02 Mar 2016

On Credit

A Baker Library collection tracks the historical evolution of American commerce, one debtor at a time
by Julia Hanna


Illustration by Eduardo Recife

The large tome looks its age, which is roughly 160 years old. Bound in leather, an average page, of which there are about 800 in the volume, includes almost 100 eye-blurring lines of pen-and-ink script. It’s one of 2,522 volumes of credit reports from R.G. Dun & Co. dating from 1840 to 1895, housed in Baker Library’s Historical Collections. Probably not the first thing you’d pick up for beach reading. Yet once the eyes adjust, a lost world opens up. Much like ours, it’s driven by human strivings large and small, and the movement of people from one part of the world to another. There is failure, success, and death. Marriage, children, and real estate. Fires, war, and moral weakness. And the ups and downs of one man’s bakery.

“Age ab[ou]t 50, fam[ily] of ab[ou]t 5 children, has done an excel[len]t bus[iness] & made money at it,” reads an entry on R.S. Miller of Charleston, South Carolina, dated March 11, 1856. (Frequent abbreviations are used in the reports; subsequent quotes have been translated for clarity.) Three months later: “In business a long time; doing a very extensive business wholesale & retail. Makes crackers by the million & has grown fat on them. Is in very comfortable circumstances & increasing his property daily.” Six additional reports tell more of the same: “is rich & good.” Then, in 1865, a few months after the end of the Civil War, a much briefer verdict: “Out of business.” Miller bounces back a couple of years later, but sells out by April 1870. “Worth nothing was wealthy before the war but was ruined by the war. Can’t recommend him for credit,” reads a July 1873 report. A year later, the final words: “Little credit no means business quite small.”[1]

Credit is as old as commerce, but the reports that fill page after brittle page from the R.G. Dun & Co. Collection provide a slow-motion close-up of a 50-plus-year span when American business expanded from small, local exchanges within a day’s horseback ride to transactions spanning multiple states and hundreds, if not thousands, of miles. The physical fact of those massive volumes highlights the importance of telling that story through the letters, memos, reports, books, and images that provide a lens for examining the past to better understand the present—a need that has become no less essential in an online, digitized world. “Our current collecting focus is the papers of influential business leaders and the records of innovative companies in the late 20th- and 21st-century global business world,” says Laura Linard, Baker Library’s director of special collections. More recently, that focus has led to relationships with investment and financial organizations. “It’s in that world that you get a glimpse of what is happening in the overall economy,” she says. “The Dun collection is remarkable in that sense because it references all of American society in the industrial age.”

“The Dun collection is remarkable in that sense because it references all of American society in the industrial age.”
“The Dun collection is remarkable in that sense because it references all of American society in the industrial age.”

In the first decades of the 19th century, it wasn’t uncommon to somehow know the person you were doing business with—maybe they went to your church, or were married to a neighbor’s daughter. But with the opening of the Erie Canal in 1825 and the spread of railroads, newly developed transportation systems expanded the range of business dealings beyond hometown connections. More and more, merchants and suppliers were being asked to sell on credit to people they didn’t know from Adam. This, and the devastating economic effects of the Panic of 1837 and the recession that lingered in its aftermath well into the following decade, contributed to the growing demand for outside verification of an individual’s creditworthiness.

Should you sell lace on credit, for example, to Henrietta Bruckman & Co., a milliner at 403 6th Avenue in New York City? Here’s the scoop: “The extent of her means she declines, stating as her credit is as good as she wants it to be. From outsiders we learn that she is a very industrious & prudent old lady, well meaning & will not bargain for more than she intends to pay for, that she is doing a snug business (which is managed by her son ‘Herman,’ aged 24, who has lately left the employ of ‘Pollock & Bro’ where he had a salary of $800 per annum) & making a little money, has always been prompt, is worth about $300 & is in good credit for about $500 to $800. The husband makes sufficient by his practice as a doctor to support the family.”[2]

In 1841, Lewis Tappan addressed the need for firsthand insight into an individual’s creditworthiness, founding the Mercantile Agency after his own silk importing business failed in the wake of the collapse. Subscribers paid a fee to gain access to that report on Henrietta Bruckman and thousands of others; the information was held closely and only read to clients at the agency’s New York office or local branches. In 1849, Tappan sold the agency to an associate, Benjamin Douglass, who in 1859 ceded control of the firm to his brother-in-law, Robert Graham Dun. That same year, coded reference books with condensed ratings were made widely available. The advent of the typewriter also brought about change. In 1874, Dun placed an order with E. Remington and Sons for 100 of the newfangled machines at a cost of $55 each, assuring the future of the young, struggling company. After that, a report could be typed and mailed out directly—an efficiency that benefited clients but not future historians, as few of those reports survive. In 1933, the firm merged with its closest competitor, J.M. Bradstreet & Co., to become Dun & Bradstreet. Dun & Bradstreet donated the credit volumes to Baker in 1962.

“They say they will never drink again. They however promised this before but both have gone like the sow to their wallow again.”
“They say they will never drink again. They however promised this before but both have gone like the sow to their wallow again.”

