Odd Lots - What Diner's Club Card Reveals About the Nature Of Money

Episode Date: August 7, 2017

We use money everyday, but it's rare to actually think about what money is or what it represents. And in fact many of the people who are the closest to it -- academics, traders, etc. -- understand it the least. On this week's episode of Odd Lots, we talk to Lana Swartz, an Assistant Professor at the University of Virgnia in the department of media studies. We discuss why money can be understood as a form of media, and specifically we talk about her work on Diner's Club, the original charge card.See omnystudio.com/listener for privacy information.

Thanks for listening to Oddlots. Follow the show on Amazon Music for more future episodes or just ask Alexa, play the podcast, Oddlots on Amazon music. Hello and welcome to another episode of the Odd Lots podcast. I'm Joe Wisenthal. And I'm Tracy Allaway. How's it going, Tracy? I feel like it's been a long time since we've talked. Well, it has been a long time. I went on a lovely vacation for about two weeks. It probably doesn't make sense. Our listeners is because we pre-recorded some and said they've been coming out every week. week. But I guess, so this is just me and you talking. It's nice to catch up. Yeah, it's good. And all our listeners should really admire our organizational skills and the skills of our producer as well for enabling the seamless, seamless transition. Well put. So today, we're going to go back to one of

our favorite topics that we revisit from time to time on this podcast. And it's not gambling, which we talk about quite a bit, as you know. Is it chess? No, it's not chess. It's nothing to do with games. It's not about betting on baseball or poker. It's not even about the bond market, which is a common theme. No, we're going to be talking about what money is and trying to, you know, come to more understanding about what we actually do when we pay for things and stuff like that in our everyday lives.

That wasn't very articulate. It was good, Joe. I really enjoyed this topic because it's something that clearly touches everyone's lives to borrow from Oprah, I guess. I'm a little rusty coming back to this podcast. But it's something that clearly everyone does, right? We all pay for things. We all use cash. We all use credit cards, online bank accounts, branch bank accounts in some ways.

And all of that is a big, big thing in our lives. and it's something that is also rapidly changing. It's one of the most important things in our lives and probably one of the least understood to the point where people don't even try to understand it. And that's what makes it so fascinating. And as one of our earlier guests a long time ago noted, usually the people who are most intimately involved with money, economists, are the worst actually at defining it. And so I think that's what I'm really excited about today's guests, because today we're going

to be talking to someone who actually is a professor of media studies, who studies money. And so someone who's very, you know, not coming at it from the economics angle, but maybe because of that can actually shed some unusual light on the subject. Oh, well, that sounds really interesting. And I think I know what your first question should be. Yeah, me too. So, all right, let's bring her and we're going to be talking to Lana Swartz. She's an assistant professor in the department. Department of Media Studies at the University of Virginia. Lana, thank you very much for joining us. Thanks for having me.

Let's just get in with the first question, which Tracy already hinted at. But why is the study of money something that makes sense within the context of the Department of Media Studies at the University of Virginia? Well, I think there's two ways to answer that. One is historical and one is present oriented. So historically, if you look at what has counted as money, what we've used to do money, it's always been the kinds of things, the kinds of technologies, the kinds of forms that we have used to do other kinds of communication, other kinds of media. So, you know, scholars, communication scholars and historians have described how the printing press was really this important media and communication technology that allowed for the consolidation of the nation state and this sort of economic. imaginary, the size of a, of a nation. And along the same lines is the, you know, the rise of the

newspapers and the rise of the printing press, we have the rise of paper currency. So what is, what is more media than paper? Of course, paper currency has all of these images and icons of our kind of national imaginaries, what we want to, you know, what we want to remember historically as our, you know, the character, the branding, if you will, of our country. And it also kind of created this common economic language as one of my colleagues, Eric Helena, who's a Canadian media scholar, has described for people to speculate. So you knew you were a member of the same nation, the same polity, if you could transact easily using the same currency that everyone recognized as valuable. So in this way, it was sort of this public infrastructure that lubricated the economy for citizens. of a given territory. But then, if you move forward and see that, you know, Western Union and

telegraphy, today we really only think of telegraphy as something for money transfers. And of course, they don't use telegraphy anymore, but Western Union, the company. And then looking into the 1970s, 80s, and then into the 90s, we have the very same technology, the same kinds of computers that were used to build what became the Internet used to build the Visa MasterCard Network. So the technologies of communication and media and information exchange are the very same technologies of financial exchange and money. And we can see the same thing with cell phones. And every social media company from Facebook to Google is trying to introduce their own payment system. So at every step of the way, historically and into the future, we have the stuff of money being the very same as the stuff of media and communication.

