Businessmen Are Keeping the Ledger

DURING the bleak years of the Great Depression, millions of U.S. families learned to rule their lives by the household budget, religiously parceling out set amounts for all needs, from mortgage payments to shoe-shines. Many families divided their income into envelopes firmly labeled Rent, Food, Electricity, etc.; others made ends meet by keeping a strict household ledger of every penny earned, every penny spent. But as the U.S. economy burgeoned, the rigid family budget began to die out. In the midst of prosperous 1955, a manager of Home Life Insurance Co. estimates that only one of 200 families keeps a detailed day-by-day ledger. Says a Denver oilman: "My wife and I had our fill of budgets during the Depression. I can still see those damned skinny envelopes."

One big reason for the decline and fall of the traditional budget is that U.S. families have never been so prosperous. With personal income pushing beyond the $300 billion-a-year mark, families have more money than ever, worry less about stretching paychecks to the end of the month. But partly, too, the decline of the budget is due to the great change in the U.S. manner of living.

Where consumers once saved up hard cash for the purchases, they now find that U.S. businessmen have taken over much of their budgeting. Most goods and services can be bought on the installment plan, financed at predetermined rates. Autos, appliances, clothes, food, even vacations come on credit and take their nibble each month. Instead of putting away cash for medical emergencies, millions of families now have health insurance. There are Christmas clubs, book, play-and record-of-the-month clubs; the employer automatically withholds taxes, pays social security, deducts union dues, will even set aside enough for a savings bond each month.

In this pattern of living, charge and checking accounts have become the key means of watching income and outgo. Instead of counting the cash in the envelopes, families now leaf through their check stubs at the end of the month. Says one Seattle housewife: "Practically all our expenses--and those of everyone I know--are predetermined. We have certain payments we have to make--house, car, payments for food, clothes for ourselves and our three children. It doesn't take a slide-rule budget to make those payments. Our biggest concern is where our money goes, and the checkbook record satisfies that." The major exception to the new pattern is among the newlyweds, most of whom are trying to make a solid start in life on a comparatively small income, and are eager to make a budget work. They enthusiastically figure out their own budgets; only a few of them seek advice. (Since 1949, the U.S. Government Printing Office has distributed only 35,000 copies of its pamphlet Guiding Family Spending.) But most of them, also, soon change their minds, particularly when their incomes increase. Says one Santa Fe housewife: "We tried a budget when we were first married, but it was too much trouble. We decided to just go ahead and get what we have to, and somehow pay the bills when they come in."

From the start, most newlyweds find credit easy to get. Many of them, instead of renting an apartment, get a Government-insured loan to buy a house and pay for it in small monthly installments. The monthly payments, which they consider savings and investment as well as housing cost, can also take care of taxes and insurance. From a furniture store they can get a living-room set at $15 a month, and from the appliance man a freezer for $8.29 a month. If they want a power mower, some hardware dealers will sell them one for a few dollars each month in a budget charge account. The clothier, the fuel-oil dealer, even the man who sells storm windows, are only too happy to carry a new customer on time and figure it out in monthly payments, each one the same as the last. It takes much less grinding will power than the old family budget. So far, it works. Arthur O. Dietz, president of the giant C.I.T. Financial Corp., says that repossessions are at the lowest rate in years.

In an age of easy credit, more and more American families, from newlyweds on up, are turning to the deduction, installment, charge and check system of living. The Federal Reserve Board reports that U.S. families currently owe some $32.5 billion on installment plans, loans and charge accounts, and some estimates put the figure at half again as high. Obviously, since he has assumed the burden of household budgeting, the U.S. businessman has an increasing social responsibility to the community he serves. Instead of merely concerning himself with the sale and delivery of his goods, he must now extend his responsibility far beyond into careful consideration of what he should sell to whom, and on what terms.

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