In defining the good life, the suburbanites have to get down to cases, and when they do these social pressures can become highly visible. On the one hand, suburbanites have a strong impulse toward egalitarianism; on the other, however, they have an equally strong impulse to upgrade themselves. Somewhere in the middle lies the good life, but like that elusive plateau they seek in The Organization, it vanishes as quickly as one finds it.
In an environment that seems so homogeneous, one might think there were few distinctions one would have to worry about. To the practiced eye, however, there is much more diversity in the scene than the bystander sees, for the more accustomed one becomes to the homogeneity, the more sensitized is he to the small differences. At Levittown, Pennsylvania, residents are very much aware of who has what “modification” of the basic ranch-house design, and one house on which the owner mounted a small gargoyle became so famous a sight that many residents used to drive out of their way to show it to visitors. People have a sharp eye for interior amenities also, and the acquisition of an automatic dryer, or an unusually elaborate television set, or any other divergence from the norm is always cause for notice. Those who lack such amenities, conversely, are also noted. In one suburb, to cite a rather extreme example, a wife was so ashamed of the emptiness of her living room that she smeared the picture window with Bon Ami; not until a dinette set arrived did she wash it off.
Necessity has been buttressed with ideology. It’s inconspicuous consumption now, and suburbanites are quite articulate about it. One of the most frequent observations they will volunteer is that “there’s no keeping up with the Joneses here,” and they protest it with unwonted frequency. The precept does more than condone their lack of money to do anything else; it praises the behavior as ultimately ethical. It is a social compact they are voicing. Openly stated, the reasoning would go something like this: Most of us are at a pretty critical stage in our careers; it is just about now that we will realize that some of us are really going to go ahead and some of us aren’t. If you find you’re going ahead, it’s rubbing it in unfairly to make it obvious to the others who aren’t. You have broken the truce.
The job, then, is not to keep up with the Joneses. It’s to keep down with them.* Even those sophisticated enough to talk, albeit a trifle nervously, about “other-directed” consumption of their group see a valid reason for it. When they see a neighbor vaunting worldly goods, they can see this is an offense—not to them individually, mind you, but to the community. When people comment unfavorably about conspicuous display, they usually stress that they themselves see nothing wrong with it, but that other people might; and the purchase, therefore, was ill advised.
The group has always conditioned purchases, of course, and the women who gathered over the clothesline thirty years ago could form as influential a group as any Kaffeeklatsch session of today. But there is an important difference. It is the matter of choice. In previous times the group had less effect on what a person bought because there wasn’t as much of a choice to make. Today, with more people with the money to buy more things, consumers have a bewildering multiplicity of choices to make. In making them, furthermore, they have less and less tradition to lean on.
And the very similarities of suburbia are pitfalls. When everyone lives in an identical house, the most important item of their estate is washed out as a factor, and the marginal purchases become the key ones. How to choose, then? Would an automatic dishwasher be right at this stage of the game—or would it seem like putting on the dog? On this knotty problem of whether an item is a luxury or a necessity, aggregate national statistics are no guide. Some purchases, such as a car, can be accurately described as a necessity; others, such as a swimming pool, a luxury. But in between these two categories is a great shadow area in which national averages can be illusory. Even in a single neighborhood, what in one block would be an item eminently acceptable might in another be regarded as flagrant showing-off.
It is the group that determines when a luxury becomes a necessity. This takes place when there comes together a sort of critical mass. In the early stages, when only a few of the housewives in a block have, say, an automatic dryer, the word-of-mouth praise of its indispensability is restricted. But then, as time goes on and the adjacent housewives follow suit, in a mounting ratio others are exposed to more and more talk about its benefits. Soon the nonpossession of the item becomes an almost unsocial act—an unspoken aspersion of the others’ judgment or taste. At this point only the most resolute individualists can hold out, for just as the group punishes its members for buying prematurely, so it punishes them for not buying.
