12. Americans didn’t buy on credit in the 1950s
Other than mortgages on homes and car loans, most Americans didn’t borrow money during the 1950s, according to some. Instead, they lived within their means, saving to purchase large items rather than charging them as they did in later years. This assertion denies the fact that most merchants offered credit to their well-known customers, and goods were often charged to accounts. During the 1950s, the credit card, backed by large banks, appeared to challenge private accounts for services. Diner’s Club made its first appearance in 1950 in New York. In 1958 American Express began offering cards for the purchase of services and goods, though accounts had to be fully settled monthly. Revolving credit was not offered until 1959 when Bank of America offered its BankAmericard, the predecessor of today’s VISA card. Buying on credit became an American habit, and personal savings rates had dropped substantially.
In 1952, responding to rising inflation rates, the federal government imposed price ceilings on some items and products, hoping to quell the surge in demand for them. The Federal Reserve Board placed more restrictive controls on member banks, requiring higher percentages of deposits against loans to control available credit. The banks responded by raising interest rates for borrowers. The 1950s are often recalled as a time of economic boom in the United States. In fact, after the government removed price controls in 1953, the economy slid into a recession, which though relatively mild nonetheless lasted through early 1955. By then the American habit of buying on credit was thoroughly established and has expanded ever since.
