Charge It!

Financing the American Dream: A Cultural History of Consumer Credit, by Lendol Calder, Princeton, N.J.: Princeton University Press, 374 pages, $29.95

Nothing so warms the heart of a contrarian as the self-evident falsity of a time-tested bromide. Take, for instance, "You can't judge a book by its cover." The book in hand is Financing the American Dream: A Cultural History of Consumer Credit, by Lendol Calder, and, although it is a revision of a doctoral dissertation, it reads like a work of seasoned scholarship. In fact, the dissertationness is a help, since it leads the common reader carefully through the modern history of consumer debt, showing how the concept of borrowing figures not just in economic theory but in popular culture.

The cover really does tell us what Financing the American Dream is about: the intimate and often distressing relationship between debt and dreaming, between anxiety and desire. Contrary to those who piously and ahistorically rail against consumer debt as a modern fall from grace, Calder takes a much more nuanced and interesting view, one informed by the tension between Puritan restraint on the one hand and capitalist enthusiasm on the other. Most refreshingly, Calder is able to bracket moral judgment, thereby letting his story of American dreaming unfold.

As he says early on, "In the beginning of my research, I...subscribed to the two key notions that make up the myth [of lost economic virtue]: first, that before consumer credit people rarely went into debt and always lived within their means; and second, that consumer credit destabilized traditional moral values by making it easier for people to live lives devoted to instant gratification and consumer hedonism. But the more I learned about the history of consumer credit and its effects on personal money management, the harder it became to accept the myth's central presumptions."

Here's what his book's cover - a painting that originally appeared as the August 15, 1959, cover of The Saturday Evening Post - looks like: In the foreground of an evening scene by a lake are two young lovers. A brilliant full moon casts an eerie shade of blue light. The youngsters are recumbent in the crook of a magical tree that has a vine of starry moss creeping up into the heavens. The lovers are looking up into those heavens.

Let's call them Missy and Buck or, if you prefer, Adam and Eve. Beside Missy on the ground are her white gloves and, interestingly, her purse. She looks rather like Debbie Reynolds of the Tammy movies, and her eyes are now dreamily shut in reverie. Presumably she's already seen what is between her and the moon. Next to her sits her beau, himself looking a bit like Tab Hunter. Earnest, crew-cut, paying attention, he is still focused on what is in the sky.

And well he should be. For in the night sky, drawn as if they were the outlines of constellations, are objects that we still easily recognize. In pagan times the sky might have been filled with the :imaginary connect-the-star images of Leo the Lion or the Big Dipper, and in the Renaissance these heavens might have been peopled with Christian saints and divinities. But in the modern world, the heavens are composed mostly of machine-made stuff.

Let me itemize these heavenly objects, because they are still at the center of American dream life. Right under the moon is a split-level house with a two-car garage. Off to the right are two cars - one looks like a Jaguar coupe, and the other is a wood-paneled station wagon. To the left of the house is the swimming pool, complete with deck chairs, diving board, and floating toys. Moving counterclockwise are Buck's future do-it-yourself tools: a drill press and a power drill. Then Missy's stuff: a side-by-side refrigerator/freezer, a washer-dryer combo, electric stove, Toastmaster toaster, Hoover portable vacuum, electric rotisserie, portable iron, electric percolator, electric frying pan, portable mixer.

And then some family stuff: window air conditioner, portable radio, television with rabbit ears, and a stereo record player in a console. In the upper right quadrant are the kids, Bucky and Missy junior, respectively doing their things. He's catching a baseball. She's playing the piano. Next to them are the two family dogs sniffing each other. Finally, there's the family maid, wearing an apron and little hat, pushing a third child in a perambulator.

Heaven on earth? Or materialistic blasphemy?

Readers of The Saturday Evening Post 40 years ago must have been a little concerned by this Edenic image. For at one level this is a sacrilegious vision. An unnamed editor even took time to note that this aerial view, painted by Constantin Alajalov, an emigre from Russia, had originally been planned to depict "castles in air." But the painter changed his mind, the editor explains, not out of "cynicism" but because it "takes as much magic to create a two-car domicile as it does to whip up an air castle."

All it takes to make this scene contemporary is to freshen the inventory. In the update, the split-level is now in a gated community, the cars are an SUV and a Beemer, the pool is covered and heated, the fridge a Sub Zero, the stove a Vulcan, the rotisserie a stainless-steel Weber. There's a big-screen TV and well - let's face it, you know the rest. If you don't, just realize that The Saturday Evening Post, that vade mecum of middle-class dreaming, has been replaced by House & Garden, Architectural Digest, and, heaven forbid, the Robb Report.

Now to really get the symmetries in place, remember that when this cover first appeared, economist John Kenneth Galbraith was raising the war cry of "overconsumption" in The Affluent Society. Recall that the tail fin of the 1958 Cadillac - before it became a work of art showcased at the Museum of Modern Art - was derided as an example of consumptive profligacy. In our own day, Juliet Schor alerts us to the dangerous habits of Buck and Missy in The Overspent American: Why We Want What We Don't Need and Robert Frank even supplies the antidote (more taxes) in Luxury Fever: Why Money Fails to Satisfy in an Era of Excess. (See "Purchase Disorder," June.)

