World War II marked a change in how French and American policymakers conceived of consumer credit. Prior to the war, credit was debated in terms of its impact on workers and welfare. In the wake of the war, credit narratives were recast to emphasize the link between consumer lending and industrial production and economic growth. Yet how credit and growth were related was a matter of significant disagreement. Basic questions about consumer credit – including its effect on prices, household savings rates, and ultimately economic growth – became the focus of national policy debate. In the absence of definitive empirical evidence, national narratives diverged. In America, a coalition of organized labor and government policymakers came together around the idea of credit as a spur to growth. In France, a similar coalition of labor and policymakers came to the opposite conclusion. This chapter traces the role of lenders, organized labor, and central banks in framing these two alternative narratives about postwar consumer credit.

Consumer credit posed a particular conundrum for industrial policy. On the one hand, economic leaders saw the postwar demand for new products as the engine for manufacturing growth. With new housing driving a need for new household technologies, consumer credit could help to satisfy that demand. There was also an efficiency logic to credit. By speeding such purchases, credit could allow manufacturers to increase scale, and this would in turn lower costs for everyone. On the other hand, policymakers in both the United States and France worried that consumer credit would absorb capital that was needed by industry, thereby crowding out industrial investment. They also worried that liberal credit terms, and the heightened demand it generated, could aggravate the challenge of managing inflation. Both countries experimented with selective restrictions on consumer loans in order to fight inflation. In the United States, between 1950 and 1952, the Federal Reserve acting under Regulation W set mandatory thresholds for the down payment and repayment period on installment loans. Initially, these required household borrowers to pay at least 33 percent of the cost of a credit purchase up front (the down payment requirement) and repay the loan within a year. The restrictions were intended to hold down inflation even as the government relied heavily on debt to finance the Korean War effort. In France, similar restrictions on lending terms were introduced in 1954. From these similar starting points, French and American policy diverged.