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Financing the American Dream

Financing the American Dream: A Cultural History of Consumer Credit

Lendol Calder
Copyright Date: 1999
Pages: 400
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  • Book Info
    Financing the American Dream
    Book Description:

    Once there was a golden age of American thrift, when citizens lived sensibly within their means and worked hard to stay out of debt. The growing availability of credit in this century, however, has brought those days to an end--undermining traditional moral virtues such as prudence, diligence, and the delay of gratification while encouraging reckless consumerism. Or so we commonly believe. In this engaging and thought-provoking book, Lendol Calder shows that this conception of the past is in fact a myth.

    Calder presents the first book-length social and cultural history of the rise of consumer credit in America. He focuses on the years between 1890 and 1940, when the legal, institutional, and moral bases of today's consumer credit were established, and in an epilogue takes the story up to the present. He draws on a wide variety of sources--including personal diaries and letters, government and business records, newspapers, advertisements, movies, and the words of such figures as Benjamin Franklin, Mark Twain, and P. T. Barnum--to show that debt has always been with us. He vigorously challenges the idea that consumer credit has eroded traditional values. Instead, he argues, monthly payments have imposed strict, externally reinforced disciplines on consumers, making the culture of consumption less a playground for hedonists than an extension of what Max Weber called the "iron cage" of disciplined rationality and hard work.

    Throughout, Calder keeps in clear view the human face of credit relations. He re-creates the Dickensian world of nineteenth-century pawnbrokers, takes us into the dingy backstairs offices of loan sharks, into small-town shops and New York department stores, and explains who resorted to which types of credit and why. He also traces the evolving moral status of consumer credit, showing how it changed from a widespread but morally dubious practice into an almost universal and generally accepted practice by World War II. Combining clear, rigorous arguments with a colorful, narrative style, Financing the American Dream will attract a wide range of academic and general readers and change how we understand one of the most important and overlooked aspects of American social and economic life.

    eISBN: 978-1-4008-2283-6
    Subjects: History

Table of Contents

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  1. Front Matter
    (pp. i-viii)
  2. Table of Contents
    (pp. ix-xii)
  3. Acknowledgments
    (pp. xiii-2)
    (pp. 3-34)

    The american dream is a puzzle, both for those who study it and for those who pursue it.

    “What would you say is the ‘American Dream’?” writes a man to “Ask Marilyn,” a syndicated newspaper column featuring riddles, brainteasers, and philosophical conundrums. Who better to ask than the author of “Ask Marilyn”? Listed in theGuinness Book of World RecordsHall of Fame for “Highest IQ,” Marilyn vos Savant slices Gordian knots for a living. “Today’s American Dream,” she replies, “includes a house in the suburbs with a backyard for the kids to play in, a patio for barbecues, a...


    • CHAPTER 1 Beautiful Credit! The Foundation of Modern Society
      (pp. 37-73)

      Consumer credit is an invention of the early twentieth century, but borrowing and lending are not. Before there were loan offices and credit unions, before there were charge cards and “easy payment plans,” what did people do when they needed things or simply wanted things but lacked money to pay for them?

      It is a mistake to think they always saved up for the things they wanted, or did without. We remember nineteenth-century Americans as living in a golden age of thrift, savings, and economic self-discipline. But humorists of the time knew better. Charles Farrar Browne, otherwise known as Artemus...

    • CHAPTER 2 Debt in the Victorian Money Management Ethic
      (pp. 74-108)

      Debt is an economic concept. It is also a moral state. To Americans of the nineteenth and early twentieth centuries, the moral nature of debt—involving matters of trust, fidelity to promises, and the balancing of desires with prudence—loomed at least as large as the economics of borrowed money. For this reason, before exploring the rise of installment buying and borrowing, it will be helpful to first map out the moral topography of money, credit, and debt in the years preceding the credit revolution. The results are surprising and explain a lot. Contrary to stereotypes, nineteenth-century Americans did not...


    • CHAPTER 3 Small-Loan Lending and the Rise of the Personal Finance Company
      (pp. 111-155)

      In 1930, the National Forensic League topic for high school debaters was “Resolved: That installment buying of personal property as now practiced in the United States is both socially and economically desirable.”¹ That high schoolers across the nation were debating the advantages and disadvantages of “consumptive” credit was but one sign of a transformation taking place in household financial management, changes that debaters on both sides of the resolution termed a “credit revolution.” It was a revolution involving many kinds of lenders, but retailers and small-loan lenders led the way. Both helped to make installment lending for consumption, so firmly...

    • CHAPTER 4 Hard Payments: The Rise of Installment Selling
      (pp. 156-208)

      Retail installment credit developed along a different trajectory than small-loan lending. In fact, the motivation and consequence for one were very nearly the inverse of the other. The lenders who built up the personal finance business were philosophically opposed to consumerism, but the financial service they provided became an important component of consumer culture. By contrast, the debt merchants who built up installment selling were proud to consider themselves founders of a mass-consumption society. But their method of credit enforced financial disciplines on consumers that were no less effective than the ideals of the Victorian money management ethic.

      The installment...


    • CHAPTER 5 From Consumptive Credit to Consumer Credit
      (pp. 211-261)

      In the United States, credit for consumers was twice invented. It was invented the first time between 1910 and 1925, when licensed lenders and enterprising retailers made installment financing available to millions of credit-hungry consumers. But in the mid-1920s their initial success at bringing an entirely new credit system into being was soured by a crisis of legitimacy. As debt levels rose, so did public anxiety over what was disparagingly termed “consumptive” credit. A loud chorus of critics alleged that the installment plan was a grave threat to public morals and a harbinger of economic catastrophe. Fierce opposition to the...

    • CHAPTER 6 Consumer Credit in the Great Depression
      (pp. 262-290)

      The Great Depression put consumer credit to a decisive test. The Depression tested the entire American economic system, putting corporate capitalism on trial until its capacities were proved during the prosperous years of wartime production. But unlike the overall economy, consumer credit did not need a war to save it. The 1930s were prosperous years for consumer credit agencies. They prospered not by lending to the unemployed and destitute, but by expanding services to people who were fortunate enough to hold on to their jobs. Thus, during the bleak years of the Great Depression the logic and legitimacy of consumer...

  8. Epilogue
    (pp. 291-304)

    In 1927, E.R.A. Seligman predicted—correctly—that “consumers’ credit” had “come to stay.” Knowing many would be dismayed by his prediction, he offered a consoling thought. “Beef-steaks and eggs,” he reassured readers, “will probably never be sold on installments.”¹ Seligman was a good forecaster, but not a perfect one.

    Today, a half century after the credit revolution, not only can steak and eggs be purchased on the installment plan, but so can every item found in a supermarket—from motor oil to comic books, from asparagus to zucchini. And this is not the half of it. The significance of consumer...

  9. Notes
    (pp. 305-364)
  10. Index
    (pp. 365-377)