimbursed for 100 percent of losses, as long as those loans were no more than 20 percent of total loan volume.

63. New York Times, June 17, 1934.

64. The first foreclosure was reported in September of 1935.

65. New York Times, June 17, 1934.

66. New York Times, November 2, 1934.

67. New York Times, November 2, 1934; $16,000 in 1934 is $225,552 in 2004 dollars.

68. “Revival Due in Home Construction As a Result of 5% Interest Rate,” New York Times, November 4, 1934; John M. Gries and Thomas M. Curran, U.S. Department of Commerce, Bureau of Standards, Division of Building and Housing, Present Home Financing Methods (Washington: GPO, 1928), 10.

69. Gries and Curran, Present Home Financing Methods, 9.

70. New York Times, November 2, 1934.

71. In contrast, HOLC mortgages permitted junior loans as long as they did not exceed the HOLC appraisal price. FHA practices really were a decisive with past banking practices. History and Policies of the Home Owners’ Loan Corporation, 35.

72. Hariss, History and Policies of the Home Owners’ Loan Corporation, 7.

73. FHA, Here is the Housing Market (Washington: GPO, 1941), 62.

74. Ibid., 58.

75. For a principal of $5,000, and assuming a fixed interest rate of 3.5 percent, each additional five-year period reduces the monthly payment, but increases the interest payment. Eventually, the rise in interest, which is amortized, offsets the decreased monthly payment, which is why, after twenty-five years or so, additional time does not really lower the monthly payment. But to increase the mortgage from three to ten years certainly makes a big difference in the monthly payment.

76. “President Orders 5% Interest Rate on Housing Loans,” New York Times, November 2, 1934.

77. “Home Rehabilitation Loans,” New York Times, August 17, 1934.

78. New York Times, November 2, 1934.

79. “Prepare To Insure Home Mortgages,” New York Times, October 14, 1934; New York Times, November 2, 1934. This interest rate of 6 percent becomes important because it is deemed the fair rate by the government, which shapes how borrowers, in other kinds of loans, think about what they should pay for money; also remarkable was the plan that if the defaults were low enough, that money would then be used to pay off the mortgages themselves.

80. FHA, First Annual Report (Washington: GPO, 1935), 19. This separation of funds becomes important in the creation of a secondary mortgage market, discussed later.

81. “Banks and Trade Praise Housing Act,” New York Times, July 23, 1934; “Vast Federal Housing Program Set Out,” New York Times, August 5, 1934.

82. Harold Ickes, The Secret Diary of Harold Ickes (New York: Simon and Schuster, 1953), 234.

83. “Housing Chief Links Homes to Recovery,” New York Times, October 7, 1934.

84. FHA, How Owners of Homes & Business Property Can Secure the Benefit of the National Housing Act (Washington: GPO, 1934), 7.

85. FHA, Architects, Contractors, 20.

86. FHA, How Owners, 7–9.

87. Ibid., 8.

88. FHA, First Annual Report (Washington: GPO, 1935), 1.

89. New York Times, October 6, 1934.

90. Wall Street Journal, November 3, 1934.

91. “Sees FHA Restoring Faith in Real Estate,” New York Times, December 8, 1934.

92. “Bankers Urged To Aid FHA in Mortgages,” New York Times, December 24, 1934.

93. FHA, First Annual Report, 11.

94. This plan is in stark contrast to the conflicts surrounding PWA housing programs.

95. Field Division, FHA, Better Housing 1, no. 5 (1934): 1.

96. FHA, Local Chairmen of Better Housing Committees, Appointed and Reported to March 19, 1935 (Washington: GPO, 1935), 86.

97. FHA, Better Housing 1, no 8 (1934): 1.

98. FHA, Bulletin for Manufacturers, 4.

99. FHA, Architects, Contractors, 4.

100. FHA, Bulletin for Manufacturers 4.

101. FHA, First Annual Report, 11.

102. FHA, Better Housing 1, no 8 (1934): 1.

103. Ibid., 3, 8.

104. “Lumber Head Asks PWA Housing Halt,” New York Times, November 26, 1934.

105. FHA, First Annual Report, 2.

106. “33 Northern Cities Break Deadlock in Winter Work,” Better Housing (December 1934): 1.

107. “Large Manufacturers Report Gains in Volume up to 500 percent,” Better Housing (December 1934): 2.

108. Better Housing (December 1934): 7.

109. FHA, First Annual Report, 12.

110. Franklin Roosevelt to James Moffett, March 6, 1935; folder “Correspondence between state governors and Pres. Frankling D. Roosevelt concerning FHA legislation 1934–35,” box 1. Records of the Federal Housing Administration, NARA.

111. Federal Housing Administration, Underwriting Manual: Underwriting and Valuation Procedure under Title II of the National Housing Act (Washington: GPO, 1936), preface.

112. FHA, Third Annual Report (Washington: GPO, 1937), 16.

113. New York Times, November 4, 1934.

114. FHA, Underwriting Manual, ¶304 (3)

115. This idea was the bedrock of 1920s and 30s installment financing theory. At any point, the value of the good would be at least equal to the amount it could get if resold. Theory is the important word here. Goods obviously depreciated at different, and often nonlinear, rates. But the good was expected to maintain some value over time, hence the anxiety surrounding lending for soft goods, like clothes, which could not maintain their resale value like furniture or automobiles.

116. FHA, What is the FHA Plan? (Washington, GPO, 1938), 2.

117. Refinancing existing mortgages under FHA was possible. There was a small premium of 0.5 percent above the normal rate. Still, this was only for refinancing already owned housing, not for the purchase of previously built housing. It still drove potential home owners to new housing stock.

118. FHA, Underwriting Manual, Part II, ¶133.

119. Ibid., ¶135.

120. Ibid., ¶136.

121. Ibid., ¶244.

122. Ibid.

123. Ibid.

124. Ibid., ¶236.

125. Ibid., ¶234.

126. Ibid., ¶266.

127. Ibid., Part I, ¶306 (2); Part II, ¶228.

128. Ibid., Part II, ¶208.

129. Ibid., Part I, ¶305 (1).

130. Ibid., Part I, ¶305 (2).

131. FHA, Third Annual Report, 17.

132. FHA, Planning Neighborhoods for Small Houses, Technical Bulletin No. 5 (Washington: GPO, 1936), 1.

133. Ibid., 3.

134. FHA, Underwriting Manual, Part II, ¶210 (d).

135. New York Times, December 30, 1934.

136. Thomas Sugrue, in Origins of the Urban Crisis, provides the best analysis of how government-insured financing co-created the suburb and the ghetto. Where his work looks at the racial consequences of FHA financing for the city, I focus more on how this form of financing shaped other fields of debt in the suburbs.

137. New York Times, October 29, 1933.

138. Congress, National Housing Act: Hearing on S. 3603, 179.

139. “Federal Housing Called Unsound,” New York Times, May 20, 1934.

140. Donald B. Thorburn, “Bank Credit Goes on a Retail Basis,” Burroughs Clearing House (October 1936), 10–11.

141. Federal Home Loan Bank Board, The Federal Home Loan Bank System, 1932–1952 (Washington: GPO, 1952), 8.

142. Participation certificates were, in many ways, the earliest forms of mortgage-backed securities. After the passage of Glass-Steagall, they were suppressed as a financial instrument until their resurrection in the 1960s, as described in chapter 7.

143. Ernest Fisher, Urban Real Estate Markets: Characteristics and Financing, Studies in Urban Mortgage Financing (New York: 1951), 78; see also Hariss, History and Policies.

144. New York Times, November 2, 1934.

145. For more on the history of commodification and market-making, see Cronon, Nature’s Metropolis.

146. New York Times, November 2, 1934.

147. FNMA, Background and History, 6.

148. Leo Grebler, The Role Of Federal Credit Aids In Residential Construction, Studies in Capital Formation and Financing (New York: National Bureau of Economic Research 1953), 42.

149. Known trading partners with repeated interactions exchanging federally tracked mortgages, differ substantially from what would evolve after the breakdown in the FHA mortgage system around 1970. See chapter 7 for details on the transformation to a true mortgage market.

150. Letter from James Moffett to FDR, October 30, 1934; Letter from FDR to James Moffett, November 1, 1934, reprinted, New York Times, November 2, 1934.

151. Grebler, Capital Formation, 229. The remaining difference can be explained through local variation in risk, not market imperfections. (A. H. Schaaf, “Regional Differences in Mortgage Financing Costs,” Journal of Finance 21 (March 1966): 85–94.)

152. New York Times, November 2, 1934.

153. Ibid.

154. FHA, Here is the Housing Market, 11.

155. Willis Bryant, Mortgage Lending: Fundamentals and Practice (New York: McGraw Hill, 1962), 9.

156. Grebler, Capital Formation, 198.

157. Bryant, Mortgage Lending, 8.

158. FHA, Third Annual Report, vii–viii.

159. Ibid., 10.

160. FHA, Sixth Annual Report (Washington, GPO, 1940), 2–3.

161. FHA, Third Annual Report, 4.

162. Ibid., 7.

163. “Ickes Defines Aim Of Housing Funds,” New York Times, November 24, 1934; “President Forces Accord On Housing,” New York Times, November 25, 1934.

164. “PWA Pushes Ahead To Spend Millions,” New York Times, November 27, 1934.

165. Radford, Modern Housing for America, 91; FHA, Sixth Annual Report, 30.

166. New York Times, November 27, 1934.

167. Grebler, Capital Formation, 29.

168. Ibid., 162.

169. James J. O’Leary, “Postwar Trends in the Sources and Uses Of Capital Funds,” in Proceedings of the Conference on Savings and Residential Financing, 1958 (Chicago: United States Savings and Loan League, 1958), 19.

170. At this point, it is important to remember for the contemporary reader that these mortgages were directly owned, whole mortgages, and not securitized mortgages. The investors owned the mortgages directly; they were not a claim on the mortgage. Indirect ownership of mortgages would not come until 1970. See chapter 7 for a length discussion of the origin of the mortgage-backed security.

Chapter Three
How Commercial Bankers Discovered Consumer Credit

1. J. Andrew Painter to Howard Laeri, August 16, 1976, folder “J. Andrew Painter,” “Naetzker – Reichers,” Oral History and Employee Memoirs, RG 12, Citigroup Archives, New York, NY, 2. Henceforth, references to the Citigroup corporate archives will be referred to as CITI. Painter was employed in the personal loan department on the first day of its creation and in 1952 took over after Steffan retired. This narrative, written as a letter by Painter in the late 1970s, recounts his life-long career at National City Bank.

2. Ibid., 3.

3. Ibid.

4. “Personal Credit Makes History in 10 Years,” Number Eight Magazine 32 (May 1938), CITI, 2. Number Eight Magazine was the employee magazine of National City Bank.

5. “Our Entry Into Personal Loan Field Is Acclaimed By Nation’s Press,” Number Eight Magazine 23 (April/May 1928), CITI, 12.

6. Ibid, 12.

7. Bankers also commonly believed, as discussed in chapter 1, that loans ought to be invested in productive rather than nonproductive loans. The money invested from a business loan created more money, while the money spent through a consumer loan only purchased a commodity. While macroeconomically these two aspects might be entangled, well-trained bankers cared more about having their loans repaid with interest than sustaining consumer demand.

8. Painter to Laeri, 3.

9. Roy Rosenzweig, Eight Hours For What We Will: Workers and Leisure in an Industrial City, 1870–1920 (Cambridge: Cambridge University Press, 1983), 53.

10. Frequently in this chapter I refer to bankers and borrowers alike as “he.” This gender specificity is intentional as both bankers and prospective borrowers were usually men. Women could usually only borrow under their husband’s names at personal loan departments.

11. Quoted in Thomas C. Boushall, Bankers Monthly (April 1935): 223.

12. First Wisconsin Personal Loan Plan: Detailed Procedure with Forms [1930], Box 92, Russell Sage Foundation Papers (RSF), Manuscript Division, Library of Congress, Washington, D.C.

13. “Our Entry,” 25.

