Learn about Life in the 1920s

Examples of Instalment Payment Advertising

The method of buying large ticket items with a small deposit and instalment payment plan was a feature of the 1920's. Previously only the wealthy could afford to pay cash for items like pianos, phonographs, radios, fridges, vacuum cleaners, and washing machines. Most people who aspired to owning their own home saved up the full price in cash over many frugal years, so they no money left over for luxuries.

Manufacturers realized they could expand their profits if they could grow their markets and so instalment selling was introduced. The increased production volumes reduced the unit cost of items making them more affordable, and easy terms made for easy sales.

Two strategies that were used by advertisers to drive sales were largely targeted at stay-at-home wives. The first was the time-saving factor of new appliances. Advertisers appealed to housewives to free themselves up from the drudgery of housework and have more leisure time by using mechanical devices to speed up labor-intensive tasks. The second was that savings in costs from using new and improved products would leave more disposable income which could then be spent on lifes luxuries. Processed food advertisements also stressed the time saved in food preparation.

Here are a couple of real-life examples that illustrate the techniques used taken from "The Ladies Home Journal" of June and November 1926.

1. A Ford Tudor Advertisement from June 1926 which showed a woman in a Ford Tudor Sedan watching a young boy play with a dog.

"Among women, especially, the popularity of the improved Ford Tudor Sedan continues to grow. The low price enables them to own an attractive, convenient enclosed car for their own use, without undue burden on the family income. Many women are buying on the Ford Weekly Purchase Plan - paying out of savings from the household budget."

It is worth mentioning that Henry Ford opened his own grocery stores at Ford factories in Detroit to help his employees reduce their cost-of-living.

2. The CHIPSO advertisement of November 1926 tells the story of Mrs S. who ran two guest houses -

"How I save more than $18.00 every month by using Chipso." When Mrs S. told us that Chipso actually saved her $18.00 a month, we said to her, "This is something all women everywhere should know about. Perhaps Chipso can't save that much money every month in many homes - your situation is unusual - but the same Chipso qualities that enable you to save $18.00 every month will help every woman save strength, effort, time and some money. Please tell us your story."

The double page advert then explains her story, including color illustrations surrounded by lists of benefits expounded by Mrs S.

A June 1926 Gulbransen ad for their pianos which ranged in price from $305 to $1275 was typical of many ads for luxury items when it stated "A small cash payment will put the Gulbransen Registering Piano in your home. Subsequent payments to suit your convenience." A Gordon-Van Tine advert said "For the very same money you are now paying out in rent you can own a distinctive Gordon-Van Tine Home and enjoy the comfort, convenience and pleasure it affords." A Kelvinator Advert stated "Convenient Monthly Payments - A reasonable down payment puts Kelvination, the oldest domestic electric refigeration, into your home at once through Refigeration Discount Corporation Finance Plan."

As Gordon-Van Tine so aptly pointed out, what most people were seeking was instant pleasure or gratification. The joy of use now, pay later, turned out to be an overwhelming burden of debt for many 1920's consumers as it has for consumers today.

The stock market crash of 1929 was the beginning of the end for people in debt. As America and the world slipped into the depression of the 1930's, those carrying too much debt were bankrupted, including many of the consumers enticed into debt by instalment purchases. Unemployment increased to unforseen levels and incomes were significantly reduced. It became impossible for many people to maintain repayments and as a consequence people walked away from their homes and farms, or sold their car, or returned goods to retailers. Landlords auctioned off what was left for rent arrears. The market was flooded with cheap items due to oversupply, so it was a buyers market if you had the cash.

The older, more conservative generation, were often better placed to survive the depression as they weren't burdened with the same level of debt.

Nevertheless, instalment payments are still with us today and history is destined to repeat itself. It's the 1920's, and soon to be the 1930's, all over again.