Sometimes a Great Notion

American Thrift, Past and Future


andrew l. yarrow, a historian, former New York Times reporter and author of the recent book, Man Out: Men on the Sidelines of American Life, wrote the 2014 book Thrift: The History of an American Cultural Movement.

Published October 23, 2020


Few economic virtues are more universally applauded than thrift,” former Treasury Secretary Larry Summers declared earlier this year. Applauded, yes; practiced, no. A century ago, a mass movement vigorously promoted thrift, aiming to get individuals (and the nation) to save more than they spent. Today, America is anything but a thrifty country. The tens of millions of U.S. workers who lost their jobs in the wake of Covid-19 brought attention to the chilling fact that about two-fifths of Americans do not have enough in the bank to tide them over for three months without ongoing income. A Pew survey in April also found that one-third of the population isn’t able to pay all their bills. At last count (mid- 2019), 55 million workers did not have access to employer-organized retirement savings plans, and a quarter of Americans had no retirement savings. Lack of savings is bad enough. But household debt – which reached a record $14.3 trillion in March thanks to ballooning education and auto loans before the Covid-19 tsunami hit – makes the financial picture look even bleaker. The poorest fifth of Americans have a negative net worth, meaning they owe more than they own. All told, the United States (with by far the highest per capita income of any large economy) ranks 22nd in median personal wealth. Indeed, the median adult American has just two-fifths the assets of their counterparts in Canada, France and Japan. And while there are at times very good reasons for the federal government to borrow in order to spend, that doesn’t mean at all times. Total federal debt has soared to more than 120 percent of GDP.

We live in a society in which too many who could save, do not. The consequences are as doleful as they are obvious: without savings, people are less able to plan for the unexpected, less able to pay for retirement – and less able to provide their kids with a down payment on the good life.

Explaining this aspect of American exceptionalism is not easy. But it certainly is true that America leads the world in celebrating shopping as entertainment and facilitates borrowing to prolong the fantasy that life is one big salad bar. It was not always like this, however. Here, I offer a short, anecdotal history of an era when thrift seemed to matter to most.

The Story of the Thrift Movement

In the early 20th century, a broad-based movement rose to fight the nascent consumerism in an economy that, for the first time, gave most households some discretionary income beyond subsistence. Consumerism won, of course. And the thrift movement that flourished from the first decade of the century to the Great Depression is largely forgotten.

But there are insights to be winnowed from this history – lessons about the drivers of public policy, capitalism, mass media and education – if one cares to take note. What’s more, it’s an intriguing story that made bedfellows of interests with little else in common: everyone from evangelicals preoccupied with scrubbing away the era’s moral rot to political progressives determined to integrate the new urban, largely immigrant working class into the nascent middle class.

Thrift thus meant not only saving but also industriousness, self-control and an ethic of stewardship. Advocates bristled at the stereotype that being thrifty meant being miserly or prone to hoarding. “Saving for your own needs in the future is common sense,” one thrift movement brochure of the era explained. “Saving for the sake of others is laying up treasures in Heaven.”

A variety of push and pull factors opened the door to the movement in this period. As America industrialized and farming mechanized, millions of households ended up in cities – where saloons beckoned to the weak and unwary, who, for the first time, had a few dollars left in their pockets on Friday night. This was also an era of growing economic inequality. To be sure (and unlike today), wages were rising across the spectrum. But the temptations of the new consumer culture, built on a foundation of advertising and installment credit, were rising even faster, leaving families without nest eggs to fall back on. Meanwhile, America’s entry into World War I led Washington to link patriotism with savings in order to finance the war.

National Service Bureau Poster/David Pollack/Corbis via Getty Images

A first phase, which gained traction around the turn of the century, was led by the afore mentioned moral reformers, notably the Women’s Christian Temperance Union, which reflected both nativist prejudice against the mysterious ways of the (mostly Catholic) immigrant working class and realistic concerns about the impact of alcoholism on families. Its high-water mark was the passage of the 18th Amendment to the Constitution in 1920, which barred the sale of demon rum.

But temperance meshed nicely with other causes. Political conservatives, for their part, saw thrift and self-reliance as antidotes to unionization and socialism. Meanwhile, the Progressive movement saw thrift as a way of ameliorating poverty and economically empowering the majority of Americans who had little or no access to banking, credit and home ownership.

Other players in the thrift movement warned against the rise of mass-market capitalism, urging people to live more simply and to join cooperative loan associations and credit unions. African-American leaders like Booker T. Washington espoused the virtues of thrift, while Maggie Lena Walker, the Richmond- based daughter of a kitchen slave, founded the first African-American-owned savings bank.

A second phase during World War I turned thrift into a crusade in which citizens would help themselves by helping Uncle Sam defeat the Kaiser. In fact, a federal push for savings had preceded the war. A postal savings bank, facilitating modest accounts that in theory enabled all citizens to save, was created by Congress in 1911.

With America’s entry into the war in 1917, the Wilson administration decided to raise a good chunk of the funds for the war effort from bond sales rather than through taxes, and launched a massive thrift campaign.

