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The Evolution of Commercial Credit Reporting Agencies in Nineteenth-Century America*

Published online by Cambridge University Press:  11 June 2012

James H. Madison
James H. Madison
Affiliation:
Visiting Assistant Professor of History, Indiana University
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Abstract

Professor Madison examines the formative decades of an important new industry in the nineteenth-century American economy. Overcoming a wide range of problems and challenges, firms such as the Bradstreet and the Dun agencies became established enterprises by the end of the century primarily because they effectively met new needs in a changing business environment.

Type
Articles
Information
Business History Review , Volume 48 , Issue 2 , Summer 1974 , pp. 164 - 186
Copyright
Copyright © The President and Fellows of Harvard College 1974

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References

1 For European examples, see Friends of Commerce, A Caution to Bankers, Merchants, and Manufacturers, against a Series of Commercial Frauds Prevalent throughout Great Britain and Ireland (Edinburgh, 1831)Google Scholar; The Guardians: Or, Society for the Protection of Trade against Swindlers and Sharpers, Established March 25, 1776 [London, 1779]. See also Errant, Joseph W., The Law Relating to Mercantile Agencies (Philadelphia, 1889), 5, 13, 17–19.Google Scholar

2 The Mercantile Agency was also known under the style of Lewis Tappan & Co. (1841–1849), Tappan & Douglass (1849–1854), B. Douglass & Co. (1854–1859), and R. G. Dun & Co. (1859–1933). Dun & Bradstreet: The Story of an Idea 1841–1966 (New York, 1966), 36.

3 Earling, P. R., Whom to Trust: A Practical Treatise on Mercantile Credits (Chicago, 1890), 301.Google Scholar See also Errant, Law Relating to Mercantile Agencies, 3; de Colange, L., The American Encyclopaedia of Commerce, Manufactures, Commercial Law, and Finance (2 vols., Boston, 1881), II, 723Google Scholar; Zimmerman, T. J., ed., Credits and Collections: The Factors Involved and the Methods Pursued in Credit Operations: A Practical Treatise by Eminent Credit Men (Chicago, 1904), 48Google Scholar; Goddard, Frederick B., Giving and Getting Credit: A Book for Business Men (New York, 1896), 128–129Google Scholar; Blanton, Ben H., Credit, Its Principles and Practice: A Practical Work for Credit Men, Presenting the Principles and Practice Involved in Modern Credits and Collections, together with an Explanation of Bankruptcy Proceedings (New York, 1915), 80.Google Scholar

4 Bailyn, Bernard, The New England Merchants in the Seventeenth Century (Cambridge, Mass., 1955), 34–35Google Scholar; Atherton, Lewis E., The Frontier Merchant in Mid-America (Columbia, Mo., 1971), 75Google Scholar; Atherton, Lewis E., “The Problem of Credit Rating in the Ante-Bellum South,” Journal of Southern History, XII (November, 1946), 535–536Google Scholar; Porter, Glenn and Livesay, Harold C., Merchants and Manufacturers: Studies in the Changing Structure of Nineteenth-Century Marketing (Baltimore, 1971), 31–32Google Scholar; Tooker, Elva, Nathan Trotter: Philadelphia Merchant 1787–1853 (Cambridge, Mass., 1955), 143–144.CrossRefGoogle Scholar

5 “The Mercantile Agency System,” Bankers' Magazine and Statistical Register, VII (January, 1858), 548; Clark, Thomas D., Pills, Petticoats and Plows: The Southern Country Store (Indianapolis, 1944), 112Google Scholar; Earling, Whom to Trust, 17.

6 Hidy, R. W., “Credit Rating Before Dun and Bradstreet,” Bulletin of the Business Historical Society, XIII (December, 1939), 84–88Google Scholar; Perkins, Edwin Judson, “The House of Brown: America's Foremost International Bankers, 1800–1880” (Ph.D. dissertation, Johns Hopkins University, 1972), 304–305, 477–479.Google Scholar

7 Foulke, Roy A., The Sinews of American Commerce (New York, 1941), 333–334Google Scholar; Taylor v. Church, 4 Seld. 452 (1853). See also Pessen, Edward, “Moses Beach Revisited: A Critical Examination of His Wealthy Citizens Pamphlets,” Journal of American History, LVIII (September, 1971), 419, 421.Google Scholar

8 Wyatt-Brown, Bertram, “God and Dun & Bradstreet, 1841–1851,” Business History Review, XL (Winter, 1966), 432–450.Google Scholar

9 Dun Credit Ledgers, Ohio, Vol. 78, p. 59, Dun & Bradstreet Collection (Baker Library, Graduate School of Business Administration, Harvard University). This volume is one of the original credit ledgers from the New York office of the Mercantile Agency. Approximately 2,580 of these ledgers are deposited in Baker Library. They contain reports on businessmen throughout the United States and Canada for the period 1841 to 1890.

