Financing the American Dream: A Cultural History of Consumer Credit. (Reviews).

Financing the American Dream: A Cultural History of Consumer Credit. By Lendol Calder (Princeton and Oxford: Princeton University Press, 1999. xv plus 377pp. $29.95/cloth $18.95/paper).

In the best tradition of cultural history, Lendol Calder explores the fusion of materialistic and idealistic impulses within the much-heralded American Dream. Although the Dream upholds such ideals as freedom and self-fulfilment, it rests on access to the consumer commodities that are the building blocks of personal identity under capitalism. For Calder, the costly nature of these products explains the "long-standing American tradition of going into debt to bring unattainable dreams within reach" (p.290). Financing the American Dream is an institutional history of the consumer credit industry, a social history of consumers, and a cultural history of debt. It not only suggests how Americans learned to pay for goods in creative ways but explains the process by which consumer credit came to receive widespread moral sanction. By depicting how people came to "feel good" (p.10) about borrowing money and by focusing on the public debate over the morality of consumption as a way of life, Calder makes a major contribu tion to the debate over the cultural significance of American consumerism.

Skillfully placing American buying habits within the context of culture and history, Calder describes how the Victorian money management ethic distinguished between the producer debt of farmers or small business folk, and self-indulgent consumer debt. Although the latter supposedly undermined thrift and self-control, debts for middle-class commodities that increased in value (from homes secured by mortgages to reapers, sewing machines, and pianos bought on time) were considered productive and appropriate. By 1890, the nation's estimated $11 trillion in private debt was segmented along social class lines: while the urban working class turned to pawnbrokers, small-loan agencies, and marginal retailers selling furniture or clothing on the installment plan, middleclass clients patronized more respectable building and loan associations for five-year mortgages for the construction of residential homes.

Calder argues that the 'credit revolution' (p.111) of the early twentieth century made consumerism the "foremost cultural authority" (p.8) of American society. Ironically, Progressive era reformers played a major role in this transition. Seeking to democratize access to reliable sources of credit, reformers succeeded in repealing or amending state usury laws. By 1932, twenty-five states had some version of the Uniform Small Loan Law, thereby creating a legal foundation for non-profit loan societies as well as privately run 'consumer' or 'household' (p.211) finance companies. A greatly expanded credit industry now celebrated the productive nature of small loans and offered personal finance professionals as 'counselors to the consumer' (p.147). Licensed lenders reached out to as much as one-eighth of the population in the states in which they operated, with particular success among skilled workers, lower-echelon white collar employees, and women homemakers (80 percent of 1920s personal loans were signed over to married women whose credit was based on their husbands' earning power).

After 1915, many personal finance loans enabled debtors to pay off retail installment plan obligations. Concentrated in clothing, hardware, appliance, jewelry, and department store outlets as well as the auto industry, the time payment system accounted for some two-thirds or more of durable goods sales in the 1920s. "Installment credit generated a psychology of affluence that contributed immensely to the spirit of the Roaring Twenties" (p.206), concludes Calder. Yet critics warned that the 1930s depression would provide the credit system's ultimate test. Surprisingly, then, that debt actually declined in hard times as both buyers and lenders became more conservative. As finance companies often extended payment deadlines to avoid defaulted contracts, borrowers continued to use cash loans to pay off installment obligations. The credit system further stabilized when the New Deal government loaned funds to farmers and homeowners and insured mortgages and bank deposits. By 1940, strengthened commercial banks had b ecome the largest lenders of consumer credit as a result of extensive dealings with affluent white collar and professional borrowers.

Despite its spectacular role in fueling twentieth century prosperity, consumer credit had an uphill battle in winning approval from many traditionally oriented social workers, economists, clergy, and newspaper editors, as well as old-line bankers and retailers. Accusing such elitists of adhering to the myth of lost economic virtue, Calder notes how adversaries repeatedly predicted that instant credit would destroy the nineteenth century Protestant ethic of hard work and manly self-reliance and promote instant gratification and unbridled hedonism among the masses. Consequently, early versions of the installment plan were dismissed as the folly of the improvident poor, immigrants, and women. It is in response to such criticism that Financing the American Dream asserts its strongest thesis.

Calder argues that low rates of loan delinquency and default demonstrate that prudence, saving, and industry survived in the world of installment buying and household credit. Strict scheduling of payments, he contends, imposed disciplined budgeting and financial management. "The principal significance of consumer credit is the way it regulates and ultimately limits the hedonistic qualities of consumer culture" (p.294), concludes the author. By encouraging Americans to be disciplined workers as welt as liberated consumers, the credit system served as an "integrating force" (p.28) that eased the passage from a producerist to a consumerist society.

Calder has effectively built upon the work of cultural historian Jackson Lears by adding to our understanding of the relationship between consumerism and moral traditionalism, although the point seems to be driven home excessively throughout the book. There are also a few factual errors to report: George W. Norris was a colorful U.S. senator from Nebraska, not Governor of the Federal Reserve; Jesse Jones had served as head of the Reconstruction Finance Corporation, not the National Recovery Administration; the author of The Morality of Spending is Daniel, not David, Horowitz. No matter. Calder has given us an important contribution to American social and cultural history that places consumerism in the rich context it deserves. Students of the subject will be compelled to consider this well-reasoned and lively book.