Frauds, Swingers and the Odd Early Days of Credit Cards

As credit cards came into greater use in the late 1950s and early ’60s, the financial press closely followed their emergence, especially when the wrong sorts got access to them.

Consider, for example, Joseph Miraglia. In one month of orgiastic spending, Miraglia ran up a $10,000 bill entertaining himself across three countries, four girlfriends and one rhinestone-collared cocker spaniel. Miraglia was no scion: He was a clerk from the Lower East Side of Manhattan earning $73 a week. How did he get into the then-exclusive credit-card club?

In 1959, travel and entertainment charge cards, such as Diners Club, were just beginning to lose their ground to bank cards, such as BankAmericard. But the use of credit was still subject to very real technological and moral constraints. Miraglia nicely illustrated how both would soon change -- and foreshadowed some of the consequences.

His adventure began in September 1959, when he ducked into a fancy New York restaurant and saw a pile of Travel and Entertainment card applications for “men of responsibility.” He filled out the Hilton Hotels’ Carte Blanche paperwork, complete with his real pittance of a salary, and, to his surprise, received a card a few weeks later with a letter that said “this card is your key to every luxury Hilton has to offer.”

‘Nice Things’

And indeed it was. Beginning with the Waldorf in New York, Miraglia hit Montreal, Las Vegas and Havana before running out of steam. He bought fur coats, fine wines, dogs, meals, suits and even silk shirts from the same tailor as Cary Grant. With only the cash he won at the craps tables and some checks he wrote against the card, he lived, as he said, “like a millionaire’s son.”

When the police caught up with him, he said simply, “I always wanted to see the world, and I like nice things.”

But while Miraglia could live the high life on his Carte Blanche card, he couldn’t live a normal life. A traveling businessman with a Carte Blanche could eat in a few swank restaurants, buy his wife or mistress a fur coat in an affiliated shop, and maybe get a suit from a neighborhood tailor who had a relationship with the hotel, but he couldn’t go to K-Mart. He couldn’t buy groceries. Only places that catered to the expense account took American Express, and for everything else, there was cash.

Although Miraglia could spend $10,000 to live like a millionaire, it would have been almost impossible for him to spend $10,000 to live like a middle-class person -- much less a working-class guy from a Lower East Side tenement.

As bank credit cards spread across the country, this problem would start to confront not just frauds like Miraglia but increasingly the law-abiding middle class. And while more stores accepted credit cards in the 1960s and ’70s, moral concerns about debt were slower to change -- it was as much attitudes as access that constrained the growth of credit cards.

A 1968 survey found that only 17 percent of Americans had credit cards, as opposed to the 62 percent who had gas cards. A 1971 study in the Journal of Marketing found that men who used credit cards were disproportionately affluent, urban and more likely to agree with statements like “I like to think I am a bit of a swinger.”

Hippies, Liquor, Credit

Those who didn’t use credit cards led more restrained lifestyles. Men without cards disproportionately believed that “hippies should be drafted,” that “liquor is a curse on American life” and that “a woman’s place is in the home.”

They were not only disproportionately poorer, they also saw the world differently. Their economic outlook was less optimistic. They didn’t believe in the benefits of investing in stock markets at nearly the same rate as those who had credit cards. They also were less likely to believe they would be executives in a few years or that their family incomes would go up.

The optimism that underpinned the credit expansion in the postwar period found its native expression in the credit card. Users embraced the good life, confident in a progressive future of prosperity -- and willingly borrowing from that better tomorrow today. The swingers embraced the new turbulent era and charged up the difference between what they had and what they thought they would be getting very soon. Those who lacked that optimism continued to find credit use “unwise.”

They may have had a point. Perhaps we would have been wise to use means other than credit cards to adapt to the swinging economic fortunes of that postwar world. And perhaps we would have been better off if the practical and moral impediments to widespread credit-card use hadn’t been quite so malleable. Because once you start using credit -- as a consumer or as a nation -- it’s hard to stop.

Miraglia was let off in 1959. The judge evidently considered his actions youthful indiscretions. But like much else surrounding postwar credit, his case portended things to come. In 1984, Miraglia perpetrated what the New York Times called the “largest credit card counterfeiting ring ever encountered in the New York metropolitan era.”

He did a year and a half in federal prison. It’s unclear if his credit rating suffered.

(Louis Hyman is an assistant professor of history at Cornell University and the author of “Borrow: The American Way of Debt.” The opinions expressed are his own.)

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