10 “The Mercantile Agency,” Hunt's Merchants' Magazine, XXIV (January, 1851), 49–50.

11 Reports of the Four Leading Cases against the Mercantile Agency for Slander and Libel (New York, 1873), 188. See also Barrett, Walter [Scoville, Joseph A.], The Old Merchants of New York City (New York, 1862), 236–239.Google Scholar

12 Reports on the Bradstreet Agency, 1877, 1880, Dun Scrapbook, Firm Vol. 5, pp. 30, 37, Dun & Bradstreet Collection; Bradstreet's Annual Statements, 1878–1882, ibid., p. 41; R. G. Dun & Co., “Statistical Comparison Compared,” May 10, 1882, ibid., p. 42; Bradstreet's Improved Mercantile Agency under Its New Management (New York [1878]), 1; Wiman, Erastus, Chances of Success: Episodes and Observations in the Life of a Busy Man (New York, 1893), 265.CrossRefGoogle Scholar The Dun and Bradstreet companies continued to compete vigorously until their merger in 1933. In 1902, for example, George Marston Whitin of the Whitin Machine Works noted that “Bradstreet is thought more of in the South than Dun.” Whitin was a regular subscriber to Dun but decided to subscribe to Bradstreet in order to compare the two agencies. After a year's observation, he concluded that “Dun's reports were more promptly rendered and more satisfactory as to details.” Quoted in Navin, Thomas R., The Whitin Machine Works Since 1831: A Textile Machinery Company in an Indus trial Village (Cambridge, Mass., 1950), 225.CrossRefGoogle Scholar See also Steffler, C. W., “The Evolution of the Mercantile Agency: R. G. Dun & Co.,” Commerce and Finance, XVII (March 21, 1928), 637–642Google Scholar; Steffler, C. W., “The Evolution of the Commercial Agency: The Story of Bradstreet's,” Commerce and Finance, XVII (February 22, 1928), 425–429.Google Scholar

13 Foster, George G., New York Naked (New York, 1854), 119–120.Google Scholar References to Jesuitism and inquisitorial procedures characterized criticism of this type. See A Merchant of Boston, “Traits of Trade—Laudable and Iniquitous,” Hunt's Merchants' Magazine, XXIX (July, 1853), 51Google Scholar; Atherton, “Problem of Credit Rating,” 551–553; Wyatt-Brown,“God and Dun & Bradstreet,” 443.

14 Merchant of Boston, “Traits of Trade,” 51.

15 Quoted in Perkins, “The House of Brown,” 304. See also Hidy, Ralph W., The House of Baring in American Trade and Finance: English Merchant Bankers at Work 1763–1861 (Cambridge, Mass., 1949), 349.CrossRefGoogle Scholar

16 Meagher, Thomas F., The Commercial Agency ‘System’of the United States and Canada Exposed: Is the Secret Inquisition a Curse or a Benefit? (New York, 1876), 17–18.Google Scholar The present analysis is concerned with the issue of inaccuracy in credit reports as seen by contemporary critics and not with the question of the accuracy or usefulness of these reports for historical research. Two historians who have used the reports have found them to be less complete in coverage and systematic in detail than desirable but nevertheless generally reliable and exceedingly valuable as sources of information. Madison, James H., “Businessmen and the Business Community in Indianapolis, 1820–1860” (Ph.D. dissertation, Indiana University, 1972), especially 238Google Scholar; Walsh, Margaret, The Manufacturing Frontier; Pioneer Industry in Antebellum Wisconsin 1830–1860 (Madison, Wisc., 1972), 230–232.Google Scholar

17 Earling, Whom to Trust, 300. See also Wyatt-Brown, “God and Dun & Bradstreet,” 443; Atherton, “Problem of Credit Rating,” 553–555.

18 Indianapolis Indiana Journal, January 13, 16, 1857; Merchant of Boston, “Traits of Trade,’ 52; Meagher, The Commercial Agency ‘System,’ 12–13.

