Before the twentieth century, personal debt resided on the fringes of the American economy, the province of small-time criminals and struggling merchants. By the end of the century, however, the most profitable corporations and banks in the country lent money to millions of American debtors. How did this happen? The first book to follow the history of personal debt in modern America, Debtor Nation traces the evolution of debt over the course of the twentieth century, following its transformation from fringe to mainstream--thanks to federal policy, financial innovation, and retail competition.
How did banks begin making personal loans to consumers during the Great Depression? Why did the government invent mortgage-backed securities? Why was all consumer credit, not just mortgages, tax deductible until 1986? Who invented the credit card? Examining the intersection of government and business in everyday life, Louis Hyman takes the reader behind the scenes of the institutions that made modern lending possible: the halls of Congress, the boardrooms of multinationals, and the back rooms of loan sharks. America's newfound indebtedness resulted not from a culture in decline, but from changes in the larger structure of American capitalism that were created, in part, by the choices of the powerful--choices that made lending money to facilitate consumption more profitable than lending to invest in expanded production.
From the origins of car financing to the creation of subprime lending, Debtor Nation presents a nuanced history of consumer credit practices in the United States and shows how little loans became big business.
Louis Hyman is assistant professor of history at the ILR School of Cornell University.
"[I]ncredibly timely."--Diane Coyle, The Enlightened Economist blog
"[Debtor Nation] does a splendid job unpacking the origins and evolution of credit and debt in the US, an effort that should give news consumers a new and useful perspective on the American consumer. . . . Hyman tells the story of America's debt obsession engagingly and without an overabundance of jargon."--Asa Fitch, The National
"As an elegantly crafted historical analysis of how consumer credit grew to a colossus, Debtor Nation is compelling reading. As a well-documented financial analysis, Debtor Nation exposes the weak underside of lenders' balance sheets. Legislators should read it. Lobbyists for banks and other lenders may not be able to ignore it."--Andrew Allentuck, Financial Post
"Beautifully written, painstakingly documented, and altogether persuasive, the book provides a comprehensive look at the history of consumer debt in the U.S. . . . [Debtor Nation] is a must read for anyone who wants to understand the modern credit system in the U.S. It manages to weave together a long history of developments within America's credit markets in a narrative that is both fascinating and frightening."--Choice
"Hyman has written an insightful book about the evolution of U.S. credit markets. Debtor Nation is particularly relevant given the recent financial crisis and after reading it, it is clear that a complete story of the crisis must begin decades earlier. I recommend this book to anyone wanting to know more about U.S. credit markets, or about how the U.S. became so dependent on debt."--Katharine L. Shester, EH.net
Table of Contents:
List of Illustrations ix
An Introduction to the History of Debt 1
Chapter One: Making Credit Modern: The Origins of the Debt Infrastructure in the 1920s 10
Chapter Two: Debt and Recovery: New Deal Housing Policy and the Making of National Mortgage Markets 45
Chapter Three: How Commercial Bankers Discovered Consumer Credit: The Federal Housing Administration and Personal Loan Departments, 1934-1938 73
Chapter Four: War and Credit: Government Regulation and Changing Credit Practices 98
Chapter Five: Postwar Consumer Credit: Borrowing for Prosperity 132
Chapter Six: Legitimating the Credit Infrastructure: Race, Gender, and Credit Access 173
Chapter Seven: Securing Debt in an Insecure World: Credit Cards and Capital Markets 220
Epilogue: Debt as Choice, Debt as Structure 281