Beyond Our Means: Why America Spends While the World Saves

Frank Trentmann on the changing history of thrift across the globe

beyond-our-means-5323400

Reviewed by: Frank Trentmann
Author: Sheldon Garon
Publisher: Princeton University Press
Price (RRP): £19.95

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Samuel Smiles, the Victorian champion of self-help, summed up the ‘practical wisdom’ of thrift as “temptation resisted, and hope rewarded”.

He saw saving as an essential part of character formation; citizens learnt to live within their means. Putting a penny away taught them independence as well as insuring for a rainy day. Those who failed to save ended up in debt and dependence, little more than slaves.

Reality today could not be further from Smiles’ ideals a century and a half ago. The world is teetering on the edge of a mountain of private and public debt. In the United Kingdom in 2005, the household saving rate dropped below zero. In the United States it managed to stay above it, but only just.

How the Anglo-world came to live “beyond their means… while the world saves” is the big question of Sheldon Garon’s fascinating book. It could not be more timely.

Readers who worry that it might be too technical, do not fear. This is a history of flesh and blood, as Garon reclaims the topic from the economists. Facts and figures are surrounded by real people and rich illustrations that convey how passionate societies came to be about saving.

Postal saving has never been so sexy.

It is tempting to be nostalgic about a bygone golden age where people were naturally thrifty and not yet corrupted by cheap credit. This though is a myth. Saving, Garon shows, was a modern invention. The first savings banks were set up by social reformers in 1780s Europe. Postal saving gave it a boost a century later, but it was the state which made saving a truly collective exercise in the era of the two world wars.

The book’s major contribution is to place the various saving campaigns in a global context.

Recent historians have shown how social reforms travelled back and forth across the Atlantic. Garon adds Asia to the map. Around 1900, Japanese reformers were picking up expertise from Belgium, Germany and Britain. But the flow of knowledge was not a one-way street. In the 1950s–70s, Japan exported a well-oiled savings machinery to South Korea, Singapore and beyond.

The golden age of saving was the mid-20th century. Everyone did it, Americans, British and Japanese. “Keep on saving – we’ve great things to do”, a fiery cross urged Britons in 1944 in one of the many, beautifully reproduced posters in this book (see picture). Saving was vital for war and reconstruction.

Saving campaigns reached all sections of society. From Tokyo to Munich and Melbourne, schoolchildren dropped off their pennies in weekly thrift parades. In the 1970s, Japan opened savings halls complete with wedding halls and hotel rooms.

There is a risk, as indicated by the title, of dividing up the world into bad spendthrift Anglo-Saxons and the good thrifty rest. In fact, Denmark, Finland and Sweden – all welfare states – have been saving less than Americans and Britons since the 1980s.

Germany meanwhile shows that it is possible to save too much for one’s own good, not just too little. I am also less sure than Garon that these campaigns created “enduring cultures of thrift”. After all, Japanese and Koreans quite suddenly stopped saving in the early 2000s.

Whether education will reverse this trend is doubtful. In the past, saving campaigns worked because they used moral pressure or plain coercion.

While not all will be swayed by the book’s moral pitch for thrift, few will ever look at saving in the same way again. 

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Frank Trentmann is professor at Birkbeck and research fellow at the Sustainable Consumption Institute, Manchester