19 Annual Return from Albany Office, R. G. Dun & Co., December 31, 1876, File Drawer 3, Dun & Bradstreet Company Archives, New York. See also McLean v. Dun et al., in Report of Important Cases against The Mercantile Agency, as to their Liability for Representations, Honestly Made in the Course of their Business (New York, 1877), 103; The Mercanti Agency: Its Claim upon the Favor and Support of the Community: Commendatory Letters (New York, [1872?]), 13; Earling, Whom to Trust, 32.

20 Meagher, The Commercial Agency ‘System,’ 38; Zimmerman, ed., Credits and Collections, 43.

21 “The Mercantile Agency System,” 546; Dun Credit Ledgers, South Carolina, Vol. 6, p. 8, Dun & Bradstreet Collection; McLean v. Dun et al., in Report of Important Cases against The Mercantile Agency, 102, 112; Goddard, Giving and Getting Credit, 53; Foulke, The Sinews of American Commerce, 337, 374–375; Zimmerman, ed., Credits and Collections, 45–46.

22 Dun, Barlow & Co. to Branch Managers, February 7, 1874, File Drawer 3, Dun & Bradstreet Company Archives; R. G. Dun & Co., Circular, November 1877, File Drawer 1, ibid. For examples, see Dun Credit Ledgers, Pennsylvania, Vol. 207, p. 204; Indiana, Vol.69, p. 416, Vol. 72, p. 429; Maryland, Vol. 14 (file), Dun & Bradstreet Collection; Navin, The Whitin Machine Works, 233.

23 Vose, Edward Neville, Seventy-Fve Years of The Mercantile Agency: R. G. Dun & Co. 1841–1916 (New York, 1916), 142.Google Scholar

24 Lewis Tappan to John B. Niles, April 7, 1842, John B. Niles Papers (Lilly Library, Indiana University, Bloomington).

25 “The Mercantile Agency System,” 546; The Mercantile Agency: Its Claims upon the Favor and Support of the Community, 13; Goddard, Giving and Getting Credit, 127–128.

26 Reference books published by the Dun and Bradstreet agencies have been examied in Baker Library, Harvard University, and the Dun & Bradstreet Company Archives, New York.

27 Vose, Seventy-Five Years of The Mercantile Agency, 80–85, 98; The Banker's Agency, Circular, 1883, Dun Scrapbook, p. 24, Dun & Bradstreet Collection; D. Plumb & Co., Circular, December 28, 1860, MSS File No. 79 (Baker Library, Graduate School of Business Administration, Harvard University); J. M. Bradstreet & Son to William Witherle, November 20, 1861, William Witherle Collection (Baker Library, Graduate School of Business Administration, Harvard University).

28 McLean v. Dun et at., in Report of Important Cases against The Mercantile Agency, 102; Commonwealth v. Stacey, in Reports of the Four heading Cases against the Mercantile Agency for Slander and Libel, 282, 291; Beckman, Theodore N., Credits and Collections in Theory and Practice (New York, 1924), 117–118.Google Scholar

29 Dun, Barlow & Co., Circular, December 1877, Dun Scrapbook, p. 76, Dun & Bradstreet Collection.

30 Gibson v. Dun, in Report of Important Cases against The Mercantile Agency, 34. See also Zimmerman, ed., Credits and Collections, 92–93, 153, 166.

31 McLean v. Dun, in Report of Important Cases against The Mercantile Agency, 101–102.

32 Dun & Bradstreet: The Story of an Idea, 34–35; “The Mercantile Agency System,” 545; R. G. Dun & Co., “Statistical Comparison Compared,” May 10, 1882, Dun Scrapbook, p. 42, Dun & Bradstreet Collection; Bradstreet's Improved Mercantile Agency under Its New Management, 3.

33 The Mercantile Agency: Its Claims upon the Favor and Support of the Community, 12–13.

34 Ibid., 12.

35 Gibson v. Dun, in Report of Important Cases against The Mercantile Agency, 40, 67, 77; “The Mercantile Agency System,” 547–548; Bradstreet's Improved Mercantile Agency under Its New Management, 6; Bangert, Shaw, & Co.'s Mercantile and Collection Agency, Circular [n.d.], Dun Scrapbook, p. 16, Dun & Bradstreet Collection.

36 “The Mercantile Agency System,” 547; Indianapolis Indiana Journal, January 16, 1857.