So I find this notion of money and payment being linked to social identity, really, really fascinating. And you summed it up enormously well just then. But Joe actually sent me a paper that you have done on a specific example of how this kind of works. and it has to do with the Diner's Club card. Can you maybe dig into that one a little bit for us? Sure. So as some people may know, Diner's Club was the first credit card. Well, that's actually a misnomer.

It was actually a charge card because it wasn't tied to a store of rotating credit. Instead, it was, you know, you got a bill at the end of every month and you paid off the bill. But it was the first third-party universal private payment company. So, of course, you know, gas companies and department stores and the like had long extended credit to regular customers. But the Diner's Club was the first company that allowed you to take a card, take it to any number of businesses that accepted the Diner's Club card and make a payment there. This emerged in the 1950s, a time when we had the emergence of the highway system in the United States, democratized jet travel, the rise of the corporation and therefore the business trip and the business traveler. But the U.S. banking system was relatively provincial. So, you know, the local banks, banks were really mostly local. I mean, at this point, Bank of America was a relatively regional bank in Northern California. So it was kind of hard to travel without massive amounts of cash.

Travelers checks were available, but they weren't really accepted and, you know, out of the way places off the highway in the middle of the country. And so there were references and newspapers at the time, you know, that said things like when it comes to payments, the person who needs to, the traveler, the person who who needs help the most is often stranded. So diners club became this way for people to move as fast and as far, or rather for people's money to move as fast and as far as they did. And this, I argue that because you received a bill at the end of every month, which is commonly referred to as kind of country club style billing, diners club created this club that was networked and sort of everywhere and nowhere and invisible. So you get diners club advertisements at the time that say things like, you know, your credit is good anywhere diners club is accepted. You have a friend anywhere diners club is accepted. People will know you whether you're, you know, in the backwoods of Indiana or New York City the first time you've ever been there as long as you carry your diners club with you. People know you belong.

So I find this really, I'm kind of, I love that we're talking about the diner. Club itself, because I remember going to restaurants as a kid growing up in the 80s. And, you know, you'd see those signs of which cards, restaurants would accept. And there's like Visa Card, MasterCard, American Express. And usually Diners Club was on there, but I never, like, knew anyone who had one. And I always sort of just had this, I didn't know what it was, but I had this intuition that maybe it was a thing back in the day and that it was sort of this, like, you know, fading and relevancy. They still exist, right? Yeah, they do.

I mean, not exactly in the same form. So by the end of the 70s, Diner's Club really faced competition on the high end from American Express. And then sort of on the democratized or, you know, mass appeal end by bank issued Visa Master Club cards, which, you know, diners Club came out first, but they didn't really perfect it either at the luxury level or at kind of. getting it out to everyone who maybe wasn't able to pay off their bills at the end of every month. And then, so by the 70s, the end of the 70s, their business really had waned. And throughout the 80s and 90s and even more recently, the brand has gone through a variety of different acquisitions by Citibank and then by Discover. And they do have a really interesting international program where there's local franchises across the, globe in various countries that are local to various countries.

But that and so when Discover acquired them most recently, they really acquired them for that international network, although the Discover brand and the Diners Club brand haven't fully merged. So they do exist, but it isn't really, it's mostly just as the brand, not really the same company or the same technology as in the 50s and 60s. So just going back to the heyday of Diner's Club, which I guess was the 50s and 60s, you know, you get this kind of vision in your head of like madmen style businessmen using their cards to expense boozy lunches and that sort of thing. And I guess that's that's kind of the image that they were going for. But you talk in some of your research about the downsides of the Diner's Club for one particular demographic.

