Credit At Grocery Stores

Today, when credit card offers pop up on our phones, our computers, our televisions, and, of course, in the mail, it is difficult to understand how scarce credit for urban African Americans was in the past. One form of credit was the grocer’s ledger book. In the 19th century, and well into the 1920s, this kind of store-based credit was common for everyone, white or Black, urban or rural. By the 1930s, however, most Americans had moved away from grocery store credit. The rise of new chain grocery stores, like the A&P, offered no credit, but low prices. Customers who paid in cash even received special stamps, like credit card points today, that could be redeemed for gifts and prizes. This move to cash meant that grocery stores could offer low prices, but also that customers were no longer tied to a particular grocer who offered them credit. They could shop anywhere. They were in a market economy, where competition between grocers kept prices low.

For urban African Americans, this world of low prices, no credit, and a competitive market was far from their everyday experience. Neighborhoods had few grocery stores (if they even had more than one), and without competition, prices could only go up. Moreover, unlike most postwar white working-class families, the incomes of Black working-class families were far more uncertain and their savings non-existent. They often lived from paycheck to paycheck, not certain if the next paycheck would come. Even Black union members, like Mr. Watson, had less stability than white union members because of the “last hired, first fired” rules of labor unions. Black workers, often recent emigres from the South, tended to have less seniority. Throughout the 1960s, industrial worksites were set by conflicts between white and Black unionists over who deserved job security.

For these families, credit was important. It allowed them to get by in times when work hours were scarce. The downside was that these families were more dependent on the grocers who did offer credit. These grocers charged much more than the chain stores. Even if Black families had a car to leave their neighborhoods, they would not be able to get credit at the chain stores.

If grocers wished, they could wield a lot of petty power over the choices of their customers (which did not happen at the A&P). Their relationships were personal, not through the market, and all the foibles of people come to light in that personal relationship. Grocers could become petty tyrants to their customers, who had no alternative but to shop there if they wanted to eat. Even if they didn’t “cheat” their customers, they certainly charged higher prices to cover the costs of lending to their customers. Despite these higher prices, they were still less profitable than the chain stores that offered no credit at all. This credit-based grocery was bad for customers and bad for business, but when the customers had no alternative, it was the business model that could exist at all.

About the Author

Louis R. Hyman is a professor of Labor Relations, Law, and History and Director of the Institute for Workplace Studies at Cornell University. Hyman is the author of Debtor Nation: The History of America in Red Ink.