But with America’s entry into the war in 1917, things got serious. The Wilson administration decided to raise a good chunk of the funds for the war effort from bond sales rather than through taxes, and it launched a massive thrift campaign. The Treasury, the War Industries Board and the Committee on Public Information produced booklets such as “10 Lessons in Thrift” to promote Liberty Bonds and “thrift stamps.” (U.S. EE Savings Bonds, which can still be purchased directly from the Treasury in bite-size denominations, are a reminder of this very different era.)

Poster for World War I Thrift Stamps/Buyenlarge/Getty Images

When the war ended, the idea of government promotion of household savings took on a life of its own. Treasury Secretary William McAdoo persuaded Wilson to maintain the 100-person Savings Division, and McAdoo’s successor, Carter Glass, working with the National Education Association, commissioned a thrift curriculum.

In 1919, the Treasury also recruited 10 women’s groups, including the General Federation of Women’s Clubs, to encourage household thrift. The idea was that, while men earned money, women controlled the bulk of spending. Wives were called family “treasurers”; husbands were household “presidents.”

The third phase dates to the 1920s. In the midst of a decade fabled as the first flowering of mass-market consumer culture, it may seem paradoxical that the presumably antithetical virtue of thrift was so widely celebrated. But celebrated (and promoted) it was. A variety of interests represented by groups including the American Bankers Association, the Young Men’s Christian Association, the National Education Association and a purpose- built American Society for Thrift led the charge. The Boy Scouts and Camp Fire Girls – scouting for girls – had thrift programs.

The YMCA, for its part, had emphasized thrift as early as the 1890s, with “Economy Clubs” formed to teach young, mostly immigrant men how to budget, save money and avoid foolish expenditures. Classes were offered in more than 1,000 local Ys. Adolph Lewisohn, a flamboyant investment banker and copper magnate, chaired the Y’s National Thrift Committee. Like other philanthropists of the time, he saw no disconnect between his own ostentatious wealth and his efforts to help people of modest means become financially independent.

Charles Towson, a YMCA leader in Scranton, Pennsylvania, urged the association to “systematically do something about helping young men to master their money matters.” And in 1920, the Y launched National Thrift Week, with events throughout the country. The week began on Benjamin Franklin’s birthday (January 17), and each day was devoted to the promotion of a practical aspect of thrift. Although the topics occasionally varied, they included everything from opening a bank account to household budgeting to making a will.

In New York, wreaths were laid at statues of Franklin, with Presidents Coolidge and Hoover offering tributes. Mayors issued proclamations in more than 1,000 cities and towns. In Dallas, awards were given to schools with the highest percentage of school savings accounts. A monument to thrift was erected in Porterville, California, and in 1923 thrift mailings were sent to 80,000 homes in Washington, D.C.

African-American newspapers covered activities in black communities, and segregated “Negro Ys” held thrift-related events. So did Young Men’s Hebrew Associations and Jewish Community Centers. Anna Kelton Wiley, a D.C. suffragist leader, joined the chorus, urging children to save two cents from their allowances, donate two cents at church and spend the rest on their needs.

Thrift Week artists produced posters that, while colorful, now seem to verge on camp. A religious one showed Jesus telling a turbaned man in the desert: “Why gavest not thou my money into the bank?” Another showed a sinking ship, captioned “Beware small expenses,” and a giant hand marked “Unpaid Bills” grasping for a man surrounded by rocks labeled “Collectors,” “Loan shark,” “Salary garnishee,” “Worry” and “Loss of self respect.”

A host of quirky people and organizations jumped into the mix. J. Robert Stout’s Educational Thrift Service was a for-profit venture selling thrift materials to schools. Stout, also the founder of the American Benjamin Franklin Society, later wrote a peculiar book in which he ranged from thrift to advice on bathing and sneezing. Bolton Hall, a labor activist and author of two books on thrift, called for planting gardens in backyards and school grounds, and practiced “simple living” by establishing a cooperative farm in New Jersey that attracted celebrities including Paul Robeson and James Cagney.

Edward Filene, best known for his nowdefunct eponymous department stores, was also a Progressive reformer who tirelessly worked to establish credit unions to provide savings accounts and small-business-loan credit for those shut out by commercial banks and exploited by loan sharks and pawn shops. He and Roy Bergengren, whom he hired to run the Credit Union National Extension Bureau, were crosses between evangelists and lobbyists, leading efforts to enact laws to charter these cooperatively owned “people’s banks.” By the end of the 1920s, 32 states had passed enabling laws, and President Franklin Roosevelt signed the Federal Credit Union Act in 1934.

Interestingly, the early 20th-century wilderness conservation and industrial efficiency movements coincided and allied with the thrift movement. Teddy Roosevelt was the driving force behind the national park system, which an early director, Arno Cammerer, called “an outstanding example of national thrift.” Frederick Winslow Taylor, the engineer who championed scientific business management, argued that managerial thrift created savings that could be passed along to consumers. Frank Lloyd Wright may be remembered for his iconic modern homes for the rich. But he opposed unnecessarily large houses and instead designed small, efficient houses, priced for the middle class, beginning in the early 1930s.

