How to make ends meet: Working-class household economies before the First World War
This article explores how working-class households tried to manage fluctuations in income and expenditures by a combination of saving and borrowing. The Swedish Cost of living survey from 1913–1914 focused on working-class and lower-income white-collar households in urban areas. It asked the participating households to keep track of weekly incomes, expenditures, and financial operations in accounting books, which were kept for an entire year. These books make it possible to trace fluctuations in income and expenditures on a weekly basis over an extended period of time, something few other sources allow.
A sample of 30 households were chosen on the basis of expected irregular incomes. However, a subset of maintenance workers turned out to have regular incomes. Four households were chosen as cases for in-depth investigation and are presented as ideal types. The four types have been labelled cash accumulators, bank savers without net annual saving, small borrowers, and mixers of saving and borrowing.
The cash accumulating households strove to save enough money to pay for their high rent. Bank savers used their savings account for precautionary and target savings reasons, resulting in no net annual increase in their savings. The small borrowers relied on small loans to make ends meet. Their expenditures varied with their income and they also had problems repaying their loans, since they had to take out new loans to pay for old ones. The mixers used both savings and loans, even though they could have financed their consumption through savings. They used loans to pay for consumer durables, primarily furniture.
The households managed to smooth their consumption to varying degrees. Despite borrowing extensively, the expenditures among the small borrowers varied, even on food. Fluctuations in food expenditures, although uncorrelated to income, were also present among the cash accumulators as well as the mixers.
Household practice was affected by dependency ratio and degree of income fluctuation. For example, the small borrowers had many children and an average income but with large fluctuations. The mixers had also large variations but no children, which allowed them to save more.