The reports—the most frequently used in the library’s extensive historical records—offer a historic treasure trove in their rare level of detail, geographic scope, and depth of narrative information about individual businesses and the people who ran them—the high-flying bankers and railroad men as well as women, recent immigrants, and African Americans. “The Dun collection contains granular, local information about 19th-century America that exists nowhere else,” says Special Collections Librarian Timothy Mahoney. “That’s why researchers come from far and wide to use it.” A scholar might research women-owned boarding houses, for example, or German immigrant businesses in New York, or even individuals—J.D. Rockefeller’s early days are chronicled, as are those of Frank Winfield Woolworth, who borrowed $300 from a former employer to open “The Great Five Cent Store” in Utica, New York, in 1879.

The correspondents who gathered information on a subject’s creditworthiness were often attorneys, although they might also be a bank cashier, postmaster, sheriff, or even another businessperson. Each was known by a number or initials. While no key exists to their identities, it’s believed that Abraham Lincoln, Ulysses S. Grant, Grover Cleveland, and William McKinley all worked as correspondents at some point. Generally compensated by being recommended as debt collection agents, they mailed accounts of an individual’s net worth, character, habits, and time in business to the closest Dun office, where clerks were paid about $3 a week to transcribe them into the enormous volumes.

The leeway allowed in a credit report might seem slim when considering the dollars-and-cents of one person’s holdings. But the question of character offered a wider margin of opinion. “Formerly did business for H & E Leberman...but now does for himself. He is now small potatoes,” one correspondent writes in December 1864 of a New Orleans businessman in an unnamed industry. Several months later: “He is not only small potatoes, but a d——d rascal.”[3] Two partners from Fort Worth, Texas, “have been very dissipated. ...They say they never will drink again. They however promised this before but both have gone like the sow to their wallow again.” One of the men, Thomas J.J., was “raised in idleness & knows more about dressing fine & sporting than he does about business.”[4] The correspondent concedes that both are men of “some capacity” who might succeed if they apply themselves; nine months later, however, “J.J.” is dead, and his partner has gone broke.

A Chicago leather dealer in business with his brother, “RTB,” is “very tyrannical & windy (talks of 50$ as most men would 50 cents, lives well, drives fast & drinks freely).” Reports go back and forth on RTB’s creditworthiness. He is “the best judge of leather in this market” but also “irascible & quarrelsome & in this way makes enemies.” Then, “his habits have been more expensive than his circumstances were thought to justify, but he is more prudent in this respect than formerly...careful in his credits & industry.” Seven years later, prudence seems to have won out: “Stand well with the trade & are in high credit.”[5]

The personal nature of some of these details, and the fact that an individual had no access to his or her report, made Dun and other agencies vulnerable to criticism. The Irish nationalist and Civil War brigadier general Thomas F. Meagher penned one of the most damning indictments. In The Commercial Agency “System” of the United States and Canada Exposed (1876), he writes of credit reporting work, “It can only be performed...by the ill-at-ease, struggling, acrid spirits of the place—the meddlesome, mischief-making busy bodies, whose moving springs are envy, greed, uncharitableness, or disappointed ambition.”

Libel suits were a more serious threat. The first, filed in 1851, claimed that two Ohio business partners were prevented from purchasing goods in New York because a correspondent reported that the wife of one of the men was about to file for divorce and alimony, thereby reducing his assets. A few years later, a New York engraver filed suit when he learned of a report that stated he was a counterfeiter who had left his wife for a prostitute. The Ohio case ruling found in favor of the plaintiffs, although it would be overturned on a technicality; the second was decided in favor of the agency on the grounds that the report had no malicious intent and was provided in confidence. By the late 1800s, enough precedent existed to establish the legal understanding that credit reports were “privileged communication” exempt from libel charges.

In this way, the reports of the Dun collection made history as much as they now serve as a means of studying it. “You can see that what happened then is all part of an ongoing, dynamic cycle,” says Laura Linard. Given that, one could wonder what researchers will find 150 years from now in the blizzard of bits and bytes being left behind today. In the wake of the Internet, what changes will the 50-year period show from 2000 to 2050 in how business is done, and what will it reflect about our society? We won’t be around to know. But Linard and her colleagues are doing their part to ensure that resources are available to answer those questions.

For more on the R.G. Dun & Co. Collection and other holdings in Baker Library’s Special Collections, visit www.library.hbs.edu/hc.

1. South Carolina, vol. 2, p. 263, R.G. Dun & Co. Collection. Scholars can track the Civil War’s economic effects across geography and industry thanks to the Dun collection’s comprehensive holdings.
2. New York, vol. 216, p. 731, Ibid. Credit reports for women, who were not legally liable for their debts, always made mention of the financial status of close male relations who would be responsible if an enterprise failed.
3. Louisiana, vol. 3, p. 163, Ibid.
4. Texas, vol. 28, p. 202, Ibid.
5. Illinois, vol. 2, p. 209, Ibid.


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