Item by item, the process is constantly repeated, and the norm never stays still. As soon as a certain range of items becomes standard in the neighborhood group, its members grow restive for a new necessity. What it will be is only part determined by national trends; even when neighborhoods are identical in age and income levels, they can vary a lot in the luxuries that are being turned into necessities. Home freezers, for example; like air conditioners, they are not distributed uniformly, and in some blocks there may be a 60 per cent “saturation” while in the very next one no more than one or two. Similarly, in some blocks hi-fi sets are considered an affectation; in others, only a stone’s throw away, they are almost mandatory.
In this process, merchandisers have been comparatively passive. In the check I made of air-conditioner ownership in Philadelphia, I found only two cases where the original suggestion to buy had been made by a salesman; in almost all cases the initiative in the purchase had been taken by the consumer himself. To a surprising degree, retailers—and most manufacturers, for that matter—fail to appreciate the power of these word-of-mouth networks. Few use “outside” salesmen to speed up the process, and those who do tend to have the salesmen scatter their calls over a wide area rather than work on natural neighborhood groupings.*
For which fact, I make haste to add, the susceptible can be thankful. With mingled admiration and horror, I heard a door-to-door selling expert explain how a smart merchandiser could exploit the group contagion. First, he said, he’d make a special effort, even if it involved a slight loss, to place air conditioners in the key homes in a neighborhood. Then, after the rest had succumbed, he’d leave them alone for a while. Just about the time they would be feeling guilty that there wasn’t a conditioner in the children’s room, he would return to trigger the next round of purchases. “All you do now,” he said, “is pull the trap. Here’s the way I would do it. I’d go in to ‘check’ the first conditioner, and while I was about it I’d mention to the couple that my wife and I had just bought a second conditioner for the little ones. I’d pause and let that hang in the air for a while. Then, very quietly, I’d say, ‘You know, Mr. and Mrs. Jones, now my wife and I really sleep nights.’ ”
The good-life standard is being revised upward so rapidly that planners of suburban shopping centers have had a hard time keeping up with it. If one has to err, their experience suggests, it is safer to overestimate than underestimate—even to aim at the center is to be unsynchronized with the suburban rhythm. At what they fancy are slights to their taste level suburban housewives are quick to take injury. When it was announced at Park Forest that the new department store would be a branch of a people’s department store, there was a good bit of who-do-they-think-we-are-anyway muttering on the part of housewives. They wanted Marshall Field. Eventually, Marshall Field did install a store there. To some shoppers it looks almost forbiddingly stylish, but not to most; sales have been good, and on some lines—higher-priced men’s suits, expensive dresses, and moderately expensive home furnishings—beyond expectations. (Hosiery, lingerie, and cosmetics sales were surprisingly poor.)
The pattern has been similar at Levittown, Pennsylvania. For several years the principal stores were chain stores featuring an economy-priced line. Newcomers to the community were well satisfied; those who had been there long enough to pass through the necessity phase, however, were not. Convenient, some said, but, frankly, a little tacky. When the Allied Stores Corporation decided to put in a department store, it correctly saw that the matter of its “character” was all important. In its preliminary survey in early 1954, it found a strong demand for higher-priced brand lines and better “taste.” In furniture, for example, 25 per cent of Levittowners had mixed-style furniture—i.e., otherwise indescribable—but only about 2 per cent said they would buy this kind again; 67 per cent wanted modern. When Allied put in the store, Pomeroy’s, it found that the people bought just the way they said they would—upward.
The word “rhythm” is justified, for, increasingly, this upgrading trend seems to be following a regular, cyclical pattern. In early 1954, Levittown, Pennsylvania, had been settled for only two years, yet despite this small time span it was found that small differences in the age of a neighborhood made for considerable differences in average income. In the area settled between a year and one half and two years, Allied Stores found, 24 per cent of the families had incomes over $7,000; in areas settled a year to a year and a half, 19 per cent; areas settled a half to one year, 13 per cent; areas settled up to six months, 7 per cent.
These differences in average income may seem small, but they are translated into palpable differences in what has come to be called “life style.” Even the degree of wives’ slenderness; as incomes rise, waistlines go down. In their Levittown survey, Allied Stores found that in the area settled long enough for income to have risen to between $5,000 and $7,000, 59 per cent of the women wore the small “misses” sizes; by contrast, in the newer, $3,000 to $4,000 area the sizes were larger—only 42 per cent wore the small sizes and 7 per cent wore the large 38-44 sizes (versus only 3 per cent of the wives of the $5,000 to $7,000 area).