14. Dirk DeYoung, Bankers Monthly (May 1934): 278.

15. First Wisconsin, 3.

16. Quoted in Boushall, Bankers Monthly (April 1935): 223.

17. Irvin Bussing, Report on Some Important Aspects of the Personal Loan Business From the Savings Bank Point of View to the Investment Committee of the Savings Bank Association of the State of New York (1937), Folder “Savings Banks,” Box 99, RSF, 2.

18. A. Cornelius Clark, Bankers Monthly (November 1932): 671.

19. Ibid.; as late as 1936, Bank of America advertisements for its personal loans explicitly connected establishing “valuable bank credit relationship” under the guise of personal loans and the ease of future business there (Los Angeles Times, February 18, 1936.)

20. Clark, Bankers Monthly: 671; this unintuitive computation confused people at the time as well. The reason for the 16 percent interest rate is the difference between being charged interest on the total or on the declining balance. If the loan was for a year, the average money loaned would be equal to half the initial loan, since at the beginning of the year the borrowed money would be $100 and at the end of the year it would be $0, with an average balance of $50. Eight divided by 50 is 16 percent. How to calculate interest rates was surprising controversial, running, as a side argument, through nearly all the scholarly and critical work on debt through the century.

21. Ibid., 672.

22. Quoted in Boushall, Bankers Monthly, 223.

23. Clark, Bankers Monthly, 672.

24. Chapter 2 focuses on the intended effects of the National Housing Act, describing how it nationalized and standardized mortgage practices in the United States. I argue that the specific ways in which home mortgages were remade set the stage for the expansion of other postwar consumer credit. Chapter 2 also discusses how Title I and Title II loan programs affected the housing industry and the American economy, as well as the process by which they were widely adopted.

25. Consumers could not use the program for movable durables like refrigerators.

26. FHA, How Owners of Homes & Business Property Can Secure The Benefit Of The National Housing Act (Washington: GPO, 1934), 7–9.

27. David C. Barry, “Consumer Financing And Its Relation To The Commercial Bank,” Journal of the American Statistical Association (March 1938): 51.

28. J. H. Perkins to A. P. Giannini, March 13, 1934, National City Bank of New York – Bank of America Correspondence, 1929–1951, CITI, 1.

29. Lewis H. Kimmel, The Availability of Bank Credit, 1933–1938, conference board studies number 242 (New York: National Industrial Conference Board, Inc, 1939), 54.

30. Economic Report of the President 1969 (Washington: GPO, 1969), 228.

31. John B. Paddi, “The Personal Loan Department of a Large Commercial Bank,” Annals of the American Academy of Political and Social Science (March 1938): 135–41.

32. Kimmel, Availability, 52.

33. J. P. Huston, “Personal Loan Departments in Country Banks,” Mid-Continent Banker (October 1935), Folder “Operating Techniques,” Box 92, RSF.

34. Joseph D Coppock, Government Agencies of Consumer Installment Credit, NBER Studies in Consumer Installment Financing, vol. 5 (Camden: Haddon Craftsmen, 1940), 30. Table 3.

35. Painter to Laeri, 6.

36. “Steffan Made Director,” New York Times, August 10, 1934, 2.

37. ‘Resigns Housing Post,” New York Times, December 21, 1934, 45; “Roger Steffan, Banker, 62, Dead,” New York Times, December 28, 1955, 23.

38. Roger Steffan, “How Modernization Loans Benefit Property Owners, Business, and Banks,” folder 001.401 – Steffan, Roger, box 4. “001.401 Russell, Horace to 001.411 Clayton, Lawrence,” RG 82 Records of the Federal Reserve System Board of Governors Central Subject File, 1919–1954, National Archives, College Park, MD, 1.

39. Steffan, “How Modernization Loans,” 4.

40. Painter to Laeri, 6.

41. Ibid.

42. Ibid.

43. Steffan, “How Modernization Loans,” 5.

44. FHA, First Annual Report, 9.

45. The racial and gender limits of that new middle class limited access to the personal loans as well. On the social and economic origins of the new middle class please see Oliver Zunz, Making America Corporate, 1870–1920 (Chicago: University of Chicago Press, 1990).

46. By the end of 1934, 72 percent of Title I loans had been made by commercial banks, compared to 22 percent for finance companies and 4 percent for industrial banks. FHA, First Annual Report, 9.

47. Ibid., 1.

48. Bussing, Report on Some Important Aspects, 2.

49. Paddi, “The Personal Loan Department,” 136.

50. Bussing, Report on Some Important Aspects, 6.

51. Ibid., 2.

52. Ibid., 6.

53. See chapter 1 for a lengthier discussion of this convergence of small loan lending and the installment plan.

54. D. J. Defoe, “Helps Them Get On Their Feet: Five Per Cent Personal Loans With An Optional Savings Plan That Converts the Borrower Into a Saver and Investor,” Burroughs Clearing House (September 1927), Folder “Operating Techniques,” Box 92, RSF, 16.

55. “Gang Tactics Scored In Debt Collection,” New York Times, January 8, 1940, 3.

56. During repossession, the borrowers lost the goods and all the money that had been paid for the goods. Equity loss in repossession, as explained in chapter 1, was the main threat to guarantee repayment.

57. Paddi, “The Personal Loan Department,” 140.

58. “Depression Has Proven Harvest For Loan Shark,” Iron Mountain Michigan News (September 1932), Box 106, RSF.

59. Bussing, Report on Some Important Aspects, 2.

60. Ibid., 3.

61. Painter to Laeri, 5.

62. “Bank Lowers Rate On Personal Loans,” New York Times, May 12, 1936, 33.

63. Barry, “Consumer Financing,” 53.

64. Paddi, “The Personal Loan Department,” 136; Barry, “Consumer Financing,” 54.

65. Paddi, “The Personal Loan Department,” 136.

66. Ibid. John Paddi was, at the time, assistant vice-president of Manufacturer’s Trust Company of New York and in charge of its personal loan department.

67. Barry, “Consumer Financing,” 53; Burroughs Clearing House, “The Small Loans Setup” (January 1936), “Operating Techniques,” Box 92, RSF, 12.

68. “Drop in Small Loans A Sign of Recovery,” June 24, 1934, New York Times, XX2.

69. Rolf Nugent, Banking (December 1937): 26. These numbers are uncertain since the data is actually for those departments still existing in 1937. If a substantial number of departments folded from the early 30s, then these numbers would be more inaccurate the further into the past they went.

70. These numbers should be used as estimates since they were collected from a survey mailed to banks by Nugent when he worked for the Department of Remedial Loans of the Russell Sage Foundation. More accurate than the absolute numbers, I think, is the rate of change of loan balances and number of departments organized. Nugent felt that the loan balances probably reflected 90 percent of the actual total number, while the number of loan departments was probably only 75 percent of the actual number. See Preliminary Report of the Personal Loan Department Study (1937), Folder “Loans Receivable by Year,” box 99, RSF.

71. FHA, First Annual Report, 1.

72. “To Extend Small Loans,” Burroughs Clearing House (August 1936), Folder “Operating Techniques,” Box 92, RSF.

73. Frank R. Sage, “Ideas for Building Small Loan Volume,” Burroughs Clearing House (April 1940), Folder “Operating Techniques,” Box 92, RSF.

74. “Personal Loan Business,” Wall Street Journal, June 30, 1936, 7.

75. “Personal Loans Add to Revenues, Bankers Testify,” Wall Street Journal, March 18, 1938, 8.

76. Federal Reserve, Twenty-Fifth Annual Report of the Board of Governors of the Federal Reserve System Covering Operations for the Year 1938 (Washington: GPO, 1939), 23.

77. J. H. Perkins to A. P. Giannini, June 15, 1938, National City Bank of New York – Bank of America Correspondence, 1929–1951, CITI, 1.

78. “Display Ad 10 – No Title,” Los Angeles Times, January 21, 1936, 12.

79. American Bankers Association, Survey Of Personal Loan Department Experience And Practice, Bulletin 74, May 1938 (New York: American Bankers Association, 1938). A survey letter was sent to “518 banks known to be doing a personal loan business of appreciable volume,” of which 258 banks answered. The responses came from all over the country.

80. Ibid., 10, 18.

81. Ibid., 15.

82. Bussing, Report on Some Important Aspects, 7.

83. United States Department of Labor, Bureau of Labor Statistics, United States Department of Agriculture, Bureau of Home Economics, et al., Study Of Consumer Purchases In The United States, 1935–1936 [Computer file]. 2nd ICPSR ed. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [producer and distributor], 1999. This data set is skewed in its sampling, but oddly it is skewed to contain exactly the population to which bankers reported lending. Unlike data used in later chapters, it cannot be used to discuss the different uses of debt between populations, because of this basic sampling problem. This figure of 10 percent should be considered a provisional estimate, which nonetheless is as good as anything else available. The variables that were used, variables 1376 and 1377, were described as “Notes due to banks, insurance companies, or small loans companies” and did not include mortgages. It cannot be ascertained whether these funds came from personal loan departments, industrial banks, or other sources. But it is useful to see that such a high fraction of the urban population was using small loans from some kind of institution.

84. This recurrent theme is addressed thoroughly in chapter 1. The expansion of this entire system was an adaptation to a widespread wage system, away from the farming system of pledged future assets. It was the division of industrial production reshaping the credit system.

85. United States Investor, “Borrowers of Little Sums” (June 6, 1936), 1.

86. Paddi, “The Personal Loan Department,” 140.

87. United States Investor, “Borrowers of Little Sums,” 3.

88. John Paddi, Manufacturers Trust Company, “Investigation Process” 1937; “Operating Techniques,” Box 92, RSF, 1.

89. The reliance on salaried employees was based on the social separation of labor from the means of production.

90. Without a universal identification number, like the social security number, keeping track of individuals across many addresses and name spellings was extraordinarily difficult. The concerns over the number’s as universal ciphers have been borne out in the past century.

91. American Bankers Association, Survey of Personal Loan Department, 10.

92. Paddi, “The Personal Loan Department,” 136.

93. Paddi, “Investigation Process”; “Operating Techniques,” 2.

94. John Paddi, Manufacturers Trust Company, “Functions of the Local Interchange Bureau” (1937), “Operating Techniques.”

95. Paddi, “Functions.”

96. John Paddi, Manufacturers Trust Company, “Address File” (1937), “Operating Techniques.”

97. Paddi, “Address File.”

98. Paddi, “Functions.”

99. United States Investor, “Borrowers of Little Sums,” 3.

100. American Bankers Association, Survey of Personal Loan Department, 19.

101. Ibid., 19. Median net profit rate calculated by author.

102. “Inevitable That More Banks Will Recognize Possibilities of Personal Banking,” Wall Street Journal, May 31, 1938, 9. This was not on unpaid balances, so the actual annual interest was approximately double.

103. “Personal Loan Profits Of Banks Found Higher Than on Other Assets,” Wall Street Journal, June 12, 1940, 6.

104. “National City Shows Increased Profit for 1938,” Wall Street Journal, January 11, 1939, 9.

105. Wall Street Journal, “Banks Beginning to Consider Personal Loans As Integral Part of Their Business,” May 28, 1938, 3.

106. Nugent, Banking, 26; the main reason I have focused this history, after this point, on commercial banks rather than other lesser capitalized institutions is that commercial banks so quickly and decisively overwhelmed their lending volume, once they became interested in consumer lending.

107. William Trufant Foster, Consumer Loans By Commercial Banks, Pollak Pamphlet 40 (October 1940), 12–13.

108. M. R. Neifeld, Law and Contemporary Problems (Winter, 1941): 31. He estimated that personal loan department extended $592,000,000 during 1939. In 2004 dollars this would be $8,045,280,000.

109. D. J. Defoe, “Helps Them Get On Their Feet: Five Per Cent Personal Loans With An Optional Savings Plan That Converts the Borrower Into a Saver and Investor,” Burroughs Clearing House (September 1927), “Operating Techniques,” Box 92, RSF, 16.

110. Michigan and Virginia because of the state banking department; Arkansas, Missouri, Illinois, Nebraska, Ohio, Pennsylvania, Texas and Oklahoma because of usury laws.