and the notion that it actually reinforced some negative stereotypes for women, basically. Yeah, well, actually, I mean, that kind of cuts both ways for women because, you know, in this boozy, 60s, madmen environment, there were the kind of Peggy Olsons and, I guess, later season Jones trying to make their way in this man's world. And there are numerous accounts in the press at the time in columns with names, you know, the column title is like white collar girl, which gives career advice to this kind of first generation of working women. And they give advice like, and this actually comes from Helen Gurley Brown from before she went on to be the editor of Cosmopolitan. She said something like bosses are miserable misers when it comes to raises. but indulgent sugar daddies, and I'm making quote fingers here, indulgent sugar daddies when it comes to expenses. So be sure to make ample use of your diners club card to get by. So you can imagine, you know, women, working women going and taking their diners club card down to, you know, Bloomingdale's

and getting lunch at the Bloomingdale's Cafe, because that's the only place that accepts diners club and that where they can just get a quick bite to eat. So, and then just, just, you know, kind of writing it off and the boss looking the other way. And similarly, there is another tale from a similar column of a young working woman taking her a male client out to lunch. And of course, with business etiquette, the woman is, or the vendor is supposed to pay for the lunch for the client. But if it's a young woman taking an older male out to lunch, that may produce awkwardness, particularly in the 60s, maybe even today. But the column advised the young woman to be sure to use her diners club card because then it looks like her boss is taking the vendor out to lunch.

And she can sort of say, oh, it's on the company, not on me as an individual. So I think that's so interesting because it shows that there's so much social meaning and protocol and manners just packed into how we pay for something. And that really reflects the kind of larger issues of the moment. In terms of the other side, every Diner's Club application in that period had the option to check whether or not you want your bill sent to your office or to your home or if you want to have two separate accounts, one bill that goes to your office and one bill that goes to your home. So it really kind of shows this. And again, we can go back to think about, you know, madmen for, you know, you. to kind of illuminate what this might have been like. But it allowed men who worked in the city and had homes and families in the suburbs to further compartmentalize the distinctions between these two places,

to have one bill with one set of expenses that got delivered to the house and another bill with another set of expenses that kind of stayed in the city. So, you know, this ability to kind of further this ability to sort of live separate lives. So it seems to me there's listening to that, there's fascinating, there's like a ton to unpack. One of the things that strikes me is that this example immediately illuminates this idea, and you said it directly, that not all payment is the same. So paying something by cash fundamentally is different than paying something by card, whether it's a credit card or a charge card. It has a different sort of, it ends up structuring society differently. even we sort of we might think of them as sort of fungible alternative payment methods, but they really do have different ordering effects. And then sort of thinking about this, like from the media perspective, I always think, you know, with new media technologies, how often they end up creating things that are almost exactly the opposite of what they went for.

So, you know, I used to Twitter is like this cacophonous mess of people yelling. And what started off is like a place to have an interesting communication. Facebook just seems like everybody comes to like hate their friends and families, even though it's on Facebook, even though it was sort of ostensibly intended to be a place where people could gather. These things that we create, these networks that we create, whether they're a payment system or a more straightforward media system, we might envision them to solve one thing, but then they turn back on us to recreate the social order. Oh, absolutely. I agree. And we're certainly seeing that with the emergence of new payment systems. You know, I'm a professor and most of my students are under 23 and every single one of them uses Venmo. And Venmo is a huge part of their everyday financial lives. And I read a report once that almost everyone under 25 uses Venmo and almost everyone over 45 has never heard of Venmo.

So because of that, I'll explain quickly what Venmo is, which is a peer-to-peer payment system that's owned by BrainTree, which is owned by PayPal. So ultimately, it's owned by PayPal. That allows you to pay your friends directly from your debit account. So it tries to avoid entering the credit card network to avoid paying fees and just uses the automated clearinghouse, which is a low-fee system, partially publicly administered in the U.S., but that's a longer story. The main social point here is that it creates a social feed of all your payments between friends. So if I say, send a message to Tracy and say, thanks for, you know, margaritas last night with some drink emojis and we're friends with Joe, then Joe can see that we've hung out

without him and might feel some feelings of FOMO or other things. So, you know, there are stories of people observing breakups between their friends over Venmo where people are, you know, charging, invoicing their ex for half a record collection or half a couch or that sort of thing. There are stories of two people going on dates. And then at the end, the date doesn't really end the way the person who paid for the date expects. So the next morning, the other person wakes up and is invoiced for her half of the meal. And it's creating all kinds of new social awkwardness, all kinds of new meanings of what counts as polite on Venmo, what counts as impolite as Venmo, all kinds of surprising reveals like, you know, someone's mother gives them money every week and is essentially