This heavenly vision, this American Dream, must be restrained, say such commentators. After all, Missy and Buck can't really want - ugh! - such vulgar things. These things are not necessities, say the descendants of Thorstein Veblen via Galbraith; they are merely unneeded "luxuries." To such well-cosseted and well-remunerated academic critics, Missy and Buck can do very well with a rusted-out Volvo, a used Kenmore, no TV, and some sensible tie-up shoes. As important, Missy and Buck should never go into debt in order to get this kind of stuff.

Indeed, puritanical economists such as Schor and Frank love to speak of the almost $2 trillion of consumer debt flowing up into the heavens (or down the drain), while neglecting to tell you that the real explosion has been precisely in the variety of things that can be bought on credit (almost everything), the new and efficient means of using credit (the card), and, especially, the vast expansion of people who are now offered credit (the young and the lower classes).

Calder focuses precisely on such developments and how they have come to shape our times. The rise of consumer credit is a fascinating story because one gets a chance to observe human desire equilibrate between difficult choices: spend/save, now/later, have/want, and especially luxury/necessity. Although from time to time people are duped into debt, more often consumer debt results from an often crafty, often intelligent, navigation between these polarities. It is, in Calder's felicitous term, "disciplined hedonism," or what used to be called "budgetism."

Of course, that's not the view from the shame-on-you wing of academia, which sees consumer debt as a great snake about to poison us all. But in point of fact, consumer debt has been with us for a long time; we just haven't seen it on monthly statements. In the early part of this century, for instance, this kind of debt was held inside families. As Calder says, America has always been awash in red ink. And, interestingly enough, well over 95 percent of consumer debt is not just repaid but promptly repaid. In fact, given the choice of holding corporate debt or consumer debt, you'd be much better off lending to consumers.

Our language carries our judgment and, as Calder notes, the language of consumer debt comes out of Victorian moral pieties - hence the "myth of lost economic virtue." Nowhere is this anxiety better seen than in the 1920s, as the syntax of individual debt was rejiggered in more positive terms.

A central figure in articulating the linguistic changes was the economist E.R.A. Seligman, whose groundbreaking The Economics of Installment Selling revolutionized how we calibrated debt in words. Seligman recast what used to be called consumptive debtors and consumptive lenders (phrases fraught with tubercular overtones) as productive debt and productive credit. Essentially, he argued, if you were going to buy a sewing machine, or a car, or especially a house, then you were going to have to get close to the demonic snake of debt. The only real question was how venomous the snake should be.

Simon Patten, who went on to found the University of Pennsylvania's Wharton School, showed that consumption need not be onerous and that a sense of controlled hedonism is healthy for individuals as well as markets. Veblen, it turned out, had told only half the story: Sometimes consumption is a path to satisfaction. Even more important, the inability to consume is an almost certain path to unhappiness.

What Seligman, Patten, and others did, in modern parlance, was to show that terms such as luxury, saving, thrift, necessity, and the rest were social constructs and that they could be redefined in all sorts of ways. What would happen, for instance, if you called debt consumer's credit and aligned it with the morally acceptable producer's credit? Seligman knew full well that this was "just" semantics, but he also knew that having the machine-made thing was becoming central to the creation of self.

There is, to be sure, a crucial difference between "buy now, pay later" and "pay as you use." There is wise debt and foolish debt. In fact, Seligman argued that you can actually view some debt as a kind of savings. "The ultimate aim of all economic activity," he argued, "was the 'production' of satisfactions." Debt, he pointed out, was often an efficient shortcut to satisfaction. (Try buying a house in cash sometime.)

This is Puritan heresy, of course, but capitalist truth. Let's return to the cover art and ponder an irony worthy of note - and one lost on those who dislike "luxuries." These things are within reach of Missy and Buck not because of their willingness to go into debt in order to have them but because of the willingness of others to do it first.

Take any of those heavenly objects - the washer/dryer, for instance. At first, this object was obtainable only by the rich. All you have to do is look at early advertising and you will see that the machinery is positioned as something the maid can use not for herself but for her employer. Thanks to mass production and mass marketing, unit costs decrease and the retail price falls. Eventually, Missy and Buck can get in on the act. They may have to borrow to do it but, if they do, the price may go lower still. Those kids of theirs - the ones currently playing baseball and the piano and being pushed in the pram - will pay even less for even better versions. (See "Buying Time," August/September 1998.)

This is a story, of course, not told by the thrift-minded critics. There is a weird kind of welfare system at work in the heart of a market economy. Name the current "necessity" - indoor plumbing, telephone, refrigeration, automobile, and especially the single-family house itself - and you will see that not only was it introduced as a luxury item, but that it was often financed by - aargh! - that Janus-faced god, consumer debt.

Since we usually are treated to only the bad side of that deity, Lendol Calder is to be commended for showing us the other side - the side that, more often than not, has made Missy and Buck's dream possible. The myth that consumer debt is evil is as suspect as the bromide that you can't judge a book by its cover.

James B. Twitchell ([e-mail]) is a professor of English at the University of Florida and author of Lead Us Into Temptation: The Triumph of American Materialism (Columbia University Press).