News Story: Buying On Credit In The 1920s Essay Example

Part 1: Article: Buying on Credit 1925

During and in the immediate years after the Great War, American consumers were encouraged to save, conserve and limit their consumption in order to provide the nation with the resources needed to for the war and rebuilding efforts. However, as the 1920s began and the nation grew prosperous, the popular attitudes towards saving and sacrifice began to change. Not only did Americans have more money in their hand but the quantity and variety of products available for purchase also increased. In addition, the introduction of buying on credit, allowed people who otherwise had to wait until they had the funds what they needed to “buy now and pays later.” This was a positive development as buying on credit may have begun with the notion of helping customers in need get essential goods when they needed it. However, over the years critics of buying on credit argue that it has changed from buying what is essential to buying what is useless, unnecessary and quickly forgotten. Those same critics assert that it has created a nation of spendthrifts whose main purpose in in purchasing items is to keep up with the Joneses. Despite its critics, buying on credit has been an overall success and positive development for the national economy. In addition to allowing people to get products that they need quickly, buying on credit also gives people the opportunity to purchase products they never dreamt they would have the chance or means to obtain. For instance, Sears, Roebuck and Company’s Housing Kits provide newly arrived immigrants the previously unthinkable pleasure of owning their own home inexpensively. Moreover, buying on credit plans introduces new products into the stream of commerce more rapidly and efficiently than the nation is traditionally used to as mass production, competing manufacturer and economies of scale work to increase the quality and costs of products in order to broaden their available to customers. In addition, buying on credit increases the production of goods which will eventually lead to the creation of more jobs. How can more jobs be bad for the nation?
Outside of the manufacturing realm, buying on credit has a number of individual benefits for the customer. First, it trains the consumer on the benefits of financial discipline and responsibility. To be sure, every customer understands that if they cannot make their payments they may lose their purchase. Second, it teaches the importance of savings and managing spending as customers will be forced to make saving and spending plans or else risk missing a payment. Finally, and in contrast to critic’s arguments of creating spendthrifts, buying on credit stresses the value of honoring your financial obligations as no one wants to be known as a deadbeat.

Part 2: Sears, Roebuck and Company Ad

Interesting in buying a home but not sure how to go about it? Tired of living in a crowded apartment building when the peaceful suburbs call? Thinking of starting a family but not sure if the city is the best place for it? Our “The Valley” Modern Home kit is just the answer you’ve been looking for (Sears, 2012). For a reasonable US $ 989, Sears, Roebuck and Company will provide a one floor “already cut and fitted” 26x24 foot three room house including porch, bathroom, flooring, finishing, roofing, paint and some basic furniture (Sears, 2012). The entire house will be transported to the railroad station nearest your land plot ready to be assembled. Moreover, if don’t have the funds readily available for purchase, try our “Easy Payment Plan.” It’s simple to complete (we’ll even offer a translated version) and offers reasonable interest rates and low down and monthly payments (Thornton, 2002)

Part 3: Reflections of the Times

One of the major trends of the 1920 was the seeming necessity of consumption for the average American (Benchley, 1920). While consumerism was not new to America, what made a difference in the 1920s were the efforts that manufactures, stores and salesman put into persuading Americans to buy products and the susceptibility of the American public to believe that they needed to buy the latest product. It was almost as if consumption itself was the goal. What made consumption easy was the popularization of “buying on credit” or installment plans. Whereas in the past, being in debt was looked down on, it became personally and publically popular. For instance, the Sears and Roebuck ad mentioned above illustrates the trend succinctly. While Sears, Roebuck and Company, today commonly known simply as Sears, is well-known as a chain department store, between 1908 and 1940, besides their retail outlets, they also ran a thriving mail-order business that included ready-made house kits with instructions on how to build the new homes. The homes were “truly modern homes with centralized heating systems, electric lights and indoor plumbing” (Thornton, 2002). Moreover, for those that are happy with their current living circumstances, Sears entices consumption by suggesting there is a better way to live that they have ignored but that Sears will introduce to them. Finally, and perhaps most importantly, Sears makes the inability to pay for it all at once disappear. To be sure, in order to makes the homes affordable to the general public and persuade customers to by its homes it offered them an easy payment plan that perfectly expresses the trend of the times to “buy now and pay later.” This is further illustrated in the news article. While it recognizes the twin traditional American values of and only buying only what you can afford and against being in debt it tacitly suggests that remains true to these values may be bad for the economy and the nation’s development. Additionally, while acknowledging some of the negatives that buying on credit produces it explain them away by explaining how the advantages outweigh any disadvantages.

References

Benchley, R. (1920, May 10). How to Sell Goods. Retrieved on January 13, 2015, from http://americainclass.org/sources/becomingmodern/prosperity/text3/howtosellgoods.pdf
Federal Reserve of Boston – FRB. (n.d).Credit History: The Evolution of Consumer Credit in America. Retrieved on January 13, 2015, from https://www.bostonfed.org/education/ledger/ledger04/sprsum/credithistory.pdf
Sears Archives – Sears. (2012, Mar. 21). Sears Homes 1921-1926. Retrieved on January 13, 2015, from http://www.searsarchives.com/homes/1921-1926.htm
Thornton, R. (2002). The Houses That Sears Built: Everything You Ever Wanted to Know About Sears Catalog Homes. Alton, IL: Gentle Beam Publishing.