As the Kalamazoo Gazette recently put it, “Without James H Duncan Sr., we might all still be using cash.” Duncan, 84, helped developed the modern credit card. He served in the infantry in World War II, then began work as an overdue loan collector, working his way up to CEO and chairman of the First National Bank & Trust Co. of Michigan. After retiring in 1985, he moved to Santa Fe with his late wife, who raised their seven children. Here, he’s served on the board of the Santa Fe Community Foundation and dabbled in archaeology. “I took pride in getting the hell out of the way,” Duncan says.
SFR: Am I to understand you invented the credit card?
JD: I can’t honestly say that, but we were the first in the business with anything like the form it is now. A bank on Long Island financed fuel oil sales. I happened to read the only article ever written on that subject—I think it was March of 1952. My boss asked me if I’d heard anything about charge banking. I told him what I knew. He sent me to New York. I came back and told the [bank] president about it. I said, ‘If you could do something for fuel oil dealers, you could do it for any kind of a merchant.’ So he had me appear before our board of directors, which scared me to death—I was about 25 years old. I was put in charge. I built the thing. Out of it grew MasterCard, and Visa as well.
How did that happen?
I started the Charge Account Bankers Association. After a while, we said, ‘Wouldn’t it be nice if people could go to Indianapolis and shop using their First National charge card?’ We learned a bank in Omaha had picked a name for their operation called MasterCard. So we set up an interchange, and it later became national. Then Bank of America came to visit us and said, ‘We’re so impressed with your assistant, if you could let him loose for a couple months, we’ll pay his salary and a nice bonus.’ They started up Bank Americard. After a year or two they wanted to expand it by selling franchises of their system all over the country. That was hard because a lot of banks resented their size. They came up with Visa, which got rid of the stigma.
Did you imagine credit cards would become so widespread?
We thought of it as a convenience kind of thing and an emergency thing. I never envisioned that it would be a means where people would take on large amounts of debt.
Nothing like these ballooning interest rates that trap people?
People don’t get trapped if they read what they’re getting into. The rates are based on the risk companies take. I criticize a lot of the companies for too-lenient lending. We had over 100 banks in our company. I tried to teach them, all of them, that if the loan isn’t good for the customer, don’t let them take it. The young men used to protest, ‘We’ll lose a customer.’ I would say, ‘It’s a lot better to lose a customer than to haul away their car or foreclose on their home.’ That’s been forgotten by a lot of big banks.
How do you feel about the way the administration is handling things?
The only thing I’m willing to say is I was terribly disappointed in John McCain when he characterized everybody on Wall Street as a bunch of crooks. That was patently unfair. He was trying to be a populist. They’re willing to say almost anything or incriminate almost anybody to get votes, and that’s just plain wrong.
What’s been the most important change to the finance industry?
The rise of consumer credit. It was only about 1946, when you had all these guys coming home—all of us wanted cars, and all of us wanted homes. The GI Loan was a measure passed by Congress to help GIs get homes. And the interest rate was 4 percent. I got a GI loan in 1948, and our first home was a four-bedroom that cost 7,000 bucks, brand-new.
As somebody who’s been around, are people right to panic about today’s economy?
No. We’ve been through these things before. You people in the press have to take some responsibility for people having a sense of panic. The good news is that 93 percent of the people in this country are still working.