“Beautiful credit, the foundation of modern society!”

— Mark Twain, The Gilded Age: A Tale of To-Day (1873)

Just as credit had to adapt to the emergence of the market economy in the early nineteenth century, it also had to adapt to the rise of a mature industrial economy toward the end of the century. The spread of large-scale mechanized production meant the availability of new consumer durables—farm equipment, sewing machines, and other appliances—that were almost, but not quite, within financial reach of the mass of the consuming public. New credit practices, like the installment plan, helped to bridge the gap.

New credit practices were also necessary to accommodate the new employment structures of factory production. The waged labor that put cash in workers’ hands also led them to undertake new financial obligations—like installment buying—which in turn gave rise to temporary liquidity problems. Small lenders like pawnshops and salary lenders proliferated in nineteenth-century cities, but strict usury laws meant that many operated illegally and hence were able to exploit their customers in their times of need. Better regulation of small consumer lenders in the 1920s both opened access to credit and reduced borrowers’ vulnerability.