In this upward course there is physical movement as well. Because small differences are magnified in suburbia, people can upgrade themselves in one location just so long; after they reach a certain income level, there is a strong pressure on them to move, for they cannot otherwise live up to their incomes without flouting the sensibilities of the others. This is true everywhere, of course, but in suburbia so many people regularly find themselves in this position that periodic house changing is becoming an increasingly accepted phenomenon. Not only do people move out and on, but, in a sort of musical-chairs cycle, there is a growing amount of movement within the communities.
Developers did not plan it this way. When Park Forest was first put up, the developers thought of sticking pretty much to the basic $13,000 house; but they were nothing if not pragmatists. More or less as an experiment, they put in several blocks of houses at $17,000. When these were snapped up almost immediately, the developers started putting in more blocks, and before long they were putting up some $19,000 houses.
Half in jest, but only half, they are now talking about the possibility of the “life cycle” community. It would work like this: At age twenty-six, a junior-executive trainee, his wife, and baby join the cycle by moving into a two-bedroom court apartment. This is ideal for quite a while, but at the end of three years his income is up to $6,800, they are getting fed up with the court, and the third baby is on the way. As another junior-executive couple takes over their apartment, they move into a three-bedroom, $13,000 house in the homes-for-sale area.
For five years this is fine too, but as the husband’s salary has gone up, so has that of his successful friends, and one by one they have been moving into the $18,000 area. At age thirty-five, the husband sells the ranch house and moves into a $19,000 split level. Fifteen years later, when the children have married and moved away, they sell the house and move back into a two-bedroom apartment in one of the old courts. The kids playing in the court make good proxies for their missing grandchildren, and the gang is delighted to have them around to baby-sit for them. The cycle draws to a close.
Too many people are transferred—or begin making too much money—to stay within the cycle, but the basic idea is not so farfetched as it sounds. It is now plain that the best customers for the $13,000 houses are people who moved into Park Forest as renters; the best customers for the $19,000 houses have been either ex-renters or people who had $13,000 homes. Meanwhile, the declining demand for two-bedroom houses by young couples has been offset by a potential market originally not considered. With some signs of success, the developers are beginning to merchandise these to older people without children, (A SECOND HONEYMOON! the ads promise.)
Somewhat the same kind of movement has been taking place in Levittown. Of 17,600 dwellings, roughly 3,000 change hands annually, and a good part of this turnover is caused by residents trading in old houses as their rising income enables them to move to somewhat more expensive ones in the same community. After about five years a man with one of the early Cape Cod Levittown houses (original price: $8,000) finds that he can get up to $10,000 for it, and he transfers his equity to the purchase of a later, ranch-type model. This will cost him as high as $18,000, depending on the location and the improvements that the owner has added.*
The optimism that powers this upgrading movement is tremendous. In any period, of course, it is characteristic that couples are most consumption-minded—and sanguine—during the time they are raising their children and accumulating their basic possessions, and as they grow older, their aspirations tend to level out. But there is a real generational difference as well. Even people in their late thirties feel a fundamental difference between their outlook and that of the younger neighbors, and they speak with awe of the liberal spending habits about them. “When we were that age we wouldn’t have dreamed of getting so much in debt,” goes a typical observation. “Even now, when we have more than they do, we put off getting things like dishwashers.” The memory of the depression is still so vivid that they cannot be sure the cornucopia will remain open; and their outlook was shaped in that distant period when Social Security, hospital insurance plans, and other such cushions were not a part of life.
For the younger couples, however, there has been an almost unbroken momentum; they came to adolescence at a time of rising hope, and throughout their early adult years they have known nothing but constantly increasing prosperity, personal as well as general. Suburbia has further confirmed them in their optimism. Here they are surrounded by others like themselves—too young to have failed. Disillusionment and diminishing raises are yet to come, and there are few about them whose example would temper their aspirations. No crazy drunkards, no embittered spinsters—there is rarely even death in the new suburbia—and though there are some whose hopes are already blighted, it is without the cruel finality that one can see elsewhere.