111. Survey of Personal Loan Department, 19.

112. Ibid., “Borrowers of Little Sums,” 2.

113. Mr. Alexander to Mr. Horbett, “Office Correspondence: National City Bank of New York,” folder “430.1–17 – Personal Loan Department data Call Report,” box 2006 “430.1–2 1925–1946 to 430.1–17 1937,” RG 82 Records of the Federal Reserve System Board of Governors Central Subject file, 1919–1954, National Archives, College Park, MD, 2.

114. American Bankers Association, Survey of Personal Loan Department, 20.

115. Donald B. Thorburn, “Bank Credit Goes on a Retail Basis,” Burroughs Clearing House (October, 1936), 9.

116. “Bank Group Gains Stir,” Los Angeles Times, January 2, 1936, 17.

117. Thorburn, “Bank Credit,” 11.

118. “Display Ad 7 – No Title,” Los Angeles Times, March 11, 1938, 7.

119. “Display Ad 5 – No Title,” Los Angeles Times, October 14, 1938, 6.

120. “Display Ad 10 – No Title,” Los Angeles Times, January 21, 1936, 12.

121. “Bank of America Gains 38% in Year,” New York Times, January 2, 1937, 20.

122. Ibid., 20.

123. “Bank of America Building Program Totals $1,000,000,” Los Angeles Times, May 16, 1937, E6.

124. Ibid.

125. Donaldson Thorburn, “Bank Credit Goes On a Retail Basis,” The Burroughs Clearing House (October 1936), 9.

126. P. I. Caplan, “Blind Spots in Consumer Credit,” reprint from September/October 1939 Credit Executive, “1935–1940 General,” Box 166, RSF.

127. Los Angeles Times, January 21, 1936; Thorburn, “Bank Credit,” 9.

128. “Personal Credit Makes History in 10 Years,” Number Eight Magazine 32 (May 1938), CITI, 1.

129. Steffan, “How Modernization Loans,” 6.

130. Thorburn, “Bank Credit,” 10.

131. Industrial banks continued to cater to working-class Americans unserved by personal loan departments at commercial banks. (William Foster, “Consumer Loans by Commercial Banks,” Pollak Pamphlet, [October 1940], Historical Collections, Baker Library, Harvard University, 17.)

Chapter Four
War and Credit

1. Diner’s Club International Website, “Diners Club history overview and timeline,” http://www.dinersclubnewsroom.com/anniversary.cfm, accessed on August 15, 2006.

2. Lewis Mandell, Credit Card Use in the United States (Ann Arbor: University of Michigan Press, 1972) and Lewis Mandell, The Credit Card Industry: A History (Boston: Twayne Publishers, 1990). Mandell’s narrative of the credit card’s origin provides the basis for most other histories of consumer credit. Other, more recent critical or sociological books, like Bruce Manning’s Credit Card Nation, rely on Mandell’s findings for their arguments about contemporary indebtedness. A better, yet still incomplete, account of the early credit card is the more obscure article by Timothy Wolters, “‘Carry Your Credit In Your Pocket’: The Early History of the Credit Card at Bank of America and Chase Manhattan,” Enterprise & Society 1 (June 2000): 315–54. Wolters acknowledges the existence of pre-existing credit systems, but still privileges individual entrepreneurs over structural changes and policies in explaining the emergence of credit cards. The greatest weakness of his argument, however, is the Whiggish privileging of bank credit cards over department store credit cards in the development of consumer credit practices. In chapter 5, moreover, I argue that while travel and entertainment cards, like Diner’s Club, were successful with certain kinds of businessmen, the more important shifts in consumer practices of credit were in department stores, which had little to do with these more discussed forms of credit. Americans, I argue, learned to use charge cards with locally branded department stores, not national credit cards like Diner’s Club. Though today’s credit cards have an institutional lineage with these early bank plan cards, the ways in which consumers practiced credit does not.

3. The last major work to discuss Regulation W was written in the early 1950s while it was still in effect. Robert P. Shay, Regulation W: Experiment in Credit Control (Orono, ME: Maine University Press, 1953). Usury laws had been in force for generations, but they operated at the state-level and regulated only the maximum interest that a borrower could be charged. In many states, installment credit relations were outside of these laws.

4. As initially written, the Trading with The Enemy Act (1917), though giving the president broad powers over the import and export of bullion as well as “credits in any form,” specifically excluded control over “transactions to be executed wholly within the United States.” In the heady days of the banking holiday, however, Congress extended the president’s powers over the economy, legalizing Roosevelt’s initially presumptuous economic regulations. The Emergency Banking Act (1933) extended the powers the president had over banks, partially by granting him those powers directly and also by revising the Trading With The Enemy Act through which he had initially justified, however illegally, the bank holiday. Though most of the amendments in 1933 and in subsequent years focused on the president’s power to control and regulate the export of bullion and use of foreign-owned property, there was also an extension of his power over domestic debts. The Trading with the Enemy Act allowed the president, during war or national emergency, to “regulate or prohibit . . . transfers of credit between or payments by or to banking institutions as defined by the President.” – Though Roosevelt defined “banking institutions” to include loan companies, finance companies, banks and anyone “engaged in the business of making or holding extensions of credit,” clearly it was odd to classify a furniture store as a bank. It was through this revision that Roosevelt justified his executive order for Regulation W in 1941. See Trading with the Enemy Act, October 6, 1917, 40 Stat. 411, 415; “History Of Sec 5(B) of The Trading with The Enemy Act And Actions Taken By The President Thereafter,” September 24, 1941, “Constitutionality of Regulation W (Jan 1940–1954),” box “502.01,” RG 82, NARA, 2–7; William H. Maulsby, “Memorandum for Mr. Mclnerney, Chief, National Defense Section,” December 1, 1941, folder “Constitutionality of Regulation W (Jan 1940–1954),” box “502.01,” RG 82, NARA, 2.

5. As discussed in earlier chapters, installment credit allowed consumers to buy goods, usually durable goods, with a contract over a fixed length of time, with a fixed interest. Each purchase had an associated contract. On default, the seller had the right to repossess the goods. Charge accounts, by World War II, were so-called convenience accounts at stores that consumers would repay at the end of the month. Charge accounts had no limit and no contract. Arrangements would be made ahead of time with the credit manager of a store, who would approve the account to purchase any goods within a store. In practice, many consumers would not repay at the end of the month. These “slow pays” might take sixty or ninety days to repay their debts. In terms of social meaning, installment credit was associated with a lower-class standing while charge accounts were associated with a more affluent rank of customer.

6. Rolf Nugent and Leon Henderson, “Installment Selling and the Consumer: A Brief for Regulation,” Annals of the American Academy of Political and Social Science 173 (May 1934): 93–103.

7. Ibid., 102.

8. Rolf Nugent, Consumer Credit and Economic Stability (New York: Russell Sage Foundation, 1939), 237.

9. John Hamm, The English Hire-Purchase Act, 1938: A Measure to Regulate Instalment Selling (New York: Russell Sage Foundation, 1940), 4. The British system of installment purchases was more akin to today’s “rent-to-own” than to the American installment credit regime (Hamm, 10).

10. J. D. Kemper, “Results of the 1939 C.M.D. Installment Selling Study,” Credit Management Year Book 1940 (New York: National Retail Dry Goods Association, 1940), 41.

11. “Confidential: Consumer Debt Under Regulation W,” December 9, 1942, folder “(Oct–Dec 1942),” box “502.3 – Installment Sales Credit,” RG 82, National Archives of the United States, College Park, MD, 6. Hereafter I will refer to materials from the National Archives as NARA.

12. Marriner Eccles, “Conference of Representatives of the Board of Governors of the Federal Reserve System with Representatives of the Federal Reserve Banks, in Connection with the Regulation of Instalment [sic] Credit, Thursday, August 14, 1941” folder “July–August 14, 1941,” box “252.W – Regulation W,” RG 82, NARA,, 6–7.

13. Ibid., 6.

14. Nugent, Consumer Credit, 244.

15. Eccles, “Conference,” 8/14/41, 2.

16. Ibid., 3.

17. Dietz, “Conference of Board of Governors of the Federal Reserve Banks, Representatives of Government Agencies, and Representatives of the Trade in Connection with the Regulation of Instalment [sic] Credit Friday, August 15, 1941,” 15 August 1941, folder “Aug 15–16—1941 Regulations FR Board,” box “252.W – Regulation W,” RG 82, NARA, 188.

18. Eccles, “Conference,” 8/14/41, 3.

19. Ibid., 12.

20. Ibid., 1.

21. Ransom, “Conference,” 8/14/41, 78.

22. Cargile, “Conference,” 8/15/41, 74; Ransom, “Conference,” 8/15/41, 73–74.

23. Henderson, on a personal level, lost his job and his prominence in policymaking circles. Not until his appointment by Roosevelt to the OPA did Henderson regain his stature (“Up Again Henderson,” Time Magazine, May 1, 1939).

24. Ransom, “Conference,” 8/14/41, 46.

25. Ibid., 74.

26. Parry, “Conference,” 8/15/41, 75.

27. Ibid.

28. Eccles, “Conference,” 8/15/41, 5.

29. Carpenter, “Conference,” 8/15/41, 17.

30. Ransom, “Conference,” 8/15/41, 14.

31. See Jacobs, Pocketbook Politics for more on the OPA rationing program.

32. Ransom, “Conference,” 8/14/41, 75.

33. Rolf Nugent to Carl Parry, 25 July 1941, folder “July–August 14, 1941,” box “252.W – Regulation W,” RG 82, NARA,, 2; Carpenter, “Conference,” 8/15/41, 20.

34. Ransom, “Conference,” 8/14/41, 46.

35. Ibid., 13.

36. Ibid., 34–36.

37. Dietz, “Conference,” 8/15/41, 118; refrigerators had such long-term lengths because sellers sold them at the same per month price as ice deliveries. If the consumer was used to paying X dollars per month for ice, she could pay the same and get the use of a modern electric refrigerator, which after three years she would own and not have to pay anything more. Such pricing schemes made installments fit the conventions of peoples’ prices and budgets for their daily expenses.

38. Nugent to Parry, 7/25/41, 1.

39. Ibid., 2.

40. David Craig to Federal Reserve Board, August 18, 1941, folder “(Aug 17–Oct 10, 1941) Regulations FR Board,” box “252.W – Regulation W,” RG 82, NARA, 1.

41. Ibid., 3.

42. Parry, “Conference,” 8/15/41, 52.

43. Nugent, “Conference,” 8/15/41, 142–43.

44. Edward Brown to Ronald Ransom, August 16, 1941, folder “Regulations FR Board,” box “252.W – Regulation W Aug 15–16 — 1941,” RG 82, NARA, 1–2; Edward Brown, “Conference of Representatives of the Board of Governors of the Federal Reserve System with Representatives of the Federal Reserve Banks, Government Agencies, and the Trade in Connection with proposed Amendments to Regulation W Friday, September 26, 1941,” September 26, 1941, folder “(Aug 17–Oct 10, 1941) Regulations FR Board,” box “252.W – Regulation W,” RG 82, NARA, 13.

45. B. E. Henderson, “Conference of Representatives of the Board of Governors of the Federal Reserve System with Representatives of the Federal Reserve Banks, Government Agencies, and the Trade in Connection with Proposed Amendments to Regulation W Friday, September 26, 1941,” September 26, 1941, folder “(Aug 17–Oct 10, 1941) Regulations FR Board,” box “252.W – Regulation W,” RG 82, NARA, 70.

46. Ibid., 71.

47. Roger Steffan to Chester Morrill, August 16, 1941, folder “(Comment’s on 8/14/41 Draft Regulation W – FRBoard),” box “252.002–W,” RG 82, NARA, 1.

48. Ibid.

49. Roger Steffan to Chester Morrill, August 16, 1941, folder “Regulations FR Board,” box “252.W – Regulation W Aug 15–16, 1941,” RG 82, NARA, 1.

50. Edgar Fowler to Chester Morrill, August 18, 1941, folder “(Aug 17–Oct 10, 1941) Regulations FR Board,” box “252.W – Regulation W,” RG 82, NARA, 5.

