There are many good books on various aspects of the history of credit: Rowena Olegario’s A Culture of Credit: Embedding Trust and Transparency in American Business, Josh Lauer’s Creditworthy A History of Consumer Surveillance and Financial Identity in America , Louis Hyman, Debtor Nation: A History of America in Red Ink, Anne Fleming’s City of Debtors: A Century of Fringe Finance, Judge Glock’s The Dead Pledge: The Origins of the Mortgage Market and Federal Bailouts, 1913–1939. I can also point to some good books on law and credit, particularly bankruptcy law: Bruce Mann’s Republic of Debtors: Bankruptcy in the Age of American Independence, Edward Balleisen’s Navigating Failure: Bankruptcy and Commercial Society in Antebellum America, David Skeel’s Debts Dominion: A History of Bankruptcy Law in America, and our own Bankrupt in America: a history of debtors, their creditors, and the law in the twentieth century (Mary Eschelbach Hansen and Bradley A. Hansen). In addition, there are many excellent books on the history of banking. On the other hand, I have always had hard time pointing to a big picture book on the history of credit that I can recommend. Most are not as bad as David Graeber’s Debt, but they tend to have the same problem as Graeber. They try to cover so much ground that they get in over their head and glaring factual errors start to pile up.
Now I have a book I can recommend. Bruce Carruthers' Economy of Promises: Trust Power, and Credit in America provides a history of credit in the American economy that covers everything from the local storekeeper allowing customers to pay later, to retail trade credit, to bank lending, to corporate and government bonds, to mortgages, to credit cards, to student loans. He weaves these developments into a single over arching story and he does so without the sort of glaring factual errors that have afflicted other attempts to cover this much ground.
The overarching story is built around the idea that credit is a specific kind of promise: I promise to pay you in the future. Focus on this promise leads to a question: whom to trust? How do we tell which promises are credible. During the colonial era and early Republic, most people made such promises to people they knew. They were able to base their decisions about whom to trust on their extensive knowledge of the people in their community. Trusting people beyond this community required the creation of substitutes for this local knowledge. Caruthers first examines the expansion of trade credit. After the Panic of 1837 mercantile agencies began to collect and sell to merchants such local knowledge, making it possible for manufacturers and wholesalers to evaluate the credibility of merchants who lived far from them, merchants they did not know personally. Over time their assessments of the trustworthiness of merchants became professionalized and routinized, based on data rather than just ad hoc impressions. The process of formalizing the evaluation of debtors spread to other types of credit. People who specialized in determining who to trust developed ratings for the riskiness of trade creditors, corporations, municipalities, home buyers, and consumer credits.
In telling this story, Carruthers highlights one of the most important trends in modern business history, the transformation of activities that depended on the tacit knowledge of individuals into processes that could be made explicit and replicated on a large scale. He also gives attention to the role that the government has played in credit, helping to provide institutions that facilitate credible promises, but also promoting or impeding access to credit to achieve other objectives.
Economy of Promises is also a model for other work in social science history. Carruthers is a sociologist who values the work not just of other sociologists but of economists, political scientists, historians, and legal scholars. Consequently, he can tell a story that covers the traditional economic issues of credit but also blends them with concerns about the relationship between credit and issues of power.
In short, Economy of Promises is the best place to start if you want to understand the role of credit in the American economy.