Depression? They don’t even think about it. If they are pressed into giving an opinion on the matter, their explanations would suggest that America has at last found something very close to the secret of perpetual motion. And the gears, they believe, can no longer be reversed. “They can’t dispossess everybody,” goes a frequent observation, and equally frequent is the even more optimistic thought that the government not only wants to keep prosperity from slipping even slightly, but that it knows exactly how to do it. “The depression would be a political issue,” explains a twenty-six-year-old junior executive. “The government would certainly see to it that a depression would not take place.” In the unlikely event one did take place, some add, it wouldn’t hurt them personally. Whatever their occupation, almost all organization people feel their particular job is depression-proof. (“People always need electricity”; “The food business couldn’t go down much,” etc.) Furthermore, it would all be relative. “If my salary goes down,” as one puts it, “prices would be going down too, so in the end I would be just about as well off as I was before.”
But all this is highly academic. Not only do the younger people accept the beneficent society as normal; they accept improvement, considerable and constant, as normal too. In a continually expanding economy, they reason, future prosperity will retroactively pay for today, and there is, accordingly, no good sense to self-denial. They have a point. The great expectations have a certain self-enforcing quality, and in an instinctive kind of way suburbanites sense this—at times, after hearing one after the other refer to that same boat they’re all in, one gets the feeling that they have ganged together in a great collective blackmail operation.
Suburbanites have a wonderful capacity for interpreting demands for more of the good life as the expression of idealism. Back in 1953, to cite one instance, Park Foresters demanded that a special $60,000 multi-purpose room be added to a new school then a-building. Klutznick said no; eventually the town was going to have to take over the financial burden and it was questionable whether they would have the tax base to pay for the regular classrooms, let alone the extra facilities. I asked the young head of the school board about this. With great heat, he declared that it was a matter of principle. “Our children deserve the best,” he said, and since a multi-purpose room was part of modern education, that should be that. I asked him about Klutznick’s argument. He shook his head sadly; he didn’t know where the money would come from either. “But,” he repeated, “our children deserve the best.” To ask why, of course, would be unpardonable in suburbia.
They save little. the average bank savings deposit throughout the country—$1,342—sounds reassuring, but the average is illusory. Examine the individual accounts that make up this average, and it becomes evident that older people contribute to the aggregate out of all proportion to their numbers. Significantly, in both Park Forest and Levittown, Pennsylvania, where there are few older people to swell the figures, the banks report the average deposit is $300.
Most young couples carry life insurance, but the actual cash value of their policies is very little. A considerable number make modest accumulations of E Bonds through pay-roll savings plans, and here and there the venturesome few buy stocks. But that’s about it. A check of budgets of a cross section of younger-marrieds in the $5,000-to-$7,500 bracket indicates that the median equity in savings deposits, bonds, and stocks is about $700 to $800. The median amount of loan money outstanding: $1,000.
The exceptions to the rule are revealing. Among younger people, bankers report, there is one kind of couple that in matters of money remains conspicuously faithful to the Protestant Ethic of eighteenth-century America. They are the first-generation children of foreign-born parents.
For the middle-class majority, however, saving is no longer a virtue in itself. What the average young couple does save is not put aside in the old rainy-day sense; it is, rather, accumulated for some anticipated expense—e.g., the next baby or a down payment on the next house. So much, they explain, is being saved for them. It’s not government Social Security they talk about so much; middle-class people become uncomfortable dwelling on the benefits of welfare statism; and, anyway, they point out, the retirement payments won’t amount to so very much. What they refer to freely are the compulsory savings bestowed by the organization they work for. Thanks to annuity plans, profit-sharing funds, and the like, they argue, the future is already in good part prepaid. To save heavily on one’s own initiative would be redundant. It would also, according to another rationalization, be bad economics. “Why should I save today’s dollars to spend tomorrow,” asks one young husband, “when they will be worth less than they are now?”