51. Steffan to Morrill, August 16, 1941, Regulations FR Board, 1.

52. Ransom, “Conference,” 8/15/41, 13, 49; for an expanded discussion of open book credit, its practices and uses, please see chapter 1. In this time, open book credit was also called charge account credit. By the late 1940s, retailers began to distinguish between regular charge account credit, which was open book credit, and revolving charge account credit, which was the new form of revolving credit that, in 1941, did not exist.

53. M. R. Neifeld, “Institutional Organization of Consumer Credit,” 8 Law and Contemporary Problems 23 (1941): 30.

54. Haverty, “Conference,” 8/15/41, 63.

55. Ibid., 54.

56. Some very large companies, like Sears, could extend a massive amount of open book credit—but only because they had such a good reputation for repayment and such a large amount of money that it could be considered wholesale financing. Sears eagerly complied with the regulation, however and did not attempt to evade its proscriptions (“Conference,” 8/14/41, 119–20).

57. Fry, “Conference,” 8/14/41, 118; Though some open book financing existed, it was costlier and rarer than installment financing, because instead of selling the debt to a third party the retailer borrowed the money from a third party.

58. Ibid., 114; by the end of the 1930s, suspicions had begun to arise about the reality of “convenience credit.” Many consumers, instead of paying off their accounts at the end of the month, spread payments over many months. This practice was never officially sanctioned by the retailer (Arthur Hert, “Charge Accounts of Retail Merchants,” Annals of the American Academy of Political and Social Science (March 1938), 111–20.)

59. Regional Fed banks compiled lists of newspapers to which to send announcements. Dallas, for instance, had a list of 432 newspapers. By November, the Kansa City Fed had arranged 61 talks for over 6,500 people, as was typical of all branches. Fed officials in Minnesota, for instance, met with concerned citizens at the Duluth Chamber of Commerce Ballroom, the Grand Rapids Village Hall, and in Winona’s High School Auditorium. “Conference,” November 17–19, 1941, 23–24; J. N. Peyton to Banks, Retailers, Finance Companies, and Others Extending Consumer Credit, May 14, 1942, folder “Federal Reserve Bank, Minneapolis credit control – economics conditions,” box “502.-c(9) Circulars Federal Reserve Boards,” RG 82, NARA, 1.

60. Carpenter, Section 9(h), “Conference,” 8/15/41, 33.

61. Ransom, “Conference,” 8/15/41, 42.

62. Dietz, “Conference,” 8/15/41, 105; Peterson, “Conference,” 106.

63. Roscoe, “Conference,” 9/26/41, 103.

64. “Federal Reserve Conference on Regulation W,” November 17–19, 1941, folder “(Oct 11–Dec 1941) Regulations FR Board,” box “252.W – Regulation W,” RG 82, NARA, 20.

65. Roscoe, “Conference,” 9/26/41, 103.

66. Chester Morrill to Presidents of all Federal Reserve Banks, January 28, 1942, folder “(1941–Jan 1942) Credit Control,” box “502.7 – Enforcement,” RG 82, NARA, 1.

67. “Conference,” November 17–19, 1941, 29.

68. Ibid., 10.

69. Ibid.

70. “Confidential: Consumer Debt Under Regulation W,” December 9, 1942, folder “(Oct–Dec 1942),” box “502.3 – Installment Sales Credit,” RG 82, NARA, 7.

71. “Furniture Sales On Time Cut 35%,” New York Times, September 13, 1942, F7; The South was harder hit, on average, than the North. The Atlanta district reported drops as high as 50 percent, while Boston reported only 25 to 30 percent.

72. “Confidential: Consumer Debt,” 12/9/42, 7.

73. “Consumer Credit in the First Quarter of 1943,” May 13, 1943, folder “(Jan–May 1943),” box “502.3 – Installment Sales Credit,” RG 82, NARA, chart 2.

74. “Confidential: Consumer Debt,” 12/9/42, 7; for additional data on other lines see F. B. Hubachek to Ronald Ransom, November 16, 1942, folder “(Oct–Dec 1942),” box “502.3 – Installment Sales Credit,” RG 82, NARA, which contains hand-drawn charts on percent change per month in various lines of installment credit goods.

75. Walter Gatzert, secretary-treasurer of Spiegel’s to Federal Reserve Board, September 3, 1943, folder “(Aug 19–Oct 1943),” box “502.3 – Installment Sales Credit,” RG 82, NARA, 8.

76. “Confidential: Consumer Debt,” 12/9/42, 9.

77. Ibid.

78. Ibid.

79. Edward Condlon, “Non-defense Loans Facing Extinction,” New York Times, March 8, 1942, F1.

80. George Coleman, “Investment Practices of Commercial Banks,” Law and Contemporary Problems (1952): 109.

81. “Conference,” November 17–19, 1941, 10–11.

82. Ibid., 14.

83. “Additional Suggestions Relating to The Proposed Regulations Governing Extension of Instalment [sic] Credit,” C. A. Sienkiewicz to Chester Morrill, August 16, 1941, folder “Regulations FR Board,” box “252.W – Regulation W Aug 15–16, 1941,” RG 82, NARA, 2.

84. Ransom, “Conference,” 8/14/41, 65.

85. Ibid., 74.

86. Zurlinden, “Conference,” 8/14/41, 74.

87. Alfons Landa, Association of Retail Apparel Stores to Federal Reserve Board, June 5, 1942, folder “(Apr–Jun 10, 1942),” box “502.3 – Installment Sales Credit,” RG 82, NARA, 1; Other installment credit store owners wrote to the Fed, like Pittsburgh’s Harris Stores Company’s H. H. Smit, but their arguments only echoed those of this group (H. H. Smit to J. A. Schmidt, November 11, 1942, folder “(Oct–Dec 1942),” box “502.3 – Installment Sales Credit,” RG 82, NARA.)

88. “Notes,” 6/2/42, 8–9.

89. Ibid., 8.

90. Ibid., 3. Calculated by author from figures in the letter. The group claimed total sales in 1939 of $155,443,000 compared with total installment sales of $3,947,000,000.

91. “Notes of Meeting with Association of Credit Apparel Stores,” June 2, 1942, folder “(Apr–Jun 10, 1942),” box “502.3 – Installment Sales Credit,” RG 82, NARA, 2.

92. Alfons Landa, Association of Retail Apparel Stores to Federal Reserve Board, 5 June 1942, folder “(Apr–Jun 10, 1942),” box “502.3 – Installment Sales Credit,” RG 82, NARA, 4; Other installment credit store owners wrote to the Fed, like Pittsburgh’s Harris Stores Company’s H.H. Smit, but their arguments only echoed those of this group (H. H. Smit to J. A. Schmidt, November 11, 1942, folder “(Oct–Dec 1942),” box “502.3 – Installment Sales Credit,” RG 82, NARA.)

93. Parry, “Apparel stores – information from Mr. Althaus,” May 28, 1942, folder “(Apr–Jun 10, 1942),” box “502.3 – Installment Sales Credit,” RG 82, NARA, 1.

94. Nugent, “Conference,” 8/15/41, 121.

95. Ransom, “Conference,” 8/14/41, 54.

96. Dorothy Brady, “Expenditures and Savings of City Families in 1944,” Monthly Labor Review (January 1946): 1.

97. Parry, “Conference,” 8/14/41, 56.

98. Dietz, “Conference,” 8/15/41, 119.

99. C. Harrell and Roger Clouse to Carl Parry, 27 July 1943, folder “(Jun–Aug 18 1943),” box “502.3 – Installment Sales Credit,” RG 82, NARA, 3.

100. Bonnar Brown, “Partial Payments in so-called Charge Accounts and Short-term Instalment Contracts,” July 12, 1943, folder “(Jun–Aug 18 1943),” box “502.3 – Installment Sales Credit,” RG 82, NARA, 1.

101. “Partial Payments,” 7/12/43, 1.

102. Ibid., 2.

103. Ibid.

104. Ibid.

105. E. A. Heath to J. H. Dillard, “Serial Liquidation of Charge Accounts Administrative and Investigative Policy,” May 10, 1944, folder “Apr 1944–Aug 1950,” box “502.32 Open Account Installment Credit Consumer Credit,” RG 82, NARA, 1; see also Edwin Gahan, “Retailers Oppose New Credit Curbs,” New York Times, June 6, 1943, S6; also, Edwin Gahan, “Evasion of Curbs on Credit Fought,” New York Times, October 4, 1942, F1.

106. “Partial Payments,” 7/12/43, 3.

107. Harrell to Parry, 7/27/43, 3.

108. C. A. Sienkiewicz to Carl Parry, August 5, 1943, folder “(Jun–Aug 18 1943),” box “502.3 – Installment Sales Credit,” RG 82, NARA, 1.

109. Regulators’ examined past business practices, intervals of payment, ratio of purchase price to buyer’s salary, store advertising, equality of partial payments, and use of payment books. Curiously, whether or not the account had finance charges or interest was not used to determine the type of credit (ibid., 1–2).

110. C. Harrell and Roger Clouse to Carl Parry, July 27, 1943, folder “(Jun–Aug 18 1943),” box “502.3 – Installment Sales Credit,” RG 82, NARA, 1.

111. Commercial Credit Company, “Summary of Comments of Trade Association,” Feb. 6, 1942, 3.

112. Paul Hodge to Carl Parry, May 21, 1943, folder “(Jan–May 1943),” box “502.3 – Installment Sales Credit,” RG 82, NARA, 2.

113. Lewis Dembitz to Parry, “Regulation W — down payments on articles sold for $6 or less,” December 31, 1942, folder “(Oct–Dec 1942),” box “502.3 – Installment Sales Credit,” RG 82, NARA, 3.

114. Paul Hodge to Carl Parry, May 21, 1943, folder “(Jan–May 1943),” box “502.3 – Installment Sales Credit,” RG 82, NARA, 2.

115. “Notes,” April 27, 1942, 3. Three months is actually an approximation for the curiously worded regulation. The actual restriction was forty days from the end of the month in which the purchase was made. So if a purchase was made on the first of the month, then payment would have to be completed by the tenth day of the second month after the purchase. The maximum number of days was about seventy and the minimum was about forty. Later exceptions were made in July 1942 in Amendment No. 5 for stores that used “cycle-billing.” Cycle-billing—bills sent in groups over the course of the month to reduce accounting expenses—required specialized equipment just coming into vogue, but also did not permit all bills to be paid before the 10th of the month. For companies using cycle-billing, an exemption was made to permit them to have the accounts paid by the “40th day following the last day of the applicable monthly billing period.” Technology that made accounting and billing easier also locked businesses into practices that made regulations more difficult to enforce. Since cycle-billing had just begun for most businesses, however, relatively few retailers used the cycle-billing exemption. Regulation W was equated with the 10th of the second month following in both the popular and professional memory of the experience of the regulation. (“Amendment No. 5 to Regulation W,” July 2, 1942, folder “(Apr 28–Dec 1942),” box “252.W – Regulation W,” RG 82, NARA, 1.)

116. Notes from conference, April 27, 1942, folder “(Feb 16–Apr 27) Regulations FR Board,” box “252.W – Regulation W,” RG 82, NARA, 1.

117. “Conference,” 27.

118. “Regulation W Proposed Amendment No. 3 (Consolidated) Summary of Comments of Trade Association of Sales Finance Companies and Three Large Finance Companies,” 6 February 1942, folder “(Jan–Feb 15, 1942),” box “252.W – Regulation W,” RG 82, NARA, 3.

119. Board of Governors of the Federal Reserve System, “Statement for the Press,” May 5, 1942, folder “(Apr 28–Dec 1942),” box “252.W – Regulation W,” RG 82, NARA, 1, 3.

120. Thomas Conroy, “Stores Expecting Rise in Cash Sales,” New York Times, July 12, 1942, F1.

121. “’Frozen’ Accounts May Be Under 25%,” New York Times, July 14, 1942, 32.

122. “Charge Account Relationships in the Sixth Federal Reserve District,” November 18, 1943, folder “Nov 1943 – Mar 1944,” box “502.32 Open Account,” NARA, 5–6.

123. Ibid., 5, 8.

124. C.B. Ritz to Ronald Ransom, May 3, 1944, folder “Apr 1944–Aug 1950,” box “502.32 Open Account Installment Credit Consumer Credit,” RG 82, NARA, 1–2.

