Ending Discrimination, Legitimating Debt: The Political Economy of Race, Gender, and Credit Access in the 1960s and 1970s

Credit and Prosperity

Today, in the aftermath of the subprime crisis, there is a foreboding sense that it is too easy for Americans to borrow. Living beyond our means on our cards and our mortgages, Americans borrowed at an unsustainable pace, and what put us here, the logic goes, was the unfortunate collision of lenders' greed and borrower's cupidity. Yet free-for-all borrowing defined another moment's economy as well, but without the ill consequences: the postwar period. After World War II, cheap credit underpinned the suburban prosperity, through government-insured loans, auto financing, and even department store Charga-Plates. Low-cost credit networks for the middle class, and especially for the suburbs, made all forms of borrowing economical and easy. Capital flowed efficiently from institutional investors through financial intermediaries into the waiting hands of borrowers. This easy credit intertwined inextricably with what economists have called the postwar "golden age of capitalism."¹ For those with access to this bountiful credit, American Dreams could be readily turned into an American reality.

For those excluded from this credit system, however, consumer life proved much more challenging. Though middle-class white people, particularly men, had ready access to many sorts of credit, low-income African-Americans and women of all classes and races had far greater difficulty borrowing. Home financing was impossible to find or extremely expensive. Urban retailers, unable to resell their customers' debts, charged higher prices both for cash and for credit purchases. Divorced and married white women also found themselves unable to get credit—unless they got their husband's permission. Credit flowed easily through channels made intentionally and unintentionally for married white men, creating for them a lush world of consumption, but for those outside, only a desert.

From the viewpoint of federal policymakers, the very success of credit in creating the postwar suburban prosperity proved the ability of credit to transform economic life. Confronted by African-American urban riots and by organized feminist lobbying, politicians came to agree that widening credit access would help redress economic inequalities of both race and gender. Despite noble hopes, the solutions to ending discrimination, while effective in the short run, proved unsuccessful in the long run at ameliorating racial and gender economic inequality, and only served to further entrench racial and gender discrimination in a more indirect way. By the 1970s, consumer credit, legitimated as fair through federal policy, grew to an unprecedented volume and creditors extended it, in the name of consumer equality, to all Americans with uncertain consequences for the economic future of the United States.

By the mid-1960s, a two-tier credit system had emerged in the United States. The practices, technologies, and assumptions embedded in the credit practices of affluent and poor consumers could not have been more divergent. For middle-class Americans, credit had become an entitlement. Rather than a privilege, it was a right tightly interwoven with suburban material culture and everyday middle-class shopping habits. Homebuyers borrowed their mortgages, financed their cars, and charged their clothes. To be denied credit went beyond an economic inconvenience; credit access cut to the core of what it meant to be an affluent responsible adult in postwar America.

Even as poor Americans evinced consumer desires of the 1960s, their credit experiences remained more akin to the world of the 1920s. For poor African-Americans in the cities, in particular, credit relations had toxically stagnated. Ghetto retailers kept their accounts in leather-bound ledgers and collected payments door-to-door every week, rather than on mainframes that billed automatically like suburban retailers. Credit cards were nonexistent. Mortgages from banks were hard to come by.² Less transparent and more prone to hucksterism, urban credit relations seemed to exploit poor consumers' limited geographical mobility, meager financial resources, and fear of impersonal institutions.

Affluent white women, despite their greater access to retailers, confronted inequalities in credit as well. In a world of retail setup for men or dependent married women, working married and divorced women struggled to acquire independent credit access...