For short-term emergencies the young suburbanites expect to take shelter under personal loans. They use loans for planned purchases too, but the primary reason they take out personal loans is for debt consolidation and for emergency medical expenditures. Significantly, medical loans are rarely taken out to cover obstetricians’ bills; these, being a highly anticipated expense, are generally taken care of by savings.
Even when suburbanites have not taken out a loan, the knowledge that loans are so readily available today has a pronounced effect on their budget habits. They have a highly inflated idea of the amount they can borrow. When the young couples are asked how much they could raise in an emergency, the median response is usually $2,000 to $3,000. As a check with bank officers indicated, many of them would be lucky to raise $500. Going by the usual rule of thumb, on a personal, unsecured loan the husband could borrow up to roughly 20 per cent of his annual income. This would mean that couples in the $5,000-to-$7,500 bracket would be able to raise little more than $1,500—provided they had no other debt outstanding. Which would be most unusual.
Not that the suburbanites are irresponsible. Indeed, what is striking about the young couples’ march along the abyss is the earnestness and precision with which they go about it. They are extremely budget-conscious. They can rattle off most of their monthly payments down to the last penny; even their “impulse buying” is deliberately planned. They are conscientious in meeting obligations, and rarely do they fall delinquent in their accounts.
They are exponents of what could be called “budgetism.” This does not mean that they actually keep formal budgets. Quite the contrary; the beauty of budgetism is that one doesn’t have to keep a budget at all. It’s done automatically. In the new middle-class rhythm of life obligations are homogenized, for the overriding aim is to have oneself precommitted to regular, unvarying monthly payments on all the major items. Come the first of the month and there is practically nothing left to decide. And so it will be the next month, and the month after—a smooth, almost hypnotic rhythm so compelling that suburbanites will go to great lengths to gear any expenditure to it.
Two decades ago, one could divide Americans into three sizable groups: those at the lower end of the income scale who thought of money obligations in terms of the week, those who thought in terms of the month, and those who thought in terms of the year. There are still many people at both ends of the scale, but with the widening of the middle class, the month has become the standard module in Americans’ budgetary thinking. Salary checks, withholding deductions, mortgage payments—the major items in middle-class finances are firmly geared to a thirty-day cycle, and any dissonant peaks and valleys are anathema. Just as young couples are now paying winter oil bills in equal monthly fractions through the year, so they seek to spread out all the other heavy seasonal obligations they can anticipate: Christmas presents, real-estate taxes, birthdays, spring cleaning, outfitting the children for school. If vendors will not oblige by accepting equal monthly installments, the purchasers will smooth out the load themselves by floating loans.
It is, suburbanites cheerfully explain, a matter of psychology. They don’t trust themselves. Occasionally bankers ask them why they don’t build up a constantly replenished savings fund to finance purchases rather than rely on loans. The answer is standard: “We’re sure we’ll pay back the bank,” the young couple explains, “but we couldn’t be sure we’d pay ourselves back.” In self-entrapment is security. They try to budget so tightly that there are no unappropriated funds, for they know these would burn a hole in their pockets. Not merely out of greed for goods, then, do they commit themselves. It is protection they want, too; and though it would be extreme to say that they go into debt to be secure, carefully charted debt does give them a certain peace of mind—and in suburbia this is more coveted than luxury itself.
They have little sense of capital. The benevolent economy has insulated the organization man from having to manipulate large personal sums; indeed, it has relieved him from even having to think about it. Tax withholding, that great agent of social revolution, has almost removed from his consideration one of the largest single items in his finances, and package mortgages have done the same for real-estate taxes. So with all the other major items. No longer does he have to think about setting aside large sums; the government and the corporation have assumed the prerogative. It is not merely that you don’t have to worry about big sums, a young couple can explain; you don’t even have the choice.
With budgetism, in short, one is passive, and this passivity helps explain why saving is losing its moral imperative. In the Protestant Ethic morality was identified with savings because of the idea that man, rather than society, was ultimately responsible for his destiny, and that, considering the way things were stacked, he’d better well attend to it. As our society has grown more beneficent, external forces, like the corporation personnel department, have assumed much of the protective job, and it is this defensive alliance, not a slackening of moral fiber, that has robbed saving of its moral imperative.