125. E. A. Heath, “Discussion of Regulation W Des Moines, Iowa Friday April 14, 1944, Hotel Kirkwood 6:30 p.m.,” April 21, 1944, folder “Apr 1944–Aug 1950,” box “502.32 Open Account Installment Credit Consumer Credit,” RG 82, NARA, 1.

126. “Discussion of Regulation W Des Moines,” 4/21/44, 1.

127. Ibid.

128. Norman Cassaday et al. to Board of Governors, May 25, 1944, folder “Apr 1944–Aug 1950,” box “502.32 Open Account Installment Credit Consumer Credit,” RG 82, NARA, 1.

129. C. B. Ritz to Ronald Ransom, May 3, 1944, folder “Apr 1944–Aug 1950,” box “502.32 Open Account Installment Credit Consumer Credit,” RG 82, NARA, 2.

130. Ritz to Ransom, 5/3/44, 2.

131. Bonnar Brown and Theodore Smith, “Visit to Philadelphia August 20 and 21, 1943,” August 23, 1943, folder “(Aug 19–Oct 1943),” box “502.3 – Installment Sales Credit,” RG 82, NARA, 3.

132. Theodore Smith, “Trip to Cleveland, October 25, 26 and 27, 1943,” November 3, 1943, folder “Nov 1943–Mar 1944,” box “502.32 Open Account,” NARA, appendix. Various credit cards, which were small paper rectangles with the customer’s name and an identification number, were at the end of the Cleveland report.

133. Strawbridge & Clothier, “Credit Control Refer List,” August 31, 1943, folder “(Aug 19–Oct 1943),” box “502.3 – Installment Sales Credit,” RG 82, NARA, 1.

134. J. N. Adam Credit Card, “Trip to Cleveland,” November 3, 1943, appendix.

135. Ibid.

136. Part of the difficulty in historicizing economic practices is the problem of definitions, which economists love and historians loathe. Revolving credit might be defined as credit extended by a retailer or bank in which the borrower expects to repay only a portion of the debt every month and to be charged a service fee and/or interest on the outstanding debt. Revolving credit is basically what we are all familiar with in contemporary credit cards. On the ground, however, historical divergence from definition becomes clear. In this period, revolving credit had a strict, very low, limit. Interest charges were small. It was suspect. Some retailers charged interest only after a few months or on the unpaid balance, while others charged at the end of the month on the entire amount borrowed. The practice was in flux and rather than strictly define it and then show deviation from that definition, I would rather show the set of practices surrounding consumer borrowing and how these practices were understood at the time by businesses and consumers. Yes, definitions were offered and imposed, but these were secondary to the flux and experiment. In later chapters, the way in which revolving credit is practiced changes in important ways, even though retailers and consumers continue to call it “revolving credit.”

137. U.S. Department of Commerce, Business Statistics 1961 Edition: A Supplement to the Survey of Current Business (Washington: GPO, 1961), 85.

138. “Statement for the Press,” November 15, 1946, folder “(Jan 1943–Nov 1946),” box “252. – W,” RG 82, NARA, 1.

139. Bonnar Brown, “Visit to New York January 4–6, 1944,” January 13, 1944, folder “(Nov 1943 – May 1945),” box “502.3 – Installment Sales Credit,” RG 82, NARA, 1.

140. “Visit to New York,” 1/13/44, 2.

141. J. A. Kaufman to Chester Morrill, April 28, 1944, folder “(Nov 1943–May 1945),” box “502.3 – Installment Sales Credit,” RG 82, NARA, 2.

142. “Demand Truman End Regulation W,” New York Times, November 9, 1945, 28; The Retail Credit Institute would later merge with the National Foundation for Consumer Credit, an important postwar pro-credit lobbying group and trade association.

143. “Demand Truman,” 11/9/45, 28; see Bruce Schulman’s From Cottonbelt to Sunbelt (New York: Oxford University Press, 1991) for more on the wartime movement of industry to the South and West.

144. “Visit to New York,” 1/13/44, 2.

145. Ibid., 5.

146. Ibid., 2.

147. “Post-War Credits Draw Mixed Views,” New York Times, March 19, 1945, 27.

148. Ibid.; Thomas Conroy, “Credit Sales Ratio Shows Rising Trend,” New York Times, January 27, 1946, F5.

149. “Statement for the Press,” November 15, 1946, folder “(Jan 1943–Nov 1946),” box “252. – W,” RG 82, NARA, 1.

150. Evans and Parry to Board, 14 June 1946, folder “(Jan 1943–Nov 1946),” box “252. – W,” RG 82, NARA, 2.

151. “Urges Sound,” New York Times, 1/16/47.

152. Ralph Young, “Role of Instalment Credit Regulation in the Current Financial Situation,” December 7, 1948, Remarks before the Capitol Group of the Controllers’ Congress of the National Retail Dry Goods Association, Washington, December 7, 1948, folder “(Oct 1948–Feb 1949),” box “502.3 – Installment Sales Credit,” RG 82, NARA, 9.

153. William Brian, “Charga-Plate Service In Action,” Credit Management Year Book 1947 (New York: National Retail Dry Goods Association, 1947), 296.

154. “Consumer Credit Expanding Swiftly,” New York Times, October 20, 1946, F6; Thomas Conroy, “Push Drive to Build Charge Accounts,” New York Times, September 30, 1945, 66.

155. “Push Drive,” 9/30/45, 66; Cash sale had risen faster, however, and accounted for 78 percent of 1944 sales compared to 65 percent of 1941 sales. Installment sales volume had plummeted from 12 percent in 1941 to 3 percent of retail sales in 1944. This was calculated by the author from published volumes of retail sales by sales type.

156. Thomas Conroy, “Credit Sales Ratio Shows Rising Trend,” New York Times, January 27, 1946, F5.

157. “Urges Sound Basis for Retail Credit,” New York Times, January 16, 1947, 38.

158. Ibid.

159. “Business Bulletin,” Wall Street Journal, October 2, 1947, 1.

160. Frank MacMillen, “Bank Loans to Aid Business at New Peak and Still Rising,” New York Times, August 18, 1946, 65.

161. “Consumer Credit Expanding Swiftly,” New York Times, October 20, 1946, F6.

162. Ibid.

163. Ibid.

164. “Store Group Sets a 9-Year Record,” New York Times, April 2, 1940, 37.

165. The editor of a postwar credit manager’s yearbook noted that, “This type [revolving credit] of account was generally discontinued during the existence of Regulation W in its original form. However, after termination of Regulation W on November 2, 1947, they were revived and continue to operate under the revised regulation.” (“Revolving Credit Analyzed,” 118).

166. Proquest, the online full-text archive of the New York Times, contains only three advertisements for “permanent budget accounts” before 1946, after which they become more common for Bloomingdale’s, and then other stores. Before 1946, the advertisements for permanent budget accounts were part of larger advertisements, while after 1946 they become the central point of the advertisements; “Display Ad 10 – No Title,” New York Times, June 12, 1942, 7. See also “Credit Practices Revised by Stores,” New York Times, May 7, 1942, 34. This ruling also affected the relatively common “ten-payment” plan for men’s clothing, which was subsumed under the revolving credit programs in the postwar.

167. Ibid.

168. Ibid.

169. Robert O’Hagan, “Latest Developments in Revolving Credit,” Credit Management Year Book 1949 (New York: National Retail Dry Goods Association, 1949), 370.

170. John Kemper, “Credit Identification and Authorization Policies,” Credit Management Year Book 1947 (New York: National Retail Dry Goods Association, 1947), 272.

171. O’Hagan, “Latest Developments in Revolving Credit,” 370.

172. Robert O’Hagan, “Bloomingdale’s Permanent Budget Account,” Credit Management Year Book 1947 (New York: National Retail Dry Goods Association, 1947), 248.

173. Ibid.

174. R. H. Bulte, “Revolving Credit Analyzed,” Credit Management Year Book 1948 (New York: National Retail Dry Goods Association, 1948), 114.

175. Ibid., 243. Bloomingdale’s had silver plates for the regular accounts and brown plates for the PBA accounts.

176. William Brian, “Charga-Plate Service In Action,” Credit Management Year Book 1947 (New York: National Retail Dry Goods Association, 1947), 296.

177. Ibid.

178. Ibid.

179. Farrington Manufacturing encouraged retailers to move to a centralized model. By the mid-1940s they were promoting a group Charga-Plate plan that combined Charga-Plate accounting and billing operations for many different stores, even of different companies. One Charga-Plate would work at different stores. (Ibid., 297).

180. Coupon books complicated the enforcement of department store credit during World War II. While the coupon book made life easier for the credit manager, it also made it harder on Fed officials. Such coupon books could be used for any goods in the store and allowed an easy evasion of the down payment requirements for Regulation W, since they were equivalent to cash at checkout. Should all coupons have down payments, which would affect even non-listed articles, or should there be special Regulation W coupon books, which would increase the clerical headaches for department store credit departments? Eventually, stores created two coupon systems or excluded restricted goods from purchase with coupons. (Lewis Dembitz to Parry, “Regulation W – down payments on articles sold for $6 or less,” December 31, 1942, folder “(Oct–Dec 1942),” box “502.3 – Installment Sales Credit,” RG 82, NARA, 1–5.)

181. Kemper, “Results of the 1939 C.M.D. Installment Selling Study,” 42.

182. Bulte, “Revolving Credit Analyzed,” 113.

183. Ibid., 124, 131.

184. Bolen, “Revolving Credit Analyzed,” Credit Management Year Book 1948 (New York: National Retail Dry Goods Association, 1948), 115.

185. Ray Johnson, “Step-By-Step Planning and Installation of Revolving Credit,” Credit Management Year Book 1948 (New York: National Retail Dry Goods Association, 1948), 136.

186. S. C. Patterson, “Advantages of Revolving Credit and How to Capitalize on Them,” Credit Management Year Book 1951 (New York: National Retail Dry Goods Association, 1951), 221.

187. O’Hagan, “Bloomingdale’s Permanent Budget Account,” 246.

188. Watkins, “Revolving Credit Analyzed,” Credit Management Year Book 1948 (New York: National Retail Dry Goods Association, 1948), 116.

189. Norman Smith, “Revolving Credit Analyzed,” Credit Management Year Book 1948 (New York: National Retail Dry Goods Association, 1948), 114; Johnson, “Step-By-Step,” 137.

190. O’Hagan, “Latest Developments,” 370.

191. Bolen, “Revolving Credit Analyzed,” 115.

192. O’Hagan, “Latest Developments,” 370.

193. Ibid.

194. Patterson, “Advantages,” 221.

195. Ibid., 225.

196. “Display Ad 45 – No Title,” New York Times, December 16, 1946, 6.

197. Ibid.

198. “Display Ad 13 – No Title,” New York Times, March 11, 1948, 14.

199. The gendering of consumption and male authority over credit, as expressed by the credit manager, continued in much the same way as it had in the 1920s. Please see chapter 1 for a detailed discussion of the ways in which gender structured credit relations for men and women.

200. “Display Ad 8 – No Title,” New York Times, August 28, 1947, 8.

201. Ibid.

202. O’Hagan, “Bloomingdale’s Permanent Budget Account,” 247–48.

203. Van Lander, “Revolving Credit Analyzed,” 117.

204. Charles Egan, “Installment Buying Is Curbed On Autos, Home Appliances,” New York Times, September 9, 1950, 1.

205. Charles Egan, “Credit Buying is Tightened; More Down Except on Autos,” New York Times, October 14, 1950, 7.

206. “Text of the President’s Economic Message to Congress Setting Mobilization Program Goals,” New York Times, January 13, 1951, 4.

207. “Text of Administration’s Summary of Economic Mobilization Bill,” New York Times, July 20, 1950, 13.

208. A. L. Trotta (Manager, Credit Management Division, National Retail Dry Goods Association) to Board of Governors, November 8, 1950, folder “Sep 1950–1953,” box “502.32 Open Account Installment Sales Credit – Consumer Credit,” NARA, 3.

209. Charles Sheldon to Alfred Williams, November 2, 1950, folder “Sep 1950–1953,” box “502.32 Open Account Installment Sales Credit – Consumer Credit,” NARA, 1–2.