keeping them afloat despite the fact that it seems like they're very successful independently. So I'm actually teaching a class this semester that looks at the history and theory of money technologies as they relate to media technologies. But as a kind of original research component, we're going to be gathering tales of Venmo and trying to see how Venmo is reshaping friendships, reshaping romantic relationships, and reshaping how people think about how they do money. So I'll definitely keep you updated as that class progresses. I love the Venmo example just because it seems like it really makes clear what was only implied in the sense that money has always been a social network of sort. But now it's unambiguous because if you're putting in emojis with the messages, no one would mistake it that way. Because so often my students who are the biggest users of Venmo who feel sort of bad about it, and they see it as the economic invading their social life,

but I see it, just as you said, as the sort of economic being revealed to have always been social. Another thing we talk about in class is we think about, all right, well, if we feel uncomfortable with the economic being made so manifest in our social life, are there other ways that we could design money technology to allow for a little bit more fuzzy areas? So instead of invoicing your friend for exactly half a meal at the end of the night, could we create a money app that allows us to buy rounds, for example.

So it's not down to the penny. It's down to the kind of granularity of like a drink. So, oh, sure, I'll buy you a drink later. Or creating apps that allow for the economic practice of it sort of all coming out in the wash at the end. And one of the things I hope my students really think about, and I hope that's really think about. And I hope also that I expressed through my research is that money is something that we can design. Money is something that we can make decisions about for how we want it to play out in our social lives. So one of the big stories in both money and payments over the past five years now has really been Bitcoin and the rise of cryptocurrencies.

I'm just wondering when you contrast something like Bitcoin with something like Venmo, what does Bitcoin? say about social identity or social networks in the fact that a lot of people want to make anonymous payments and they want the exact opposite of what Venmo kind of provides. Yeah, I mean, I've been paying attention to Bitcoin for a long time. And it's certainly been a wild ride and has gone through many different iterations and phases and had different waves of people interested. in it for different reasons, whether it was sort of the first wave of people who were really invested in a kind of surveillance-free payment app, or, you know, not app, but payment technology. And then people who were mostly interested in it as a kind of like pump-and-dump, get-rich-quick thing, and people who are mostly interested in it as an extra-national currency that allowed them to express their sort of libertarian ideology. And so it's interesting to me that Bitcoin is. kind of this, it's, it really is whatever people want it to be. I don't know. In Harry Potter,

we talk about, you know, there's like the room of requirement, which is where you go into a room and it's whatever you need is there. And I kind of think of of Bitcoin as being sort of that. It's, it's all, it's very much in the eye of the beholder. And it's been very interesting to watch how those different contingencies have shaped Bitcoin in different ways for better or worse. So at this point, it's pretty hard. to make a truly private, unsurveiled payment, everyday payment using Bitcoin. But it is pretty easy to, you know, do trades, try to engage in some Bitcoin arbitrage, maybe make a little money. So I kind of would think that the, the, unfortunately, I think the payment aspect of

Bitcoin is sort of gone by the wayside. But I do think that if we imagine, you know, state currency as one of the primary apparatus of the nation state that it's and sort of the institutions of society that it certainly is resonant with many other events, larger cultural events that people are are sort of interested in in alternatives or or interested in, you know, rethinking institutions or have perhaps lost trust in some of these institutions. I actually think, though, Bitcoin is one of the least interesting developments in money. You know, there's far more people using Venmo than there are using Bitcoin. There's far more people using frequent flyer miles, which I would argue are a private currency themselves that open up, you know, private parts of the

airport and create stratified experiences. I mean, if I'm a, if I use my, if I use my Starwood points when I travel, have a very different experience than if I just pay cash. So I kind of would imagine if I'm imagining a science fiction scenario, and I know this is very science fiction, where there's no more nation states and we all live in these sort of, you know, global tribes, I would almost imagine those tribes being dictated by like Starwood rather than say something like Bitcoin if we're going to think about what the economic determinants of those. It does seem like if Facebook wanted to.

