The diffusion of the grey men

After a hiatus I've come back to come back to reading through this old book on the history of CIT, which only recently I was reminded had been taken over by Raleigh-based First Citizens back in 2022. Of course many of you might well ask "why should I give a fuck?" about my reading of an old book about an old finance company we've scarcely ever heard of. Aside from the fact that CIT had its moment in the sun, albeit a storm-threatened one, as it teetered on the edge of and then finally had to declare bankruptcy back in 2009, the history of CIT offers a lot of insight into the development of the US economy during the period of rapid industrialization and consumerization of the early 20th century, culminating in the roaring twenties. CIT was early in the financing of consumer auto purchasing but also lots of other stuff, both retail and B2B. Here's a list of some of the spaces they were financing, including on a wholesale basis (i.e. buying receivables from other, local financing entities).

Step back and think about how so much of this stuff had been done (if at all) 50-70 years prior. By individuals, by hand. Value chains were just beginning to be broken out into their constituent elements as population centers grew and regions and people were made able to specialize due to mass communications and greater ease in getting people and things from place to place. It had to be financed somehow, which meant that you had to have small armies of people figuring out how to get that done, to get money from financial centers out to peripheries and back again. All without computers.

It was a lot of work, much of it super-boring. My point is that there is a tendency to decry the financialization of everything but in fact finance had to grow to let everything else get done. And the only way for it to happen right was for these decentralized armies of salesmen and collectors to spread out building relationships, understanding facts on the ground and then over time aggregating wisdom and abstracting up to get better scale and efficiency. Sure, lots of nastiness was going on too. But eventually wealth flowed out and supported broader prosperity.

Things are different now as the mega tech companies suck wealth inwards, and China's centralization may mean it never replicates this moment. Now I am scrambling to generalize and conclude so I can move on with my day, so I'll just do that.