210. Sherman to Leonard, “Excerpt from the minutes of the meeting of the Board on November 7, 1950,” December 1, 1950, folder “Sep 1950–1953,” box “502.32 Open Account Installment Sales Credit – Consumer Credit,” NARA, 3.

211. Aaron Frank to Thomas McCabe, October 19, 1950, folder “Aug 1942 to 1950,” box “502.322,” NARA, 1–2.

212. Frank Neely to Thomas McCabe, July 17, 1950, folder “Apr 1944–Aug 1950,” box “502.32 Open Account Installment Credit Consumer Credit,” RG 82, NARA, 1.

213. Frank Neely to R. M. Beane, “Memorandum,” September 15, 1950, folder “Sep 1950–1953,” box “502.32 Open Account Installment Sales Credit – Consumer Credit,” NARA, 1.

214. Sherman to Leonard, 12/1/50, 1.

215. Egan, “Credit Buying is Tightened,” 1; “Installment Buying,” 1.

216. “Credit Group Asks End of Controls,” February 4, 1952, 24; Alfred Zipser, “Two-Day Meeting Here to Survey Effects of Credit Curbs on Trade,” December 3, 1950, F1.

217. “Repeal Demanded for Credit Curbs,” New York Times, June 8, 1951, 43.

218. “Credit Group,” 2/4/52, 24.

219. “Text of the President’s,” 1/13/51, 4.

220. “Credit Controls Called A Failure,” New York Times, March 13, 1951, 47.

221. “Reserve Board to ‘Re-examine’ Enforcement of Credit Curb Because of Bank Protests,” New York Times, January 5, 1952, 18.

222. Philip Webster to Homer Jones, July 31, 1950, “Use of ‘revolving’ charge accounts with six months to pay, based on reports from Reserve Banks, July 21, 1950,” folder “Apr 1944–Aug 1950,” box “502.32 Open Account Installment Credit Consumer Credit,” RG 82, NARA, 1.

223. Ibid.

224. Webster to Jones, 7/31/50, 1.

225. “Credit Trend Continues: Installment Buying Last Year Little Changed From 1952,” New York Times, March 4, 1954, 40. Government statistics lumped revolving and installment credit statistics together (U.S. Department of Commerce, Business Statistics 1961 Edition: A Supplement to the Survey of Current Business, [Washington: GPO, 1961], 241.)

226. “Credit Trend Continues,” 40.

227. Sachs advertisement, “Display Ad 98 – No Title,” New York Times, February 10, 1952, 92.

228. Alfred Zipser, “Easing of Installment-Buying Curb Sets Off Battle Among Merchants,” New York Times, May 11, 1952, F1.

229. Russell Porter, “Public Slow To Buy With Easier Credit,” New York Times, May 9, 1952, 21.

230. “Dallas,” New York Times, July 6, 1952, F6.

231. Porter, “Public Slow To Buy,” 21.

232. “Display Ad 17 – No Title,” Los Angeles Times, December 9, 1953, 21.

233. “New Credit Plan Put To Retailers,” New York Times, May 27, 1955, 28.

Chapter Five
Postwar Consumer Credit

1. Wealth, as accumulated assets, can take many forms, from liquid assets like bonds and savings accounts to illiquid assets like houses.

2. This chapter, more than other chapters in Debtor Nation, relies heavily on statistical analysis of two data sets. The quantitative approach has important limitations. First, survey questions on future outlook can be used to see if they correlate with behavior, but the subtle chains of reasoning, so central to intellectual history, cannot be observed and the complicated ways in which consumers thought about borrowing in moral or religious terms is mostly absent from this data. Respondents’ attitudes have important significance, I will argue, but “thick description” cannot be found. Second, ownership information is also limited. At no point, outside of autos and homes, does the survey ask consumers what goods they already owned, only what goods they planned to buy. The 1958 survey, concerned as it was with installment credit, does little to explain the changing usage of charge accounts, and the 1961 survey does not have the 1958 survey’s detailed household financial information. The 1958 survey collected revolving credit account information but lumped it with other forms of installment credit, giving us little empirical sense of the rise of this important form of credit in the 1950s. Third, categories that today’s surveyors would disaggregate, like race, are simplified into white, black, and “other,” making analysis of Asian American or Latino uses of debt impossible to parse. Fourth, institutions that drive the analysis of many other chapters are also absent from the data. Beyond a simple question of whether borrowed money came from a person or an institution, there is little information about the institutional context of lending. The survey’s collection methods tend to boil down the world to means, percentages, and probabilities that a historian’s palate might find bland.

With those limitations in mind, however, survey data also allow access to populations underrepresented in the archives and for a range of questions that conventional archival sources cannot answer. The data enables the restoration of the African American experience to our understanding of the world of consumer finance. African American suburbanites, as Andrew Wiese in Places of Their Own: African American Suburbanization in the 20th Century (University of Chicago Press: Chicago, 2004) has recently argued, have been excluded from most accounts of the suburbs. While still a minority, the suburban experience structured an important set of aspirations for African Americans everywhere in the postwar period. At the same time, when investigating suburban history, one immediately confronts its overlapping qualities of heterosexuality, education, whiteness, wealth, and space. How can we weigh the importance of these factors in how suburbanites borrowed and spent their money? Did suburbanites borrow more simply because they had more money? Statistical methods, unlike anecdotal weighing of factors, permit the disaggregation of these different qualities of borrowing. Controlling for income or location or race allows the salient demographic features of financial behavior to come to the fore. What is simple to accomplish mathematically would be impossible to do anecdotally. Only through such analysis can we know how much more frequently a black college graduate borrowed than a white college graduate—2.67 times. While quantitative methods have fallen into disfavor among historians, I think that when used as part of a historian’s tool kit they can answer questions other methods cannot.

Though the published reports of Michigan’s Economic Behavior Program do not directly answer the questions posed at the beginning of this chapter, the raw data it gathered does. While those reports showed how indebtedness broke down by income, they did at the same time not control for race, location, education, and the myriad other factors that historians wonder about. Contemporary statistical methods, additionally, allow for a richer and more statistically accurate analysis than could have been done in 1958. The 1958 Survey of Consumer Finance interviewed 3,117 households across the country, oversampling higherincome families. The analysis in this chapter has reweighed the data for both income oversampling and internally correlated sampling clusters, taking advantage of the survey set commands of Stata to adjust for primary sampling units. The second survey, the Survey of Consumer Attitudes and Behavior from Spring 1961, sampled 1,363 households across the country. The Harvard-MIT data center, drawing on the Inter-University Consortium for Political and Social Research (ICPSR), made both data sets available for download as raw ASCII files converted from the original punch cards with an accompanying scanned code book. Both data sets are widely available for download through ICPSR. All data cleaning, variable encoding, and dictionary creation was done by the author. The author’s version of the data is available upon request. (Economic Behavior Program, Survey Research Center, University of Michigan, “Surveys of Consumer Attitudes and Behavior, Spring 1961,” ICPSR Study 3629; Economic Behavior Program, Survey Research Center, University of Michigan, “Survey of Consumer Finances, 1958,” ICPSR Study 3617.) All analysis was done using Intercooled Stata 9.2. The most important statistical advances made since the late 1950s, for the purposes of this analysis, are the ability to adjust for the internal correlation of primary sampling units, logistic regression, and censored normal regressions—all of which are used in this chapter, especially the first two mentioned. In terms of questions, this chapter pays far greater attention to the intersections of race, class, and location than the original published survey, which was mostly a collection of bar graphs and averages. For the less technically inclined reader, explanations of some of the statistical methods will be in the notes. For the more technically inclined reader, p-values of relevant tests and regressions have generally been put in the notes.

3. William H. Whyte, “Budgetism: Opiate of the Middle Class,” Fortune (May 1956), 133, 136–37.

4. John Lebor, “Requirements for Profitable Credit Selling,” Credit Management Year Book 1959–1960 (New York: National Retail Dry Goods Association, 1959), 12.

5. Malcolm McNair, “Changing Retail Scene and What Lies Ahead,” National Retail Merchants Association Convention Speech, January 8, 1962, Historical Collections, BAK, 12.

6. Calculating mean incomes over occupational categories in the survey, there were overlaps in the 95 percent confidence intervals. Office and factory workers earned roughly the same incomes.

7. Suburban mean of $7,983 compared to urban mean of $5,951, among those households with mortgages. The mean dollar amount for conventional mortgages was $7,046, while for federally insured mortgages it was $9,208.

8. Taking a subpopulation of suburban debtors, the regression found that the dummy for mortgage status (P > 0.000) and the income variable (P > 0.013) were significant, while race (P > 0.248) and liquid assets (P > 0.241) were not. Having a mortgage raised the indebtedness of a suburban household $571, after controlling for other factors.

9. Odds ratio 3.44 with (P > 0.01) [1.75, 6.79]. Logit regression of mortgage dummy variable on consumer debt dummy, controlling for race, home ownership, income, and liquid assets among suburban households. Income had no relationship (P > 0.129) on the odds of a suburban household borrowing.

10. Odds ratio 1.96 with (P > 0.02) [1.15, 3.34] controlling for race, income, and region.

11. Odds ratio 2.33 with (P > 0.00) [1.88, 2.89].

12. Logit regression of auto ownership dummy on debtor dummy, with odds ratio 2.60 with (P > 0.0) [1.78, 3.78] controlling for race, income, and location. Even after adjusting for suburb, race, and income, auto ownership was still a very strong predictor of indebtedness.

13. In these regressions, wealth refers to a household’s liquid assets, bonds, and savings accounts, not the total value of all assets, which was not available in the data set. For the decision to borrow, however, liquid assets matter most. The liquid asset variable was significant in the logistic regression to see if a household borrowed (P > 0.00), but not significant in the linear regression to see how much a household borrowed (P > 0.24).

14. The mean liquid assets of working-class households with debt were $1,018 and $1,611 for households without debt. For households headed by a professional, manager, or business owner, the means were $3,994 and $6,426.

15. Regression of total personal debt among suburban indebted households with income, mortgage status, race, and liquid bonds. Income was significant (P > 0.01) with a coefficient of b = 0.05 [0.012, 0.09].

16. The odds ratio was 1.51 with a (P > 0.023) with [1.061, 2.154].

17. Means of total personal debt had overlapping confidence intervals. The confidence intervals of the liquid assets of the working and professional classes also overlapped.

18. James Foree, “League Gets Alarming Data On Credit Victims,” Daily Defender, September 16, 1959, A7.

19. Ironically, after the 1968 riots, Urban League leaders would call on Congress to provide credit cards for ghetto residents as a way to prevent future unrest. See chapter 7 for a detailed discussion of the political economy of credit and ghetto riots in the 1960s. While this chapter focuses on middle-class African Americans, chapter 7 examines the plight of urban, working-class African Americans excluded from the credit systems discussed in this chapter.

20. “Negro Suburbia Is Fast Growing,” Chicago Defender, September 17, 1959, 2.

21. While I do not discuss this explicitly in the chapter, I wonder if this is one the roots of the wealth inequality between today’s white and black households. See Melvin Oliver’s Black Wealth, White Wealth: A New Perspective on Racial Inequality (New York, Routledge, 1995), for more on the importance of wealth inequality compared to income inequality today. As discussed later in the chapter, at the same income levels, African Americans always borrowed more frequently than whites and had lower wealth levels.

22. This was determined by running a series of regressions on debt and liquid assets, while controlling for location, mortgage status, marital status, and income. P-values for liquid assets in all models (P > 0.00). For whites, the model had R² = 0.12 and for whites R² = 0.41.

23. Odds ratio 5.42 with (P > 0.01) [1.44, 20.41].

24. A linear regression with a suburban debtor subpopulation shows race (P > 0.248) and liquid assets (P > 0.241) to have no relationship to the amount borrowed unlike mortgage status (P > 0.000) and income (P > 0.013).

25. Suburban dummy variable for black households with (P > 0.02). Suburban dummy variable for white households with (P > 0.15). Clearly it seems that moving to the suburbs had more a statistically meaningful effect on debt use for black households than white households.