President Calvin Coolidge, a frugal New England farmer, issued highminded statements on the subject, including a declaration that thrift is “the foundation of civilization.”

The Bureau of the Budget (a precursor to Richard Nixon’s Office of Management and Budget) was created in 1921 and was hailed as a sign that wise money management was necessary for government as well as individuals. In the prior year, Congress even celebrated National Thrift Week by cutting federal expenditures. President Calvin Coolidge, a frugal New England farmer, issued high-minded statements on the subject, including a declaration that thrift is “the foundation of civilization.” In 1923, he admonished Americans, “there will be proper use of our material prosperity when the individual feels a divine responsibility” to be thrifty.

An international thrift movement also emerged in the 1920s, headquartered in Italy and drawing together representatives from all over Europe (including the new Soviet Union), as well as Latin America and Asia. Thrift advocates from around the world gathered in Milan for a six-day First International Thrift Congress. Some 7,200 institutions from 27 countries were represented.

In its aftermath, under the aegis of the new International Thrift Institute, “money boxes” were distributed in Germany, while “thrift days” and weeks were observed from Brazil and Argentina to Australia and France. Spain made Thrift Day a national holiday, and member countries were tasked with writing “a song of thrift” to be broadcast on radio. International conferences continued until one scheduled in Berlin in 1940 was derailed by the Nazi assault on Europe.

The Demise of Thrift

The American thrift movement had already begun to falter under the weight of consumer capitalism by the time of the 1929 stock market crash; thereafter, it went into free fall. Despite a short-lived revival during the Eisenhower era, thrift has since been consigned to the list of often-ignored virtues like flossing and premarital chastity.

By the late 1920s, a number of economists and reformers – including Stuart Chase, Simon Patten, Marriner Eccles and John Maynard Keynes – were refocusing on the old Marxist issue of underconsumption driven by income inequality, arguing that thrift was a hindrance to prosperity.

Chase, in his 1932 book The New Deal (which, of course, preceded FDR’s New Deal), said that thrift was associated with an “economy of scarcity,” whereas consumption would lead to an “economy of abundance.” Alvin Johnson, the founder of The New School in New York City, warned that thrift promotion was a “scheme to make [workers] … more content with [their] present lot.”

Thrift suddenly was seen as a dowdy word and concept that seemed more at home in a rural, pre-modern America. Even philosopher John Dewey called it “old-fashioned,” as Keynesian economics postulated that consumer demand drives production and economic growth.

The few public voices today calling for thrift are drowned out by those urging ever-greater spending, some institutional changes and cultural trends are encouraging greater saving and less debt-financed consumption.

As the American economy boomed after World War II, Keynesian economists, who had feared another depression on the premise that civilian consumption would not replace war demand, breathed a sigh of relief: there was no resurgence of thrift to sink the good ship America. Perhaps the last word on the subject came in 1965, when a Chicago Tribune columnist remarked during what was to be the last National Thrift Week, “Save your money until next week, National Wine Week.” Consumption became the name of the game.

Can Thrift Make a Comeback?
Should It?

Set aside the pressing, if temporary, economic problems created by the pandemic. Although the few public voices today calling for thrift are drowned out by those urging ever-greater spending, some institutional changes and cultural trends are encouraging greater saving and less debtfinanced consumption.

• While the era of the defined-benefit, private, employer-funded pension is dead and buried, the U.S. tax code does promote savings by deferring or reducing workers’ tax liability if they contribute to retirement accounts.

• Some credit unions have turned the concept of lotteries on their head, encouraging personal savings by making depositors eligible to win cash prizes.

• Millennials are allegedly less consumption- minded than previous post-war generations, an assertion that the “sharing economy” has used to promote car- and bike-sharing.

• “Tiny house” communities in trendy places like Seattle seem in part to represent a reaction to ever-larger houses with eversmaller families.

• The idea of government-run savings accounts for every child born – often called “baby bonds” – were pioneered yet abandoned in Britain, but have been supported by American politicians including New Jersey senator Cory Booker.

Perhaps most important, “voluntary simplicity” has become the mantra of a growing number of people who believe that high consumption degrades the planet and is unethical in a country and world with too many living in poverty. Indeed, the concept of environmental sustainability, backed by many Americans and key to the 2015 Paris Agreement among 195 nations to combat climate change, is in line with the thrift movement’s belief in “stewardship” of natural and economic resources.

In short, the ideas of visionary proponents of the early 20th-century thrift movement do have some resonance in the 21st century. Updated, and stripped of some its fuddy-duddy messaging, thrift fits with some new realities of modern life – in particular, more risk to incomes and health, more reason to believe that the environment will not sustain us and less reason to believe that government has got our backs. Not a great ad for thrift, but it will have to do.

main topic: Human Behavior