1920s Consumerism: Buying on Credit Explained — Reading Comprehension

The 1920s in the United States was a decade marked by significant economic growth and dramatic changes in daily life. One important development was the rise of consumerism, which means that people began to purchase more goods and services than ever before. At the heart of this transformation was a new way of buying: using credit and installment plans instead of paying the full price right away.

Before the 1920s, most Americans bought products only if they could pay the entire price up front. However, as new technologies like radios, automobiles, and washing machines became available, demand increased. Companies and banks saw an opportunity. They introduced installment buying, which allowed customers to take products home after making a small down payment and then pay the rest in monthly amounts. This system made expensive items more accessible to middle-class families. As a result, Americans bought more cars, household appliances, and fashionable clothing than ever before.

Proponents of this new system argued that buying on credit fueled economic growth and made life more comfortable. For example, an advertisement from the time claimed, "Why wait? Enjoy it now—pay as you use!" This slogan reveals the optimism of the era. Supporters believed that easy credit would help families join the modern world more quickly. Business owners and manufacturers also supported credit because it increased their sales and profits. The government, influenced by growing prosperity, did not impose strict regulations on consumer credit during this period.

However, not everyone agreed that credit was a positive force. Critics worried that buying on credit encouraged people to spend beyond their means, leading to debt and financial instability. Some religious and community leaders warned that the focus on material goods and pleasure was weakening traditional values. A 1928 editorial in The New York Times stated, "The country cannot continue to spend itself rich." This quote highlights concerns that the economy’s growth was based on risky behavior rather than real wealth.

The effects of widespread credit use were complex. On one hand, new products improved the standard of living for millions. On the other hand, easy credit created financial pressure for families who could not keep up with payments. By the end of the decade, household debt reached record levels. When the stock market crashed in 1929, many families were unable to pay what they owed, which made the Great Depression even worse.

Historians now debate whether buying on credit was mostly helpful or harmful. Some argue that it helped build the modern American economy and created jobs. Others point out that it contributed to economic vulnerability and hardship when times turned bad. The story of 1920s consumerism shows how new ideas can have both positive and negative consequences. It also reminds us that economic choices affect not just individuals, but society as a whole.

Interesting Fact: In the 1920s, about 75% of cars and 60% of furniture in the U.S. were bought on installment plans, showing just how popular credit had become.

What did installment plans allow?

Which new technology became popular in the 1920s?

When did the stock market crash?

Why did some support buying on credit?

What was a main concern about credit?

What does the quote 'The country cannot continue to spend itself rich' mean?

Most Americans paid full price up front. True or false?

What does 'debt' mean?