26. Logit regression with a suburban subpopulation of debtor dummy variable with income (P > 0.118), liquid assets (P > 0.001), mortgage status (P > 0.003), and race (P > 0.004).

27. See Thomas Sugrue, The Origins of the Urban Crisis, Princeton Studies in American Politics (Princeton, NJ: Princeton University Press, 1996).

28. Pearson test of (P > 0.42) for FHA and suburban dummy variables.

29. Odds ratio 3.69 with (P > 0.02) [1.23, 11.07].

30. See, for instance, Thurgood Marshall, special counsel to the NAACP to Franklin Richards, FHA Commission, December 22, 1949, folder “Racial Restrictive Covenants 1949,” box 6, Commissioner’s Correspondence and subject file, 1938–1958, RG 31 Records of the Federal Housing Administration, NARA.

31. Shelley v. Kraemer, 334 U.S. 1 (1948).

32. Franklin Richards to Field Directors, January 10, 1950, Commissioner’s Clearance No. 1705, folder “Minority Group Housing – Field Letters”; The FHA required a form to filled out that explicitly showed that there was no such covenant in place. At the same time, however, this policy only applied to loans made after February 15, 1950, not to existing FHA-insured mortgages.

33. DeHart Hubbard to George Bremer, March 25, 1949, folder “Minority Group Housing – Financial Institutions,” box 3, Program Correspondence of the Assistant Commissioner for Operations, 1936–1956, RG 31 Records of the Federal Housing Administration, NARA; The five positions of racial relations officer was created in August 1947 to better connect the FHA and minority group associations and institutions.

34. See Catherine Willemin, “Concord Park: The Creation of an Interracial Postwar Suburb” (A.B. Thesis, Harvard University, 2007).

35. William G Weart, “U.S. Housing Drive to Aid Non-Whites,” New York Times, September 6, 1953.

36. There was a boom in postwar guides to sell to African American consumers. See, for instance, William Bell, Fifteen Million Negroes and Fifteen Billion Dollars (New York: W.K. Bell Publications, 1956), as well as the republication of the 1930s advertising classic, Paul Edwards’ The Southern Urban Negro as a Consumer (College Park, MD: McGrath Publishing Co., 1969).

37. “Negro Housing Projects: Originating and Secondary Mortgages,” box 3, Program Correspondence of the Assistant Commissioner for Operations, 1936–1956, RG 31 Records of the Federal Housing Administration, National Archives, College Park, MD; FHA to Directors of all Field Offices, “Financing Minority Group Housing Projects,” folder “Minority Group Housing – Financial Institutions,” box 3, Program Correspondence of the Assistant Commissioner for Operations, 1936–1956, RG 31 Records of the Federal Housing Administration, National Archives, College Park, MD, 1; See also Mortgage Bankers Association, “A proposed analysis of problems and experiences in mortgage financing relating to housing production for minority groups in selected communities,” folder “Minority Group Housing – Field Letters,” box 3, Program Correspondence of the Assistant Commissioner for Operations, 1936–1956, RG 31 Records of the Federal Housing Administration, National Archives, College Park, MD.

38. See Franklin Richards, FHA Commissioner, “Address before the National Association of Real Estate Brokers and the National Builders Association, Detroit, Michigan,” August 23, 1949, folder “Minority Group Housing – Field Letters,” box 3, Program Correspondence of the Assistant Commissioner for Operations, 1936–1956, RG 31 Records of the Federal Housing Administration, NARA, 1–9; Redman, July 27, 1949, folder “Minority Group Housing – Financial Institutions,” box 3, Program Correspondence of the Assistant Commissioner for Operations, 1936-56, RG 31 Records of the Federal Housing Administration, NARA; W. J. Lockwood to Directors of Field Offices, “Financing Minority Group Housing Projects,” September 14, 1949, folder “Minority Group Housing – Field Letters,” box 3, Program Correspondence of the Assistant Commissioner for Operations, 1936–1956, RG 31 Records of the Federal Housing Administration, NARA. The Lockwood letter details a long list of national and regional insurance companies bought the mortgages for such properties.

39. See for instance the discussion of North Carolina in J. P. McRae to Herbert Redman, July 25, 1949, folder “Minority Group Housing – Financial Institutions,” box 3, Program Correspondence of the Assistant Commissioner for Operations, 1936–1956, RG 31 Records of the Federal Housing Administration, NARA, 1–2.

40. Warren Lockwood to B.T. McGraw, June 23, 1948, “FHA-Insured Loans Held by Members of the National Negro Insurance Association,” folder “Minority Group Housing – Financial Institutions,” box 3, Program Correspondence of the Assistant Commissioner for Operations, 1936–1956, RG 31 Records of the Federal Housing Administration, NARA, 1–2.

41. Guy T.O. Hollyday, FHA Commissioner to J. Leonard Lewis, President NNIA, November 6, 1953, folder “Minority Group Housing – Printed Material, Speeches, Field Letters, Etc., 1940–1950,” box 4, Commissioner’s Correspondence and subject file, 1938–1958, RG 31 Records of the Federal Housing Administration, NARA, 1–2.

42. Edith Lapish to Mr. Richards, “Leading Title VI Mortgages,” September 6, 1946, “Portfolio Holdings – June 30, 1945, Insurance Companies,” folder “Mortgages Leading Institutions Holding FHA Mortgages,” box 9, Program Correspondence of the Assistant Commissioner for Operations, 1936–1956, RG 31 Records of the Federal Housing Administration, NARA. Total is for Section 203 loans for owner-occupied housing, the successor to the Title II mortgage loan program. Insurance companies accounted for 25 percent of all 203 mortgage loans.

43. B. T. McGraw to Warren Lockwood, Assistant Commissioner FHA, June 17, 1948, “FHA-Insured Loans Held by Members of the National Negro Insurance Association,” Office Memorandum, folder “Minority Group Housing – Financial Institutions,” box 3, Program Correspondence of the Assistant Commissioner for Operations, 1936–1956, RG 31 Records of the Federal Housing Administration, NARA; FHA officials saw African American insurance companies as the best opportunity to find capital for African American mortgages in the late 1940s and early 1950s. The FHA records are filled with long lists of names and companies.

44. Luigi Laurenti, “Effects of Nonwhite Purchases on Market Prices of Residences,” Appraisal Journal, (July 1952): 314–29, folder “Minority Group Housing – Field Letters,” box 3, Program Correspondence of the Assistant Commissioner for Operations, 1936–1956, RG 31 Records of the Federal Housing Administration, National Archives, College Park, MD.

45. Walter Greene, “Before National Urban League, Cleveland, Ohio,” September 2, 1952, folder “Minority Group Housing – Printed Material, Speeches, Field Letters, Etc., 1940–1950,” box 4, Commissioner’s Correspondence and subject file, 1938–1958, RG 31 Records of the Federal Housing Administration, NARA, 6.

46. Kenneth Wells to Guy T.O. Holladay, June 24, 1953, folder “Minority Group Housing – Printed Material, Speeches, Field Letters, Etc., 1940–1950,” box 4, Commissioner’s Correspondence and subject file, 1938–1958, RG 31 Records of the Federal Housing Administration, NARA.

47. P-value = 0.0001.

48. Once again, race had a p-value of > 0.586. The racial co-efficient, moreover, dropped to only a little over $500.

49. Linear regression with mortgage-having subpopulation for mortgage amount, race (P > 0.586) was not significant, and location (P > 0.006) was.

50. Pearson test for suburban dummy variable was (P > 0.42).

51. Linear regression of mortgage controlling for race (P > 0.269), location (P > 0.019), federal loan status (P > 0.003), and income (P > 0.000). Even after controlling for other factors, households that used FHA and VA loans, with their lower costs, could afford to borrow an additional $2,052 over those who did not use a federally insured loan, which was more than the difference between suburban and urban mortgages of $1,861.

52. Linear regression of mortgage controlling for federal loan status (P > 0.000) and income (P > 0.000) among black households with mortgages with an R² of 0.42.

53. Logit regression with black subpopulation of FHA dummy variable on suburban dummy variable with odds ratio .485 with (P > 0.632) [–1.57, 2.54]. The model overall had an F-test of (P > 0.63). With such a high p-value the FHA dummy did not predict suburban or urban status for African American households.

54. Computed by author from multiple response variables in the 1961 survey.

55. Timothy Wolters, “ ‘Carry Your Credit In Your Pocket’: The Early History of the Credit Card at Bank of America and Chase Manhattan,” Enterprise & Society 1 (June 2000): 315–54.

56. Ibid., 336–49.

57. National Cash Register Company, “A Bank’s ‘Charge-It’ Plan,” no. 4, April 8, 1953, Bank Information Bulletin (Dayton, OH), folder “Sep 1950–1953,” box “502.32 Open Account Installment Sales Credit – Consumer Credit,” NARA, 1.; “John C. Biggins Dies, Paterson Banker, 61,” New York Times, September 19, 1971, 66.

58. Ibid., 1.

59. Ibid., 1.

60. Ibid., 2.

61. Ibid.

62. Ibid.

63. Ibid.

64. Eight percent is much higher than the 1 to 2 percent merchant discount fees that credit card companies charge today.

65. “Merchants’ Charge Account Service is Unveiled by Franklin National,” folder “Sep 1950–1953,” box “502.32 Open Account Installment Sales Credit – Consumer Credit,” NARA, 1–4.

66. Ibid., 1.

67. Ibid., 1; “Manufacturers Trust Acquires Flatbush National Bank,” Wall Street Journal, May 11, 1946, 2; The relationship between father and son is shown in the granddaughter’s engagement announcement. “Catherine Biggins Becomes Affianced,” New York Times January 17, 1967, 38.

68. National Cash Register Company, “A Bank’s,” 2.

69. “John C. Biggins Dies.”

70. Malcolm McNair, “The American Department Store, 1920–1960: A Performance Analysis Based on the Harvard Reports,” Bureau of Business Research Bulletin no. 166 (Cambridge: Graduate School of Business Administration, Division of Research, 1963), BAK, 40. The gross margin remained fixed around 36 percent; this gross margin was also stable across sizes of stores. There was no return to scale on margins by sales volume. (Operating Results of Department and Specialty Stores in 1960, Bureau of Business Research, Bulletin no. 161 [Cambridge: Graduate School of Business Administration, Harvard University, 1916], BAK, 6.)

71. Federated Department Stores (FDS), Annual Report 1952, 8. All the annual reports in this chapter come from the Historic Corporate Reports collection in Historical Collections at Baker Library (BAK).

72. FDS, Annual Report 1955, BAK, 9.

73. May Department Stores also had a similar experience of maintaining local identity while expanding across the country. By the 1960s, these two department store chains had consolidated the bulk of the industry.

74. FDS, Annual Report 1951, 7–8; FDS, AR 1952, 8; FDS, AR 1956, 4; FDS, AR 1959, 7; FDS, AR 1964, 18.

75. FDS, AR 1951, 7.

76. Howard Abrahams, “Promoting the New Branch,” Credit Management Year Book 1956–1957 (New York: National Retail Dry Goods Association, 1956), BAK, 303.

77. Ibid., 305.

78. Ibid.

79. The sample size (N = 23) of suburban African Americans for this particular test was too small to be meaningful.

80. Ibid., 303, 305.

81. Ibid., 305.

82. Ibid.

83. Question C12, Form C, Long Interview Form Questionnaire, Survey of Consumer Attitudes and Behavior, Spring 1961.

84. Dean Ashby, “Credit Sales Promotion Ideas Which Have Paid Off,” Credit Management Year Book 1954–1955 (New York: National Retail Dry Goods Association, 1954), BAK, 85.

85. Ray Johnson, “Yes Credit Promotion Pays,” Credit Management Year Book 1954–1955 (New York: National Retail Dry Goods Association, 1954), BAK, 113.

86. Ibid.

87. Ibid.

88. Ibid.

89. Bessie Tearno, “How We Built Up Our Credit Volume,” Credit Management Year Book 1954–1955 (New York: National Retail Dry Goods Association, 1954), BAK, 217.

90. Ibid., 216.

91. Ibid., 220. Only 36 out of 16,000 accounts were higher than $120.

92. Norman Smith, “Credit Sales Promotion Ideas Which Have Paid Off,” Credit Management Year Book 1954–1955 (New York: National Retail Dry Goods Association, 1954), BAK, 78.

