Meg Jacobs Pocketbook Politics Summary

Over the years, Americans’ access to credit has grown dramatically, especially in the 19th and 20th century. American citizens, specifically in the working and middle class, wanted to participate more as consumers, but did not necessarily have the funds to support this. As American ideals for living standards continued to become more luxurious, consumers were forced to pay the price, regardless of their income. However, citizens were in favor of the better living standards, which is what allowed the growth of credit and access of credit. Although government policies played a role, cultural forces were most responsible for the growth of credit access in the 19th and 20th century. The American lifestyle forced credit access to increase because consumer demands were constantly growing and expectations of consumerism were demanded by society normalities. Government policies and intervention followed soon thereafter.
In Meg Jacobs’ Pocketbook Politics, she argues that many businesses were attempting to attract consumers by cutting prices of their

products, but struggled with the quality of the workplace. The two examples she uses are Wal-Mart and Filene’s. Both businesses want to give consumers the best prices, but their quality of workspace has different outcomes after these price cuts. On one hand, Wal-Mart has ridiculously low prices, but employee wages are very low and the working conditions are not favorable. In contrast, Filene’s works to give consumers the best prices available, but also works to increase the quality of the workplace. American citizens in the working and middle class would want to work for Filene’s because of the better wages, but may choose to shop at Wal-Mart because of the lower prices. This example shows the complicated dynamic of American consumerism and shows the beginning of the importance of credit for citizens. Since Americans were demanding more for their living standards, they wanted to be able to purchase essential goods and still have money to buy luxury items without going bankrupt (Jacobs, 3). In addition, because consumers could buy these luxury goods, “they believed that the cost of living was spiraling upward, despite the fact that the overall price level remained relatively stable” (Jacobs, 11).
In Land of Too Much, Prasad argues that “policymakers were following the lead of a widespread campaign at the grassroots for greater credit access,” which wanted Americans to consume more to help the markets (Prasad, 198). The first important government policy was driven by farmers that were not able to afford all the necessary farming equipment to keep up with consumer demand. The Federal Farm Loan Act of 1916 allowed farmers to use direct loans and credit to buy essential items for their farms in order to keep up in the farming industry. Although the government put the FFLA into action and provided credit to the farmers, it was ultimately driven by the farmers speaking out about the lack of access to credit.
With high demand from American citizens to better their lifestyles, mortgages became a stable to society because it allowed people to buy homes off the basis of credit and often people would spend more on homes. Prasad argues that homeownership has ‘“wealth effects”’ on consumption because when people own homes, they “feel wealthier and [are] willing to spend more” (Prasad, 202). This fueled the need for the National Housing Act of 1934, under the Federal Housing Administration, which allowed for a variety of loans and mortgages including long-term, low-interest, high loan to value, and fully amortized loans, in addition to insurance for lenders (Prasad, 203-204). Credit-based homeownership allowed ownership rates to increase and for people to increase the quality of life they were seeking. With these credit-based purchases, Americans could both own a home, purchase essentials, and luxury goods, while having money left over. This encouraged people to continue to spend money on a variety of goods, which supports Prasad’s claims of social democracy.
As the desire for homeownership increased, the demand for homes also increased and resulted in the need for more homes to be built.

This helped increase the employment rate and stimulated the American economy because there was a need for the homes to be built and because consumers were able to purchase homes with credit and mortgages, the market system was benefitting greatly. Without consumers driving the need for more homes, employment rates would not have increased and this would not have had as strong of an impact on the economy. Additionally, because consumers had greater access to credit, manufactures also benefitted because they still were making a profit because consumers could buy their goods. This shows that the government’s goals of the New Deal were accomplished because Americans were able to find more work opportunities and the economy was greatly benefitting from the increased workers and increased

consumerism.
Credit was not always readily available for Americans, but over the 19th and 20th century, credit became readily available to everyday citizens. Americans were struggling to improve the quality of their lives, while also trying to purchase everyday essentials. However, changes in consumerism allowed for the need for credit to become more accessible. Over time, working and middle class citizens were buying essentials like food, but were also able to afford homes and cars, which was a part of the American ideals of increased living standards. Due to changes of living standards, the need for credit was eye-opening to the government and policies were constantly evolving to help consumers and the economy thrive. Although government agencies and policies were prevalent during the time credit was booming, it was the American lifestyle and cultural forces that were responsible for the growth of credit access. Without consumer demands, credit would not have been a necessity to American society and economic involvement of citizens would not have progressed with credit.