They are acquisitive, yes, but, like the heroes of popular fiction, for the good life, and in the good life it is stability—or at least the illusion of it—that is all important. Money itself is secondary. These sober people have become prey to a state of mind in which the form of payment is almost as important as money itself or, for that matter, the purpose of payment. Up to a point, the regular monthly payment is functionally useful, but young suburbanites have gone far beyond this point; like Pavlov’s dog, they have become so conditioned to outward form that they will respond even when it poorly serves their actual needs. In their budgetism they do not seem to care about money at all. Goods, yes, but about money itself they are apathetic.
They don’t care very much what they pay for their money. As to interest rates, young suburbanites are inconsistent. They know what they are getting on their savings but they show colossal indifference toward the interest charged on loan money. This is the more remarkable since they borrow so much more than they save, and the interest on loans is usually so much higher that the yield on savings is by contrast almost irrelevant. Yet they don’t care. They much prefer banks to finance companies, for the trip up the flight of stairs to the finance company is a trip away from middle-class respectability, and they do know vaguely that the bank will charge them less than finance companies. But how much less they have no idea. They don’t even ask. All they really want to know, loan officers say, is the size of the monthly payment.
Even when the suburbanites do imagine they know the interest, they delude themselves. Most young people would be amazed to discover that almost invariably they pay the bank a minimum of 10 or 12 per cent. If they have any notion at all, they believe they are paying about 6 per cent. Very few ever pause to realize that the 6 per cent is on the face amount and, though they are constantly paying off the principal, they continue to pay as if they retained the face amount, and thus, in effect, pay double the interest they think they do.
They are relatively uninterested in total cost. The monthly charge is the only figure that they feel is relevant, and unless the item is a brand-name appliance they often are quite hazy about the real price. Occasionally a couple will ask the salesman to tell them what the whole thing will come to, itemized, but when he says how glad he is that they raised the question and goes on to other matters most couples seem almost relieved. The truth is, they don’t want to know.
Their powers of suspicion are rather dormant. A pathetic spectacle is the show of zeal the husband will affect when reading a sales contract; it wouldn’t make the slightest difference what outrageous provisions were inserted, he would still read on, comprehending nothing. Among young people there seems to be a strong faith that the protective legislation of the last twenty years, such as the small-loan acts, has somehow reversed the law of caveat emptor. One would think, for example, that they had lived long enough to be implacably suspicious of any automobile dealer, but they are not. They are so trusting that they almost never multiply to find out how much of a “pack” the dealer is taking them for. When they raise the money somewhere else so they can pay him cash, they throw away the advantage; on the mistaken assumption that the dealer prefers a cash transaction, they will prematurely announce their intention to pay cash and thereby forewarn him to pad the list price by enough to compensate for the finance charges he won’t get.
The symbols of reputability easily disarm them. If an automobile dealer or furniture merchant can say that he will arrange the financing through a local bank, they relax their guard completely. The coupon book will have the reassuring good name of the bank on it, and the suburbanites take it for granted that, as the dealer offhandedly promises, they will be paying “bank rates.” Occasionally a purchaser will bother to add up the coupons and come storming into the bank. There must be some mistake, he will say; the interest comes to 12 per cent on the face amount alone. At this point the banker must delicately explain that everything is quite in order but that the dealer, rather than the bank, sets the interest rates. If pressed, the banker must add that the difference between 6 per cent and what the dealer has charged is returned to him as a kickback for throwing the business the bank’s way.
For a future capitalist, the organization man displays a remarkable inability to manipulate capital. His handling of “debt consolidation” is a case in point. The growing popularity of loans for this purpose conjures up a picture of chastened citizens tightening their belts and cannily reducing total interest charges. The picture is quite misleading. It is true enough, of course, that in taking out one large loan from a bank a person can cut down the interest he has been paying on a variety of purchases from 25 to 30 per cent to a low of 12 or 18 per cent. But this is not the reason most purchasers take out the loan. In actual practice their consolidating is a sort of check-kiting operation by which they can square themselves away for yet another round of commitments. When these are halfway digested, they will be back again. And again.
