And while consumer debt was, as it is now, dwarfed by debts associated with the financial sector, consumer debt was booming just prior to the great depression:
"From the 1870s on small-loan lenders began springing up around the country. In fact other than the Great Atlantic and Pacific Tea Company (the A&P), the largest chain stores in America were illegal lenders.... (crackdowns on illegal lending) led the formation of the American Association of Small Loan Brokers, an organization that lobbied for legal reform....the AASLB put together a compromise legislative package. By 1917 the proposal was introduced in several state legislatures. By 1932 twenty-five state had some version if the law on their books.
"....Installment selling first became popular with high priced farm equipment. The equipment allowed much greater productivity but the price made a cash purchase impossible. Because of the increased productivity the new machine promised family farmers readily agreed to purchase on installment terms.... Soon almost every type or consumer good could be purchased on the installment plan. While large ticket items like furniture, pianos, and sewing machines were among the most popular purchases items like curtains, dishes, and clothing were sold on installment plans too. Many merchants set up shop to sell exclusively on the installment plan....
"....In the 1920s the installment plan become common place and had become acceptable to the point that the social stigma had all but disappeared. The leader of the installment plan, now known as “Acceptance” or “Finance Plan” was the automobile. In 1924 three of four cars were purchased that way.
"....In 1927 The Economics of Installment Selling was published. In it the author, E.R.A. Seligman introduced the concept of “pay as you use” as an alternative to “buy now, pay later.” This happened because you were actually simultaneously paying for and using the item. Seligman opened of the idea of “wise borrowing, foolish borrowing.” His view differed greatly from the Victorian era’s thinking in terms of borrowing to produce profit and borrowing to produce immediate comfort. In his view the production of comfort, in essence bringing happiness to one’s life, was just as valuable as the production of profit. In this sense the distinction of good and bad as defined by how the credit was used was erased. The real distinction was made in the borrower’s ability to pay the bill."
http://www.ihatedebt.com/ALookatDebt/TheHistoryofDebtinAmerica/Debt-in-America-1900-1949.php(P.S. -- that site is
not where I first learned of the rise of consumer indebtedness prior to the Great Depression: it's just the first reference that popped up when I searched for something to point you at. I've read multiple, more academic, accounts, over multiple years, of exactly what this website describes, and I've not read any credible history that contradicts this).
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