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Credit as a Production-Smoothing Device: The Case of Automobiles, 1913–1938

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  • Olney, Martha L.

Abstract

Credit financing of automobile sales and dealer inventories was provided primarily by hundreds of sales finance companies in the interwar United States. The few finance companies tied to auto manufacturers wrote 90 percent of credit business. Manufacturers initially established finance companies not to bolster retail sales but to finance dealers' wholesale inventory so manufacturers could lower average costs by smoothing seasonal production patterns. Moreover, until the Justice Department intervened, manufacturers apparently illegally coerced franchised dealers into using the manufacturer's preferred finance company rather than an independent.

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  • Olney, Martha L., 1989. "Credit as a Production-Smoothing Device: The Case of Automobiles, 1913–1938," The Journal of Economic History, Cambridge University Press, vol. 49(2), pages 377-391, June.
    • Handle: RePEc:cup:jechis:v:49:y:1989:i:02:p:377-391_00
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    Cited by:

    1. Tribo, Josep A., 2001. "Inventories, financial structure and market structure," International Journal of Production Economics, Elsevier, vol. 71(1-3), pages 79-89, May.
    2. Carruthers, Bruce G. & Guinnane, Timothy W. & Lee, Yoonseok, 2009. "Bringing "Honest Capital" to Poor Borrowers: The Passage of the Uniform Small Loan Law, 1907-1930," Center Discussion Papers 50949, Yale University, Economic Growth Center.
    3. Bordo, Michael D. & Meissner, Christopher M., 2012. "Does inequality lead to a financial crisis?," Journal of International Money and Finance, Elsevier, vol. 31(8), pages 2147-2161.

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