93. See any of the discussions from the mid-1950s in the Credit Management Year Book. Any time these issues were discussed, there were invariably audience members who denounced the expansion of credit or pointed to his store’s able track record at restraining borrowing.

94. Robert Calvert, “Where Is the Charge Account Customer?” Credit Management Year Book 1956–1957 (New York: National Retail Dry Goods Association, 1956), BAK, 247.

95. Ibid., 248.

96. George Watkins, “Planning and Installation of Martin’s Extended Chart Account,” Credit Management Year Book 1956–1957 (New York: National Retail Dry Goods Association, 1956), BAK, 102.

97. “Bad Debt Loss Survey,” Credit Management Year Book 1954–1955 (New York: National Retail Dry Goods Association, 1955), BAK, 121.

98. Kenneth Oetzel, “Credit Sales Promotion Ideas Which Have Paid Off,” Credit Management Year Book 1954–1955 (New York: National Retail Dry Goods Association, 1954), BAK, 85.

99. FDS, AR 1955, 5.

100. Herbert Landsman, “The Flexible Credit Limit Plan,” Credit Management Year Book 1956–1957 (New York: National Retail Dry Goods Association, 1956), BAK, 88.

101. Ibid.

102. Ibid., 89.

103. Ibid.

104. Watkins, “Planning,” 99.

105. Ibid., 101.

106. Ibid.

107. Landsman, “Flexible,” 94.

108. Ibid., 90.

109. Watkins, “Planning,” 103.

110. Landsman, “Flexible,” 95.

111. Race had a χ² value of (P > 0.332).

112. χ² test with (P > 0.000).

113. χ² test with (P > 0.000).

114. All customers paid the same interest and repayment of the balance. Individual interest rates for department store shopping were not yet possible. Rather than create individual interest rates, stores simply denied credit to consumers who did not earn enough income.

115. C. L. Prowse, “Leading Detroit Stores Adopt the Option Plan,” Credit Management Year Book 1958–1959 (New York: National Retail Dry Goods Association, 1958), BAK, 138; “Analysis and Evaluation of New Trends in Credit Plans – All- Purpose Revolving Accounts,” Credit Management Year Book 1958–1959 (New York: National Retail Dry Goods Association, 1958), BAK, 155; “Survey of Credit Policies,” Credit Management Year Book 1958–1959 (New York: National Retail Dry Goods Association, 1958), BAK, 164.

116. This store credit manager also remarked that a third of his 30-day balances took as long as 90 or 120 days to pay off (Prowse, “Leading Detroit Stores,” 129).

117. Charles Dicken, “Should the Credit Department Be Self-Supporting?” Credit Management Year Book 1958–1959 (New York: National Retail Dry Goods Association, 1958), BAK, 92.

118. John Gribbon, “A New Approach To Credit,” Credit Management Year Book 1961–1962 (New York: National Retail Dry Goods Association, 1961), BAK, 10.

119. Josephine Hexdall, “Welcome Mr and Mrs Charge Customer,” Credit Management Year Book 195–1957 (New York: National Retail Dry Goods Association, 1956), BAK, 59.

120. O. C. Faulkner, “Credit Sales Promotion Ideas Which Have Paid Off,” Credit Management Year Book 1956–1957 (New York: National Retail Dry Goods Association, 1956), BAK, 84.

121. Gribbon, “A New Approach to Credit,” 10.

122. Prowse, “Leading Detroit Stores,” 136.

123. Clare Prowse, “Results of Our Option Plan of Credit,” Credit Management Year Book 1959–1960 (New York: National Retail Dry Goods Association, 1959), BAK, 69.

124. Ibid., 69.

125. Dean Ashby, “Effect of Option Accounts on Consumer Buying Habits,” Credit Management Year Book 1959–1960 (New York: National Retail Dry Goods Association, 1959), BAK, 55.

126. Clare Prowse, “Results,” 69.

127. Ashby, “Effect of Option Accounts,” 55.

128. Ibid., 56.

129. Gribbon, “A New Approach to Credit,” 7.

130. Robert Lynch, “Optional Terms for Smaller Stores,” Credit Management Year Book 1960–1961 (New York: National Retail Dry Goods Association, 1960), BAK, 253.

131. Ibid., 254.

132. Ibid., 255.

133. David Bollman, “Credit Sales Promotion – Opportunity Unlimited,” Credit Management Year Book 1956–1957 (New York: National Retail Dry Goods Association, 1956), BAK, 57.

134. Ibid., 57.

135. Gribbon, “A New Approach To Credit,” 13.

136. Ibid.

137. Ibid.

138. Ibid. Surprising as it might be to the contemporary reader, Gribbon’s ideas about profit and receivables were difficult for other credit professionals to understand. Following his talk, there was an audience discussion. The many questions reveal both that the audience did not understand the larger, general principles he espoused and that they were hostile to changing their everyday business practices, even if it meant more profit. Gribbon’s paper was pronounced “provocative” by the session moderator. (“Open Forum Discussion report on Management Practices,” Credit Management Year Book 1961–1962 (New York: National Retail Dry Goods Association, 1961), BAK, 15).

139. The option plan completed reversed the habits and thinking of the revolving budget account. Compare Gribbon’s reasoning to this quote from a Wanamaker’s credit manager only five years earlier: “I would rather have a customer who is going to pay me $25 a month than a customer who is going to pay me $10 a month. Based on her ability to make those payments, the more I get the more she is open to buy” (Richard Westin, “New Techniques for Sound and Profitable Credit Selling,” Credit Management Year Book 1956–1957 (New York: National Retail Dry Goods Association, 1956), BAK, 78).

140. R. H. Bulte, “Credit Sales Promotion – The New Look,” Credit Management Year Book 1958–1959 (New York: National Retail Dry Goods Association, 1958), BAK, 95.

141. A. Leonidas Trotta, “Preface,” Credit Management Year Book 1959–1960 (New York: National Retail Dry Goods Association, 1959), BAK, v.

142. FDS, Form 10-K (1952), BAK, S–6.

143. FDS, Form 10-K (1958), BAK, S–7.

144. Ibid., S–4.

145. Lebor, “Requirements for Profitable Credit Selling,” 14–15.

146. Gribbon, “A New Approach to Credit,” 5.

147. Ibid, 6.

148. Ibid.

149. Ibid.

150. Lebor, “Requirements for Profitable Credit Selling,” 20.

151. FDS, AR 1960, 4–5.

152. Sears Roebuck Acceptance Corporation, Annual Report 1956, 3.

153. Sears, Roebuck Company (SRAC), Annual Report 1950, 3.

154. SRAC, Annual Report 1957, BAK, 2–3.

155. SRAC, Annual Report 1965, BAK, 3.

156. SRAC, Annual Report 1966, BAK.

157. This comparison was evident in a picture from the 1967 Annual Report, which showed a picture of the board in Money Market Center that had a list of the interest rates and other financial information of all the major finance companies, including SRAC (SRAC, Annual Report 1967, BAK.)

158. Edward Sullivan, “How We Solved Our Money Needs For Expanding Credit Sales and Receivables,” Credit Management Year Book 1961–1962 (New York: National Retail Dry Goods Association, 1961), BAK, 225.

159. Ibid.

160. Ibid.

161. Commercial Credit Corporation and the emergence of other national finance companies are more fully discussed in chapter 1.

162. Sullivan, “How We Solved,” 227. One reason that stores could borrow from finance companies was that finance companies did not require collateral, which typically accounted for 20 percent of the borrowed funds from banks. Though banks might charge a lower interest rate, they also tied up more capital in collateral that could not be loaned to consumers (James Newman, “A Simplified Method for Financing Retailers Accounts Receivable,” Credit Management Year Book 1961–1962 [New York: National Retail Dry Goods Association, 1961], BAK, 230).

163. Sullivan, “How We Solved,” 227.

164. Ibid.

165. Newman, “A Simplified Method,” 228.

166. Ibid., 229.

167. Ibid., 229.

168. GECC integrated the state-based finance companies setup by GE in the 1920s. See chapter 1 for more details.

169. GECC, Annual Report 1952, Historic Corporate Reports, Historical Collections, Baker Library, Harvard University, Allston, Massachusetts.

170. GECC, Annual Report 1961, 5.

171. GECC, AR 1962, 4.

172. GECC, AR 1963, 4.

173. GECC, AR 1962, 4.

174. H. A. Jaffe, “New Trends in Revolving Credit and Instalment Selling,” Credit Management Year Book 1956–1957 (New York: National Retail Dry Goods Association, 1957), BAK, 113.

175. E. O. Johnson, “New Trends in Revolving Credit and Instalment Selling,” Credit Management Year Book 1956–1957 (New York: National Retail Dry Goods Association, 1957), BAK, 113.

176. Davis, “New Trends in Revolving Credit and Instalment Selling,” 113. Strangely, the installment contract, by the end of the 1950s, had become as legally fictitious as the actually fraudulent contracts of loan sharks in the 1910s. See chapter 1 for more on loan shark contracts and their psychological use in enforcement of debts.

177. GECC, AR 1963, 5.

178. Lebor, “Requirements for Profitable Credit Selling,” 13.

179. Ibid.

180. Ibid.

181. GECC, AR 1964, 4.

182. Ibid., 6.

183. GECC, AR 1966, 3.

184. W. J. Noonan, “Customers, Credit, Computers – ‘C’s’ The Opportunity,” Credit Management Year Book 1961–1962 (New York: National Retail Dry Goods Association, 1961), BAK, 80.

185. GECC, AR 1966, 16.

186. Other programs existed like “Unicard,” which allowed consumers to use a card at multiple stores, but retailers were loath to pay the high fees to an outside firm and risk the loss of consumer loyalty. More than anything, department stores in the 1960s wanted to maintain their sales growth. Programs like Unicard threatened that and ultimately failed. Private labeling schemes, like GECC’s however, grew. (On Unicard, see Victor Brown, “What the Credit Manager Should Know About Financing Receivables?” Credit Management Year Book 1963–1964 (New York: National Retail Merchants Association, 1963), BAK, 151.

187. GECC, AR 1968, 8.

188. GECC, AR 1969, 7.

189. GECC, AR 1972, 6.

190. GECC, AR 1972, 9.

191. Lebor, “Requirements for Profitable Credit Selling,” 20.

192. George Quist, “Survey of Authorization Procedures,” Credit Management Year Book 1961–1962 (New York: National Retail Dry Goods Association, 1961), BAK, 10. This survey was not entirely representative and I think, if anything, it overstates the ability of consumers to use bank cards in the early 1960s. Seven stores of twenty-nine respondents allowed the use of “national credit cards” in their stores.

193. Computed by author from ICPSR, “Surveys of Consumer Attitudes and Behavior, Spring 1961,” ICPSR Study 3629, University of Michigan. See chapter 5 for a detailed discussion of the patterns of credit use.

194. Lebor, “Requirements for Profitable Credit Selling,” 20.

195. Timothy Wolters, “‘Carry Your Credit in Your Pocket’: The Early History of the Credit Card at Bank of America and Chase Manhattan,” Enterprise & Society 1 (June 2000): 317.

196. Overly careful readers will remember J. Andrew Painter from chapter 3, where he was involved in the formation of the first personal loan department at National City Bank and the planning of the FHA Title I loan program.

197. J. Andrew Painter, “Citibank Ready-Credit Plan,” Credit Management Year Book 1959–1960 (New York: National Retail Dry Goods Association, 1959), BAK, 83.

198. Ibid.

199. Ibid., 85.

200. Joseph Garcia, “American Express Credit Card,” Credit Management Year Book 1959–1960 (New York: National Retail Dry Goods Association, 1959), BAK, 86.

201. Robert Farrar, “Hilton’s Carte Blanche,” Credit Management Year Book 1959–1960 (New York: National Retail Dry Goods Association, 1959), BAK, 87.

202. “Stop Stewing About Saving,” Changing Times (August 1957), 16.

203. Joseph O’Mahoney, “Do Installments Peril the Economy?” New York Times, May 4, 1958, SM12.