A Culture of Credit

A Culture of Credit

Rowena Olegario
Copyright Date: 2006
Published by: Harvard University Press
Stable URL: http://www.jstor.org/stable/j.ctt13x0hqp
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  • Book Info
    A Culture of Credit
    Book Description:

    In the growing and dynamic economy of nineteenth-century America, businesses sold vast quantities of goods to one another, mostly on credit. This book explains how business people solved the problem of whom to trust--how they determined who was deserving of credit, and for how much. Rowena Olegario traces the way resistance, mutual suspicion, skepticism, and legal challenges were overcome in the relentless quest to make information on business borrowers more accurate and available.

    eISBN: 978-0-674-04163-9
    Subjects: Economics, History
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Table of Contents

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  1. Front Matter (pp. i-viii)
  2. Table of Contents (pp. ix-xii)
  3. Introduction (pp. 1-12)

    This book is a history of how creditworthiness was determined and communicated in the United States from the 1830s to the 1920s: that is, how what is now called “transparency” in credit transactions became a vital element of American business culture. I am concerned here primarily with mercantile credit, offered by wholesalers to retailers throughout the country. Mercantile credit was employed to move goods to and between distributors: from manufacturers to wholesale middlemen—importers, jobbers, factors, commission merchants, and the like—and from these middlemen to retailers. The book is much less concerned with bank or consumer credit.

    I begin...

  4. 1 Mercantile Credit in Britain and America, 1700–1860 (pp. 13-35)

    Daniel Defoe—prolific pamphleteer, inventor of the English novel, and a pioneer of modern journalism—was also a sometime merchant and twice a bankrupt. To the end of his life, Defoe was plagued by debt. YetThe Complete English Tradesman(a manual he wrote in his sixties, just after the novels—Robinson Crusoe, Moll Flanders, andRoxana—for which he is remembered), contained one of the first sustained justifications of mercantile credit. InThe Complete English Tradesman, Defoe outlined the critical role credit played in the economic and moral development of Great Britain.¹

    Writing in the decades after the Glorious...

  5. 2 A “System of Espionage”: The Origins of the Credit-Reporting Firm (pp. 36-79)

    In 1852, theLondon Timestook note of a “novel system of protection” that had appeared in the United States. The system, said theTimes, was the result of “the peculiar position of the traders in the Union, their go-ahead spirit of speculation, and the wide extent of their commercial transactions.” Even the name of the new organizations, “mercantile agency,” had a peculiarly American ring; to English ears the term referred not to a credit-reporting agency, which was unknown in England, but to a merchandise broker or factor.¹ “The importance of such a system in an extensive country,” the article...

  6. 3 Character, Capacity, Capital: How to Be Creditworthy (pp. 80-118)

    As capitalist values spread in the United States and more people became drawn into the credit economy, outward appearance, or “reputation,” took on extraordinary significance. So, too, did the anxiety that appearances could be manipulated: “Reputation, rather than character—toseem, rather thanto be,” fumed theDaily Illinois State Journalin 1856, “has become the ultimate aim of too many in all departments of business and professional life.”¹ Americans sensed that the need to cultivate a good business reputation led to new levels of hypocrisy, making it difficult to distinguish “seeming” from “being.” Business writers, however, continued to insist...

  7. 4 Jewish Merchants and the Struggle over Transparency (pp. 119-138)

    Mid-nineteenth century Americans found much to respect about Jewish ways of doing business. Jewish merchants were perceived to be thrifty, orderly, “wide-awake” go-getters in a country that had come to embrace the values of the market and the ideal of the self-made man. American elites could afford to be indulgent. The number of Jews in the United States was small, and they were deemed less threatening than were the “disorderly” and “intemperate” Irish (and to a lesser extent Germans) who emigrated to the United States in large numbers beginning in the 1840s. The absence in Judaism of a central political-religious...

  8. 5 Growth, Competition, Legitimacy: Credit Reporting in the Late Nineteenth Century (pp. 139-173)

    The Civil War placed intense pressure on the credit-reporting industry. John Bradstreet died during the war, and his son Milton assumed management of the agency. Already struggling, the company was hit hard by its founder’s death. R. G. Dun, too, saw its profits slide precipitously.

    After the war, both firms participated in the nation’s general business recovery and steadily increased their dominance of the industry. By around 1880, R. G. Dun and the Bradstreet agency were a clear duopoly in the field of national (as opposed to local or trade-specific) credit reporting. Throughout the postwar decades, the credit-reporting industry as...

  9. 6 From Competition to Cooperation: The Birth of the Credit Man, 1890–1920 (pp. 174-200)

    The birth of the “credit man” was intimately tied to the appearance of the modern business corporation. During the last two decades of the nineteenth century, these new organizations began to overshadow the traditional, single-unit firms that had dominated earlier. A new class of professionals—urban, middle class, technically oriented, and committed to the ideals of efficiency—emerged to take advantage of the opportunities corporations offered. Corporate managers assumed the function of allocating resources throughout the economy, a role that previously had been largely the reserve of market and price mechanisms. They made the critical decisions affecting the flows of...

  10. Epilogue: Business Credit Reporting in the Twenty-First Century (pp. 201-208)

    The use of trade credit in the United States continued on a massive scale: at the end of the twentieth century, it constituted the single largest source of business financing, exceeding even the volume of bank loans.¹ The growing magnitude of trade credit could be seen in the Federal Reserve’s flow of funds report, which compiled aggregate statistics on trade payables (the amount owed by businesses to other businesses). As of the last quarter of 2005, receivables outstanding for nonfarm, nonfinancial corporate businesses was a torrential $2.0 trillion, only slightly smaller than the $2.2 trillion of household consumer debt outstanding...

  11. Notes (pp. 211-268)
  12. Index (pp. 269-274)

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