History of credit in the United States

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Presentation transcript:

History of credit in the United States "productive" vs. "consumptive" debt Getting a loan to buy a farm or start a business was productive. Borrowing to satisfy personal appetites was generally frowned upon. Installment plan buying started during Civil War for things like sewing machines Fixed interest rate and fixed payments for a certain period of time But it was the automobile that really accelerated the American way of debt.

Consumerism in the 1920s Prosperity gave people confidence to buy on credit (go into debt to purchase something you can’t afford right now). Advertising boomed to popularize products no one knew they needed Managerial revolution led to change in business structures and growth of middle class.

Credit today in the U.S. Current as of November 2013 U.S. household consumer debt profile: Average credit card debt: $15,112 Average mortgage debt: $146,215 Average student loan debt: $31,240 In total, American consumers owe: $11.08 trillion in debt A decrease of 3.2% from last year $846.9 billion in credit card debt $7.75 trillion in mortgages $1,002.0 billion in student loans An increase of 10.9% from last year

“Credit History” How have attitudes toward debt changed from early American history (18th and 19th centuries) to today? What demographic and social changes occurred between 1800 and the 1920s that would lead to a changing attitude about credit and debt? What breakthrough in installment buying occurred in 1919? What convinced people who were hesitant to go into debt to buy goods on installment plans in the 1920s?