Introduction

If the idea of “embedded liberalism” fails to capture the nature of international finance during the early post–World War II period, it might be even less suitable as a means to conceptualize the domestic development of American finance. Far from being subordinated to the constraining capacities of regulatory institutions, American finance underwent a dynamic of dramatic expansion after the New Deal. Although the segmentation of the financial system meant that investment bankers were unable to leverage their strategies by using “other people’s money” (Brandeis 1967 [1914]) the industry’s self-regulation under the auspices of the SEC ushered in a golden age of relationship banking. But an even more vigorous dynamic of expansion was to be found in the development of the commercial banking sector – propelled by industrial recovery, heavy government lending, and the progressive integration of ever more layers of the American population into the financial system. A world of opportunities was created by the ways New Deal policy makers had facilitated the expansion of mortgage and consumer lending to promote the growth of a well-disciplined public of citizen-consumers. Over the course of the post–World War II period, the American working classes would become ever more fully incorporated into the financial system, not only as investors and savers but also as borrowers and consumers.