They pay dearly for the convenience. Consider, for example, a possible alternative. A mythical couple we will call the Frugals decide to defer all but necessary purchases for enough months to accumulate an extra $500. They will then have a revolving fund of their own which they can use for cash purchases, and instead of paying out a fixed amount each month in installment loans, they will use these sums to replenish the $500.
Now let’s take a normal couple. The Joneses, with precisely the same income, don’t put off purchases but instead commit themselves to a combination of installment loans and revolving-credit plans. At the end of ten years the Joneses would have paid out somewhere around $800 in interest. The Frugals, by contrast, would have earned interest—roughly $150. Not counting the extra benefits they would have reaped by being able to buy for cash, they would be, in toto, almost a thousand dollars better off.
The Frugals, to repeat, are somewhat mythical. Most suburbanites fail to accumulate capital to produce capital, and they fail to manipulate what capital they do have. It rarely occurs to them, for example, to use their savings as collateral in taking out a loan. Were they to do this they could frequently get an actual rate as low as 4¼ to 4½ per cent instead of the usual 10 to 12 per cent—and their savings would still earn them the regular rate of interest.
Were budgetism carried to its ultimate conclusion, the result would be a plan something like this: A store would assign a couple a credit limit of, say, $150. After buying up to this limit the borrower would pay off in equally scaled monthly payments, with the interest charge on the unpaid balance 1 to per cent a month, depending on the cupidity of the store. There would always be an unpaid balance. Once a couple started using revolving credit they would never stop, for if they continued to buy as fast as they paid off, they would then enjoy absolutely rhythmic regular payments, month in and month out. True, they would be paying between 12 and 18 per cent annually on a perpetually unpaid balance, but they wouldn’t have to think about this.
In department store revolving credit plans the young couples have found just such a service. And they are enthusiastic. Even the most hardened credit men are flabbergasted; so many people have been staying “bought up” that on some lines the stores are making more profit on the interest charges than on the goods themselves. Department store people don’t quite have a guilty conscience on the subject, but when they start talking about high administrative overhead, the service to the customer, etc., only the humorless can keep a straight face. “It’s fantastic,” a department store executive exclaimed to me, closing the door. “Eighteen per cent a year! Imagine it. We didn’t expect they’d all stay bought up, but if you want to know whether we like the plan, just ask us if we like money.”
The growth of revolving credit has been an interesting reversal of the usual trickle-down effect. Originally, these plans were designed for the needs of a lower economic group, but they blended so well with the prevailing budget psychology that they have been growing steadily more popular with middle-class stores and middle-class people. To the surprise of stores, even customers well enough off to rate charge accounts now frequently prefer revolving credit.
Here is the ultimate in regularity. For one thing, revolving credit evens out purchases so that there are no seasonal peaks, such as occur when the children must be outfitted for school, or Christmas presents bought. It is, better yet, a disciplining factor for the wife. The old coupon-book plans that preceded revolving credit had many of the same features, but the coupon book was “hot money,” and, more often than not, the wife spent every bit of it on the trip between the credit department and the store’s exit. The regular monthly limit provided by revolving credit has a different psychological effect, and the wife, to the delight of her husband, can confidently pre-plan her impulse buying to the penny.
So far, budgetism has operated largely to put people more in debt, but there is nothing inherent in the process that requires it to do that. Budgetism, essentially, is a person’s desire to regularize his finances by having them removed from his own control and disciplined by external forces. This urge could apply to savings as well as debt. To a degree, budgetism has subsumed thrift, most noticeably in pay-roll deduction plans; but on balance, most of the external services offered the consumer are for ease in spending rather than accumulation.
Bankers, for the most part, have not yet recognized how inclusive is the urge for the organized life. They have heavily exploited the obsession for monthly regularity in their loan business, but they have not done the same for savings. Except for the Christmas Clubs, which bankers rather dislike, few banks have merchandised compulsory, fixed plans by which people can trap themselves into accumulation. Either people save or they don’t save, bankers argue, and special plans would have very little effect.
