John D. Rockefeller and his family received consumer credit ratings like everyone else. Their names and ratings appeared beside those of fellow citizens, as shown here in The Credit Rating Book for Cleveland, 1909.
one of the most powerful surveillance institutions in American life, yet we know almost nothing about it. The industry is currently dominated by three major bureaus— Equifax, Experian and TransUnion. Together these private firms track the movements, personal histories and financial behavior of nearly all adult Americans.
Until the late 1960s, when the reporting industry suddenly became a lightning rod in debates over database surveillance and privacy, credit bureaus worked in quiet obscurity. They seemed to come from nowhere during the late 20th century and to exemplify the frightening new realities of computerized surveillance. Yet many of these bureaus have been around since the 1920s or earlier. In fact, two of the nation’ s leading bureaus, Equifax and Experian, have roots dating to the 1890s.
The consumer credit bureau was a vital information infrastructure upon which American consumer capitalism was built. These surveillance systems supported new consumer lending and financing industries that emerged during the first half of the 20th century, as automobile makers, department stores, mortgage companies and banks learned how to turn personal debt into corporate profits. Without this infrastructure, the modern credit economy and today’ s digital commerce would be inconceivable. More than any other institution, the consumer credit bureau formalized financial identity as an integral dimension of personal identity and established a technological framework for predicting credit risk and extracting debts.
While we know quite a bit about the history of consumer culture in the United States— its advertising, its spectacular commodification, its desires and deceits— we know much less about how all of this consumption, much of it done on credit, was even possible to transact. This is no trivial detail. The ascent of consumer capitalism, after all, is inextricably linked to the growth of institutional credit at the turn of the 20th century. It was nothing new for a local grocer or tailor to trust his well-known customers to pay later. This kind of informal open book credit was pervasive in 19th-century America.
But how could new institutional lenders— department stores, mail order houses, installment dealers, finance companies and, later, banks— trust total strangers, hundreds or thousands of them, to repay a debt? The answer is that they could not. But neither could local grocers or tailors. As eastern cities and upstart interior towns filled with unfamiliar faces after the Civil War, the problem of judging creditworthiness was a problem for everyone, including small shopkeepers who allowed their neighbors to run up debts. In this new world of anonymity and transience, consumers who looked“ good”— well dressed, professional occupation, well connected— often turned out to be the worst deadbeats. And just as troubling, some who looked“ bad”— shabby clothes, low-skilled job, no references— often turned out to be entirely reliable and loyal customers. How could a merchant identify the“ good” consumers and avoid the“ bad” ones?
This problem, the confounding task of deciding whom to trust and whom to invest in, led to the development of systematic credit surveillance in the United States. The first organizations devoted to monitoring the creditworthiness of American consumers appeared in New York around 1870. The idea quickly spread. By 1890 consumer reporting organizations could be found in cities and towns across the nation, from New York to San Francisco. These early ventures were a motley array of private agencies and voluntary protective associations. While some produced little more than blacklists of debtors and delinquents, others developed complex identification and rating systems that monitored the lives and fortunes of entire city populations. The most ambitious published annual reference books in which the names, addresses, occupations, marital status( for women) and credit ratings of more than 20,000 individual consumers were listed.
From the beginning, credit bureaus and credit departments were eager adopters of new office technologies, from vacuum tube and teletype systems to multiline telephone banks and mechanical filing devices. The most probing and comprehensive credit information was useful only if it could be quickly located and communicated. Speed was crucial when credit managers or sales clerks requested credit checks, often with the customer waiting anxiously nearby.
The machinery of credit surveillance was typically operated by women, often rooms full of them, tethered to headsets and switchboards among columns of filing
30 FINANCIAL HISTORY | Summer 2017 | www. MoAF. org