Apropos of an earlier post here noting this startling statistic, via Harper’s — “Percentage of U.S. homeowners who reported last year that they had bought a car using a home-equity loan: 27” — I was interested in Katherine Kersten’s comments here about the origins of consumer debt:

“In 1909, Henry Ford created the Model T, offering mobility, convenience and liberation beyond Americans’ wildest dreams. Everybody wanted one. But even after production improvements brought the price down, the Model T cost $345 — a budget-breaker for most Americans.

Ford had manufactured, for the first time, “a mass-produced consumer’s item that cost between 10 and 20 percent of a family’s annual income,” writes historian Daniel Boorstin in “The Americans: The Democratic Experience.”

“Ford was a staunch advocate of frugality and prudence. He maintained that folks should scrimp and save until they had enough cash to buy a car. But other business operators had bolder, if not better, ideas. They quickly concocted the consumer “installment plan” — a form of financing previously used only to purchase real estate.

In 1923, U.S. manufacturers sold more than 3.5 million passenger cars, according to Boorstin. About 80 percent were purchased on some kind of time-payment plan.

Installment plans spread quickly in the decades that followed, enabling Americans to acquire desirable items from refrigerators to power boats.”

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