Question
Buy Now, Pay Later
Creating Connections Social Studies: US History II
For American consumers, the 1920s were good times. New technology meant businesses could make more things. Suddenly, American stores were packed with vacuums, washing machines, radios, and more. But many Americans couldn't afford to buy everything they wanted. Instead, they turned to something called credit.
Historians say that credit wasn't invented in the 1920s. But the bad feeling that went with it faded during those years. Credit also became more widely available. For years, people had paid for most things with cash. It was okay to borrow money for respectable reasons, like starting a business or buying a farm. But going into debt for less important purchases, like new cowboy boots or better furniture, was different. That was considered a moral failing. In the 1920s, this began to change. Buying on credit became much more common.
Credit in the 1920s worked differently than it does today. The credit card hadn't been invented yet. At the time, expensive items were purchased using installment plans. These were made popular by General Motors (GM). With installment plans, people didn't pay for the entire car up front. First, consumers put down a small amount. They got to drive the car home. Then, they made the rest of the payments over the course of a year.
Henry Ford thought the installment plan idea was terrible. His company, the Ford Motor Company, was a GM rival. Ford felt that installment plans forced people into debt to buy a car. So, he invented his own system. People picked out a Ford car. Then, they paid the car dealer five dollars or so every week. After the entire amount was paid, the buyer could drive the car home. But no one liked this idea. It was a huge failure.
But installment plans were a big hit. Soon, almost everything became available on credit. Vacuums, stoves, washing machines, typewriters, and more. Businesses wanted to keep people buying. They kept developing new products. Advertising exploded. Ads tried to convince people that the radio that just came out sounded way better than the one everyone bought last year.
Installment plans were a great way to get people to buy things. But they were risky, too. People could lose their jobs. They wouldn't be able to pay back their loans. It would all fall apart.
In 1929, the stock market crashed. Millions of Americans were out of work. They were unable to pay their debts. Consumer goods sat on shelves. They lost value. Stores went out of business.
The Great Depression didn't scare Americans off credit. In fact, the opposite happened. In the 1950s and 1960s, personal credit cards were invented. Credit cards let people buy anything, anywhere, on credit. Today, experts say that nearly 70 percent of Americans use credit cards. They carry an average debt of about $6,000 per person.
Question 2
2 / 8
Think about the Article. In what way were GM's installment plan and Ford's installment plan different?
GM's plan allowed payments after driving the car home, but Ford's plan wanted the entire amount paid before driving a car home.
GM's plan kept people out of debt and was popular, but Ford's plan forced people into debt and was a huge failure.
GM's plan forced people into debt and was a huge failure, but Ford's plan kept people out of debt and was popular.
GM's plan wanted the entire amount paid before driving a car
Creating Connections Social Studies: US History II
For American consumers, the 1920s were good times. New technology meant businesses could make more things. Suddenly, American stores were packed with vacuums, washing machines, radios, and more. But many Americans couldn't afford to buy everything they wanted. Instead, they turned to something called credit.
Historians say that credit wasn't invented in the 1920s. But the bad feeling that went with it faded during those years. Credit also became more widely available. For years, people had paid for most things with cash. It was okay to borrow money for respectable reasons, like starting a business or buying a farm. But going into debt for less important purchases, like new cowboy boots or better furniture, was different. That was considered a moral failing. In the 1920s, this began to change. Buying on credit became much more common.
Credit in the 1920s worked differently than it does today. The credit card hadn't been invented yet. At the time, expensive items were purchased using installment plans. These were made popular by General Motors (GM). With installment plans, people didn't pay for the entire car up front. First, consumers put down a small amount. They got to drive the car home. Then, they made the rest of the payments over the course of a year.
Henry Ford thought the installment plan idea was terrible. His company, the Ford Motor Company, was a GM rival. Ford felt that installment plans forced people into debt to buy a car. So, he invented his own system. People picked out a Ford car. Then, they paid the car dealer five dollars or so every week. After the entire amount was paid, the buyer could drive the car home. But no one liked this idea. It was a huge failure.
But installment plans were a big hit. Soon, almost everything became available on credit. Vacuums, stoves, washing machines, typewriters, and more. Businesses wanted to keep people buying. They kept developing new products. Advertising exploded. Ads tried to convince people that the radio that just came out sounded way better than the one everyone bought last year.
Installment plans were a great way to get people to buy things. But they were risky, too. People could lose their jobs. They wouldn't be able to pay back their loans. It would all fall apart.
In 1929, the stock market crashed. Millions of Americans were out of work. They were unable to pay their debts. Consumer goods sat on shelves. They lost value. Stores went out of business.
The Great Depression didn't scare Americans off credit. In fact, the opposite happened. In the 1950s and 1960s, personal credit cards were invented. Credit cards let people buy anything, anywhere, on credit. Today, experts say that nearly 70 percent of Americans use credit cards. They carry an average debt of about $6,000 per person.
Question 2
2 / 8
Think about the Article. In what way were GM's installment plan and Ford's installment plan different?
GM's plan allowed payments after driving the car home, but Ford's plan wanted the entire amount paid before driving a car home.
GM's plan kept people out of debt and was popular, but Ford's plan forced people into debt and was a huge failure.
GM's plan forced people into debt and was a huge failure, but Ford's plan kept people out of debt and was popular.
GM's plan wanted the entire amount paid before driving a car
Answers
GPT-5 mini
GM's plan allowed payments after driving the car home, but Ford's plan wanted the entire amount paid before driving a car home.
( GM: small down payment, drive car, pay rest over a year. Ford: pay weekly until fully paid, then take car — and it failed.)
( GM: small down payment, drive car, pay rest over a year. Ford: pay weekly until fully paid, then take car — and it failed.)