If this were true, however, the Christmas Clubs would be highly unpopular. As many bankers privately remark, the Christmas Clubs are in some ways rather silly; the term is too short for the bank to net any profit from the funds, and the customer, who has to come in once a week, gets nothing extra in interest for his trouble. And Christmas, it has turned out, doesn’t have much to do with the plans; when they withdraw their money in December, the depositors apply it to real estate and federal taxes more often than presents, and roughly a third of the depositors transfer the sums to regular savings accounts or convert them into bonds.
Illogical? What people have really been begging for in the Christmas Clubs is an external discipline, and the one feature that banks most dislike—the short time period—is what many depositors also dislike. They want entrapment—constant entrapment—and those banks which have abstracted the moral think the urge can be requited quite easily. Instead of merchandising the idea of saving, they would merchandise the apparatus of it. The external stimulus, they reason, already exists. Thanks to the young couples’ familiarity with loans, they have a conditioned response to coupon books, and to exploit this, the banks simply set up loans in reverse (one such plan is called Sav-a-Loan). Instead of having payments optional, they supply coupon books with specified payments and specified dates. It is only a change in form, but where such plans have been pushed they have been successful.
Whatever expression it may take, the rhythm of budgetism is going to become more compelling. Organization man’s suburbia provides only a foretaste. Our whole population is moving toward the more regularized life, and as the guaranteed annual wage becomes a reality, the conditions for middle-class budgetism will become yet more universal. And then, finally, there are the children of suburbia —a generation of organization people for whom the Depression is not a father’s tale but a grandfather’s. Nobody, as suburbanites sometimes remark, is going back.
* Ad in The New York Times, January 10, 1954: “Gimbel’s takes note of a new trend in American living. The ‘Booming Middle Class’ is taking over—and no longer are we living up to the Joneses (Chauncey Montague Jones et familia)—we’re living down to the Joneses (Charlie Jones and the wife and kids). It’s bye-bye, upstairs chambermaid—ta, ta, liveried chauffeur—good riddance to the lorgnette, limousine, and solid-gold lavatory. The new Good Life is casual, de-frilled, comfortable, fun—and isn’t it marvelous. Gimbel’s is all for the bright, young, can’t-be-fooled Charlie Joneses.”
* The combination of dealer passivity and the growing influence of the group network has a lot to do with the pricing troubles now worrying manufacturers and retailers. Many manufacturers talk about the cut-price problem as if it were due largely to the machinations of discount houses and will be solved by “stabilizing” the market and “protecting the ethical retailer.” It is not quite so simple. What has been happening is that the consumer has been taking over part of the selling burden historically allotted to the retailer. Just as the consumer has shared in the markup on groceries by sharing in the physical burden of distribution, so now with the “big ticket” items; he has worked for part of the markup by sharing the selling burden, and he wants his cut. Because discount houses give it to him, they are often cited as the villains of the piece. But they are not the cause, only the manifestation, and though they are filling the vacuum, it was produced for them. Manufacturers still give retailers a markup big enough to justify the missionary work retailers once did. With few exceptions, however, retailers no longer do this kind of work; they service demand, but they have discarded their former techniques, such as the use of outside sales forces, to create the demand. The burden of introducing new products, as a result, now falls upon a combination of advertising and the word of mouth of the consumer group. The real selling job, in short, is done before the customer comes into the store. Guided by the group, the customer already has determined almost everything about the purchase—including the fact that he will make it—except the price and a few minor options. So he shops for price; he is earning the price cut, and whether manufacturers like it or not, he is going to get it. For years merchandising people have loved to say that the consumer is their boss. Now some of them would like to eat their words. He really is.
* The disposition to segregate by age and income is also demonstrated by the Florida trailer-camp settlements. These have become permanent institutions, and the nature of the turnover and the social life of the old people within them is in many ways quite similar to that of the younger people’s suburbia. For a good description, see G. C. Hoyt’s “The Life of the Retired in a Trailer Camp” and L. C. Michelon’s “The New Leisure Class,” both in the American Journal of Sociology, January 1954.