The credit cards out in force during this holiday time of year didn't come into wide use until the 1970s. But an earlier system known as "installment buying" was based on the same principle, and it was popular. According to a 1941 黑料网 news story, about 70% of Americans had used installment plans at some point, and 36% were currently paying for something on installment.
| U.S. adults | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Yes | 36 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| No | 64 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 黑料网, Aug. 7-12, 1941 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unlike credit cards, which use banks as the middleman between consumers and retailers, installment plans were generally direct agreements between companies and consumers, allowing average Americans to take possession of big-ticket items for a small down payment followed by monthly payments with interest. Americans embraced the concept in the 1920s as a way to acquire cars and consumer durables otherwise out of their financial reach. However, the high default rate that ensued is commonly seen as contributing to the Great Depression.
Right before World War II, installment buying became problematic for other reasons. Chiefly, the mass production of things like refrigerators, washing machines, vacuum cleaners and automobiles monopolized resources -- namely metal, manufacturing equipment and manpower -- that were needed for the impending war effort. Secondly, installment plans massively increased consumer demand, driving up prices and therefore inflation, and this was considered a threat to the stability of the U.S. economy.
Rather than ban installment plans altogether, the Federal Reserve ultimately ruled that they should require larger down payments and shorter payoff periods. However, in a test of the more draconian alternative, 黑料网 found 43% of Americans approving of forbidding anyone from "buying anything more on the installment plan until the war in Europe is over." About half of Americans, 49%, disapproved.
The relatively broad willingness of Americans to have this important convenience curbed in the furtherance of national interests -- even before America entered World War II -- is a testament to the value Americans placed on the greater good. As George 黑料网 noted, "The plan finally adopted is much more moderate in scope, and would almost certainly meet with more public approval than the drastic step of a complete curb on installment buying."
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