37 Quoted in Vose, Seventy-Five Years of The Mercantile Agency, 126. See also R. G. Dun & Co., New York, to R. G. Dun & Co., Evansville, Ind., November 18, 1896, Dun Letterbook, Firm Vol. 10, p. 256, Dun & Bradstreet Collection.

38 Vose, Seventy-Five Years of The Mercantile Agency, 122–130; Current, Richard N., The Typewriter and the Men Who Made It (Urbana, Ill., 1964), 84–85, 117Google Scholar; Foulke, The Sinews of American Commerce, 374–375; Wiman, Chances of Success, 161–163.

39 Commonwealth v. Stacey, in Reports of the Four Leading Cases against the Mercantile Agency for Slander and Libel, 302.

40 Taylor v. Church, 1 E. D. Smith 283 (1851).

41 Beardsley v. Tappan, 5 Blatchf. 498 (1867). See also Errant, The Law Relating to Mercantile Agencies, 21–24; Foulke, The Sinews of American Commerce, 292–293. The United States Supreme Court reversed this decision on different grounds in Tappan v. Beardsley, 10 Wallace, 427 (1870).

42 Ormsby v. Douglass, 37 N.Y. 484 (1868). See also Ormsby v. Douglass, in Reports of the Four Leading Cases against the Mercantile Agency for Slander and Libel, 134–186.

43 See especially the argument for privileged communication by the Mercantile Agency's lawyer in Tappan v. Beardsley, in Reports of the Four Leading Cases against the Mercantile Agency for Slander and Libel, 205–264.

44 Eber v. Dun, 12 Fed. Rep. 530 (1882). See also Trussell v. Scarlett, 18 Fed. Rep. 214 (1882); Locke v. Bradstreet, 22 Fed. Rep. 771 (1885). The printed reference books were not included under the protection of privileged communication. Sunderlin v. Bradstreet, 46 N.Y. 188 (1871); Eber v. Dun, 12 Fed. Rep. 526.

45 Eber v. Dun, 12 Fed. Rep. 528. See also Meagher, The Commercial Agency ‘System,’ 56–60; Dun, Barlow & Co. to Branch Managers, March 9, 1875, March 5, 1877, File Drawer 3, Dun & Bradstreet Company Archives.

46 Errant, The Law Relating to Mercantile Agencies, 59–70; Report of Important Cases against The Mercantile Agency, passim.

47 Eaton v. Avery, 83 N.Y. 34 (1880). See also Errant, The Law Relating to Mercantile Agencies, 42–55.

48 Journal of the House of Representatives of the States of Missouri, at the Adjourned Session of the Twenty-Seventh General Assembly, Commencing January 7, 1874 (Jefferson City, 1874), 145; Journal of the House of Representatives of the Commonwealth of Pennsylvania, for the Session Begun at Harrisburg, on the 6th Day of January, 1874 (Harrisburg, 1874), 397, 445; Journal of the House of Representatives of the Twenty-Eighth General Assembly of the State of Illinois, at the Adjourned Regular Session, Begun and Held at Springfield, January 6, 1874 (Springfield, 1874), 191, 196, 334, 489; Journal of the Senate of the State of New York: At their Ninety-Seventh Session Begun and Held at the Capitol in the City of Albany, on the Sixth Day of January, 1874 (Albany, 1874), 275, 288.

49 Commercial and Financial Chronicle, 18 (April 4, 1874), 338.

50 File of the [Pennsylvania] House of Representatives, Bill No. 178, An Act to punish commercial agents for false representations of the business condition of certain persons (Harrisburg, 1874).

51 Wiman, Chances of Success, 257–258; Meagher, The Commercial Agency ‘System,’ 80–84. A copy of the form letter is in File Drawer 3, Dun & Bradstreet Company Archives.

52 Wiman, Chances of Success, 257–258. See also Journal of the Senate of the Commonwealth of Pennsylvania, for the Session Begun at Harrisburg, on the 6th Day of January, 1874 (Harrisburg, 1874), 606, 786, 821.

53 Dun, Barlow & Co. to Branch Managers, January 19, 1875, File Drawer 3, Dun & Bradstreet Company Archives.

54 The only example found of state regulation adversely affecting credit reporting agencies in the last quarter of the nineteenth century was in South Dakota in 1891. State v. Morgan, 2 S.D. 32 (1891).

