Charge account banking: a study of financial innovation in the 1950s

Vanatta, S. H. (2018) Charge account banking: a study of financial innovation in the 1950s. Enterprise and Society, 19(2), pp. 352-390. (doi: 10.1017/eso.2017.42)

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This study takes a step toward reconceptualizing the process of financialization, the reorientation of the US economy toward financial services that scholars view as a product of the 1970s economic shocks and subsequent regulatory liberalization. Instead, I argue that financialization was equally dependent on the gradual development of new financial technologies and business practices within the political and regulatory environment of the early postwar era. I do so by examining a cohort of small U.S. banks, which in the early 1950s began experimenting with a novel form of consumer credit: the charge account credit service. These plans allowed consumers to shop at a variety of local merchants using a single bank charge card. Bankers, though, developed charge account plans not as a conduit for consumer lending but as a business service, which enabled their small-merchant customers to compete with the credit plans offered by expanding department stores. In this way, charge account banking conformed with the 1950s political economy of finance, in which commercial bankers primarily lent to businesses and were still wary of consumer credit. Although they operated differently than the credit cards consumers know today, charge account banking plans were still a necessary first step toward this later financial technology, paving the way for commercial bankers to invest in unsecured card-based credit in the decades that followed.

Item Type:Articles
Glasgow Author(s) Enlighten ID:Vanatta, Dr Sean
Authors: Vanatta, S. H.
Subjects:E History America > E151 United States (General)
H Social Sciences > HG Finance
College/School:College of Social Sciences > School of Social and Political Sciences
Journal Name:Enterprise and Society
Publisher:Cambridge University Press
ISSN (Online):1467-2235
Published Online:21 March 2018
Copyright Holders:Copyright © 2018 The Author
First Published:First published in Enterprise and Society 19(2): 352-390
Publisher Policy:Reproduced in accordance with the publisher copyright policy

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