to launch its own currency, we would probably all have to use that. I want to sort of wrap up going back to what we're talking about a little bit in the beginning, about where, you know, in what field should the study of money be situated? And you're in the media studies department. Other people have talked about money within the context of media. Last year I read a McLuhan's book, Understanding Media, and he has a chapter talking about media alongside, you know, TV and radio and everything else. Is there more inquiry coming to you from people in finance, in economics, thinking about these questions today, realizing that the traditional people who study this stuff don't really

have the answers and they need to hear the perspective of people in anthropology or media studies or sociology to actually understand more what money is? I think, you know, I definitely have people in finance. who really want, you know, get excited to talk about the history and theory of money and are really interesting in chatting. And then, of course, there are others for whom, you know, if you tell them, you know, not all payments are the same, not all money is fungible, we have to understand the social components. That sort of just makes things too messy and they're, they're less interested in that. But I do think that as, you know, with the rise of what we've

begun to call FinTech and the kind of shift of the kind of excitement in the financial sector being from kind of old school Wall Street to kind of new school Silicon Valley, even if it winds up not being as radically disruptive as some players would like to imagine. I think there are people excited about rethinking what money has been and what it could be. And I actually do have a a recent book out, an edited collection that's out from MIT Press that my colleague Bill Mauer and I edited. And it's a collection of just short essays about 2,000 words each with lots of pictures that is about kind of forgotten or unusually interesting money stuff. So there's a chapter on Dogecoin, which is sort of a cute, meme-based cryptocurrency. There's a chapter on the history

of ATMs. There's a chapter on the signature pad and people who draw art instead of signing their signature. There's a chapter on how Benjamin Franklin, when he was imagining what the currency system should be for the United States, thought that leaf prints. So, you know, prints of actual leaves would be, one, both the best anti-counterfeiting measure because all leaves are unique and leaves are destroyed in the process of being transformed into prints, but two, would most fully represent sort of the bounty of America. And we have received quite a bit of interest from folks in industry and from outside academia in that book. So I'm hopeful. Joe, I think I know what I'm going to get you for Christmas.

You can't get it for me because Lana already sent me a copy of the book, and I've been reading it, And I highly recommend it. I've been flipping through it reading chapters here and there. So Rebecca Spang, writing in the Financial Times, actually called it beach reading. So that was a- Rebecca Spang, who we had, who was an earlier guest of Oddlots talking about the money in the French Revolution. No, it's a great book. And Lana, it was fantastic talking to you.

Your work is very interesting. And I really appreciate you coming out. Thank you so much. So, Tracy, I thought. that was a really interesting conversation. I really liked what Lana said at the end about the sort of wave of fintech and how that's prompting this bigger discussion about how money can be shaped. It feels like people took for granted for a long time how money worked and didn't really think about it. But it doesn't really seem like we have that choice anymore. It seems

like to move forward, we actually have to start understanding some of these questions better. Yeah, and not just how money can be shaped in the sense of how it works and what exactly it accomplishes, but also this idea of the way money is designed having certain effects and that certain payment or credit systems can have more of a negative effect on certain demographics and others can have more of a positive effect. And I mean, Joe, I've heard it both ways from the fintech guys. You know, I've had discussions with fintech people where they say, oh, we're going to use big data. We're going to monitor your heart rate when you make a payment or when you ask for a loan. And if it's really, really fast, then we know that you're nervous about it. And so we won't extend you

credit. But if you have a slow heart rate, it means that you're calm about the whole thing. And then you'll get a loan. And they say that demonstrates fairness. but a lot of people just find some of this stuff creepy, right? Oh, I had never heard that before, but that is both fascinating and creepy. And I think that probably all anyone involved in this space should go read, you know, like all, there's so many fascinating dimensions just going back to the Diners Club examples of unforeseen things that happened because of the new system. And so obviously Lana has talked about the sort of disparate gender impact, some of it good for women. some of it not good, but all of it sort of unexpected.

And I think with any new technology, you know, you hear about all these good things that are going to come about, inclusion. But I just think there are going to be so many unforeseen things that sort of reshape the way we behave in society that will make it all very interesting. Yeah, for sure. Shall we wrap it up there? Let's wrap it. All right. Well, this has been another episode of the Odd Lots podcast. I'm Joe Wisenthall. You can follow me on Twitter at The Stallwart.

And I'm Tracy Allaway. I'm on Twitter at Tracy Allaway. And you can find Lana Swartz on Twitter at Lana Lana Lana. And follow our producer, Sarah Patterson, Sarah Pat with two teas.