55 John H. Smith to R. G. Dun & Co., [1877?], Dun Scrapbook, p. 88 Dun & Bradstreet Collection.

56 Be American Commercial Agency Association, Circular, November 10, 1878, Ibid., p. 6.

57 Bangert, Shaw & Co.'s Mercantile and Collection Agency, Circular [n.d.], ibid., 16. See also American Mercantile Agency,“To Wholesale Jobbers of Albany and Troy and Merchants Generally,” June, 1887, ibid., p. 11.

58 McLean v. Dun et al., Upper Canada, 39 Q.B. 552 (1876); E. E. Scranton to Erastus Wiman, June 20, 1878, Dun Scrapbook, p. 11, Dun & Bradstreet Collection; The Banker's Agency, Circular, 1883, Dun Scrapbook, p. 24, Dun & Bradstreet Collection. The rate charged by the Dun Agency depended partly on the number of reports requested by a subscriber.

59 Edward Russell to Wiman, July 26, 1878, Dun Scrapbook, p. 20, Dun & Bradstreet Collection.

60 J. M. Fuller to Wiman, March 13, 1879, ibid., p. 3.

61 American Commercial Agency Association, Circular, November 10, 1878, ibid., p. 6; Bangert, Shaw & Co.'s Mercantile and Collection Agency, Circular, [n.d.], ibid., p. 16; The Mercantile Agency, Boston, Circular, July 20, 1878, ibid., p. 20.

62 The Spiegel mail order house used agencies of this type in the early twentieth century. One former Spiegel executive, in commenting on the lawyers recommended by these “little two-for-a nickel outfits,” later noted that “we should have known these guys weren't going to do much of a job for us.” Quoted in Smalley, Orange A. and Sturdivant, Frederick D., The Credit Merchants: A History of Spiegel, Inc. (Carbondale, Ill., 1973), 85.Google Scholar

63 “An Impudent Fraud,” Dun Scrapbook, p. 78, Dun & Bradstreet Collection; Wiman, Chances of Success, 270–274.

64 Report on The Furniture Agency & Exchange, May 26, 1879, Dun Scrapbook, p. 85, Dun & Bradstreet Collection, See also Report on Equitable Mercantile Company, November 15, 1881, ibid., p. 72. For other kinds of chicanery by small credit reporting agencies, see Hill, John Jr, Gold Bricks of Speculation (Chicago, 1904), 285–296.Google Scholar

65 Geo. Douglas Mercantile Agency, Circular, August 20, 1878, Dun Scrapbook, p. 67, Dun & Bradstreet Collection; Curry's Commercial Reports, trade card, ibid., 64; Philadelphia Credit Bureau, Circular, ibid., p. 45; John W. Early to Flint Jackson, April 3, 1882, ibid., p. 87; Barr & Widen Mercantile Agency Co. v. Rodick, 47 Mo. App. 298 (1891); Beckman, Credits and Collections, 133–137; Ettinger, Richard P. and Gotlieb, David E., Credits and Collections (New York, 1917), 123–127.Google Scholar

66 Dun, Barlow & Co. to Branch Managers, January 17, 1885, Dun Scrapbook, p. 68, Dun & Bradstreet Collection. See also Reports on Wood & Co., October 18, 1879, August 25, 1881, September 23, 1882, ibid., p. 68; Thomas A. Richardson to R. G. Dun & Co., September 14, 1882, ibid., p. 68; Dry Goods Commercial Agency, Circular, June 15, 1882, ibid., p. 68.

67 Russell to Wiman, July 26, 1878, Dun Scrapbook, p. 20, Dun & Bradstreet Collection. The manager of Dun's Hartford branch shared Russell's concern and wrote an essay on the subject. Folts, G. H., ‘Survival of the Fittest’: Points as to Prices in Regard to Mercantile Agencies (Hartford, Conn., [1878?]).Google Scholar

68 [?] to [?] Stacey, December 5, 1882, Dun Scrapbook, p. 24, Dun and Bradstreet Collection.

69 Earling, Whom to Trust, 299–300.

70 Dry Goods Bulletin, April 15, 1879.

71 Blanton, Credit, Its Principles and Practice, 80; Earling, Whom to Trust, 301; Beckman, Credits and Collections, 105.

72 Beckman, Credits and Collections, 138–172, 264–266; Zimmerman, ed., Credits and Collections, 109; Hagerty, James Edward, Mercantile Credit (New York, 1913), 154–157Google Scholar; Vose, Seventy-Five Years of The Mercantile Agency, 157; Earling, Whom to Trust, 233.