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Explain why buying things on credit was not common prior to 1917

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Final answer:

Prior to 1917, buying on credit was rare, often stigmatized, and associated primarily with investment luxury items. Mass production, technological advancements, and advertising contributed to changing attitudes, making consumer credit more common by the 1920s as new goods became accessible to a broader audience, and credit purchase systems evolved.

Step-by-step explanation:

Buying on Credit Before 1917

Before 1917, buying things on credit was not common for several reasons. In the 19th and early 20th centuries, consumer credit was less developed, and there was a societal stigma associated with buying everyday goods on credit, as it was often associated with financial instability or recklessness. It was only for certain big-ticket items seen as investments, like fine furniture or pianos, that buying on credit was more socially acceptable. Technological advancements and the rise of advertising during industrialization were crucial in changing attitudes toward consumption.

Moreover, homes and goods were often produced locally, and mass production had not yet made luxury items accessible to the burgeoning middle class. It was only as the 20th century approached, particularly in the 1920s, that new credit systems became more common. This shift was driven by technological innovations, mass production, and aggressive advertising campaigns that made goods more widely available and desirable, ultimately encouraging credit purchases among a wider range of consumers.

Nonetheless, this trend towards increased consumerism and credit buying also meant that lower-wage earners who aspired to a middle-class lifestyle often found themselves in debt. While at times this enabled them to purchase luxury or new technology products, it also had the potential to create financial difficulties should there be a sudden change in their economic circumstances. This development laid some of the groundwork for what would become a credit-dependent consumer economy.

User Ashish Rathore
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The motive why the use of credit was unusual prior to 1917 because it had not ever been permissible for lenders to control interest rates with high sufficient to create a revenue and offering money was unprofitable. Offering money to others was not a money making business and only wealthy people might get personal credits. Deprived of the opportunity of profit, lending money to the middle and lower class was not value the threat. Small time loan sharks which are people who offered loans at extremely high interest rates which was an illegal activity at that time existed for people in desperate financial positions but they were shady operations on the fringes of society. Credit laws were relaxed in an attempt to create a mainstream, profitable alternative to loan sharks for the working class. Installment credit which is a type of credit that has a fixed number of payments, also known as revolving credit and legalized personal loans became big business.
User Erik Finnman
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