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'Mad Men' money: Credit in the smoking era

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Inspired by the hit TV series, "Mad Men," to revive the three martini lunch? Some ways of life in the mid-century were definitely healthier than others. A major difference is the way Americans borrowed. Here's how the era was better for consumers and why some of the past is better left on the small screen.

Cool in the 1960s
Don Draper and his real life counterparts may have suffered frequent hangovers, but their financial and banking habits were probably sober and sound. If you were a typical adult at that time:

Mad Men money: Credit in the smoking era
  • You knew your bank president. "There were more community banks," says Robert D. Manning, author of "Credit Card Nation" and consumer credit and debt expert. "You also knew your local bank president and had a strong personal relationship with him." Therefore, he says, when you went for a car loan, you were talking to someone familiar and could appeal to that person as an individual. You weren't reduced to a mere credit score.
  • You weren't in credit card debt. Sure, you would have looked like a million bucks in your slim suit or swank shift, but you probably paid for it with cash. In 1965, only 5 million credit cards were in circulation. Your attitude about owing was different, too. "The debt addiction hadn't yet taken hold," says Kristen Hagopian, host of the radio talk show, "Brilliant Frugal Living." "That generation was that much closer or perhaps even raised in the Depression era, where too much unpaid debt combined with a lost job often resulted in losing your house, your family, your confidence." Hence, thrift was still the norm.
  • Stores offered free or cheap loans. This doesn't mean the ability to borrow didn't exist. When shopping on Main Street, you just might have had a buy now, pay later option. According to Manning, local merchants tended to give "off the book" loans because it reinforced customer loyalty. Many didn't charge interest, either, but if they did, it was around 1 percent to 1.5 percent per month -- just enough to cover the extra bookkeeping expenses. Also, you could and would pay the tab in full, since the loans were small and paying incrementally was rarely an option.
  • Saving was expected and creative. Without the "charge it" mindset yet in full swing, you'd have saved for what you wanted. S&H Green Stamps, which grocery stores and gas stations gave customers after a purchase, hit their popularity peak in the mid-60s. You would have pasted them in books, and after collecting enough, redeemed them for everything from household necessities to luxuries. Almost all banks offered such short-term savings accounts as Christmas clubs, too, and with them you'd be sure to sock away enough to buy Junior his Red Ryder BB gun.

Cold in the 1960s
Not all aspects of personal finance was rosy for our stylish '60s citizens. Modern Americans would be just as appalled by the following as they would by a pregnant, chain-smoking Francine Hanson. For example:

  • Secretive credit reporting. While credit reports existed before 1970, only businesses would have been able to access them. "Credit reports were not available to consumers, and they tended to have more intimately personal information in them," says Mark Hankins, author of "Debt Hope: Down and

    The Welcome Wagon was used as a spy service, and reports would have things in them like a count of the liquor bottles in the consumer's trash, or a notation that their children weren't wearing shoes.

    --  Mark Hankins
    Author, "Debt Hope: Down and Dirty Survival Strategies"
    Dirty Survival Strategies." The system was also more local, less regulated and errors were rampant. If you applied for a loan, you could have been unfairly turned down. Not only would you never know that it was due to an inaccuracy, but you wouldn't have the opportunity to clear it up. The Fair Credit Reporting Act, which helped to shape modern-day credit reporting, wasn't passed until 1970.
  • Women and minorities need not apply. The Equal Credit Opportunity Act was still but a dream (first enacted in 1974), so if you were a woman, establishing credit in your own name would have been tough. "A 30-something woman was highly unlikely to have a high-paying job, and would most likely be laughed out of any bank in which she attempted to secure a mortgage," says Hagopian. And if you were of color, like Draper's secretary Dawn Chambers, you would have had an especially hard time. "During the 1960s, African-Americans were not significantly represented in the credit reporting system," says Sonya Smith-Valentine, credit lawyer and founder of the personal finance education company, Financially Fierce. "African-Americans were mostly doing business with other African-Americans. Racial discrimination was still a major issue. Banks were reluctant to lend to African-Americans so most didn't have a credit report."
  • Unwelcome lending requirements. Bank rejections might have made you turn to booze or even to momentarily neglect your kids, but such actions could have impaired credibilty further. "The Welcome Wagon was used as a spy service, and reports would have things in them like a count of the liquor bottles in the consumer's trash, or a notation that their children weren't wearing shoes," says Hankins. Information about the state of your home was sent to Retailer's Credit -- the Atlanta-based regional credit bureau that eventually became Equifax -- and lenders could make decisions based partly on those highly subjective character conclusions.
  • Debt collectors had free rein. Once you did get a credit card or loan, it would have been even more crucial that you keep it in good standing than in today's consumer-friendly legal environment. You'd have to wait 10 years for the Fair Debt Collection Practices Act to pass to enjoy protection against unfair and brutal collection actions. Consequently, the guy demanding money would have been relatively free to harass and threaten you for unpaid balances.

Indeed, some aspects of personal finance were classier before the tackier disco age, but clearly not all were. Important banking and credit advances emerged when people spoke up. After all, as Don Draper said in season three, "If you don't like what's being said, change the conversation."

See related: What reality TV teaches us about credit and spending, The history of credit cards

Published: April 23, 2012


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