Daily Micro: Yesterday’s Visionaries in Today’s World ~ The Credit Card

Acknowledging The Credit Card

You probably never heard of me but my name is Frank X. McNamara. I’m the guy that invented the credit card and this is how the whole thing came to me.

I watch them shopping, the war over, yearning to re-enage in life, WWI vets and their families, going in and out of stores and restaurants, the glorious 50’s ahead, the years of I like Ike, and the idea hits me like a ton of bricks.

What if, I think, instead of cash and checks, they could use a card, one card at all the stores, in all the restaurants.

I track down two of my buddies and we put some money together and we start a company we call Diners Club. We pass out two hundred plastic cards to friends and get 14 restaurants in New York to accept the cards.

The idea is simple: Eat and sign your name, we pay the restaurant when they bill us and you pay us when we bill you. Of course, there’s some discounting for volume on the front end and we make the spread. Nice and easy.

Years later, we’re super successful and I learn the secret, the drift in the ways things were and the way things are going to be, and how we rode the wave.

You see, the country’s going to be transformed. Some of you probably never heard of Louis T. McFadden, who he was and how he died. A banker and a republican, Mr. McFadden became a congressman and from 1920 through 1931, served as the Chairman of the United States House Committee on Banking and Currency.

Take some time, read about Louis T. McFadden and learn what he had to say about the banking system.

In the meantime, I’ll let him tell you why Diners Club succeeded and why credit cards are here to stay. In his own words;

“The Federal Reserve Bank of New York is eager to enter into close relationship with the Bank for International Settlements…The conclusion is impossible to escape that the State and Treasury Departments are willing to pool the banking system of Europe and America, setting up a world financial power independent of and above the Government of the United States…The United States under present conditions will be transformed from the most active of manufacturing nations into a consuming and importing nation with a balance of trade against it.”

– Rep. Louis McFadden – Chairman of the House Committee on Banking and Currency

You see, we weren’t super smart.  We were in the right spot at the right time. Don’t ask me what happens to a nation that exchanges manufacturing for consumption.  You can see that, yourself.

~ Stephen J. Bergstrom

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