Street Cred

Before 1919, Americans didn’t buy things on credit. General Motors changed that. The company realized it couldn’t sell enough cars for cash, so they started lending buyers the dough for a new set of wheels. Sears and other companies followed suit. Then Wall Street decided to get in on the action, “and started offering stock on credit—’on margin,’ it was called. By the thousands, middle‑class Americans opened margin accounts, putting up 10 or 20 percent of a stock purchase and borrowing the rest. When the market went up, the returns felt like free money.” And there’s nothing like free money, until the bill comes due. In those early days of credit, the bill came due in 1929, the greatest crash in American history. Andrew Ross Sorkin started writing his new book 1929 because he was interested in the finances and psychology behind an important moment in the country’s history, not necessarily because of parallels to today’s market. But in the months leading up to the book’s release, things started to feel a little too familiar in all the wrong ways. An adapted excerpt from The Atlantic (Gift Article): The Lesson of 1929. “Problems arise when we get greedy and take too much. Nobody knows for sure where the line is—or what to do when we discover that we’ve gone past it. At that point, panic is the natural reaction.”

+ Back in the 1920s, credit was new. A century later, “everybody’s getting sucked into creating a lifestyle that’s bigger than them, bigger than what they can afford,” as tech-focused Buy Now Pay Later companies have taken credit to a whole new level. What could possibly go wrong? Well, for one thing, Later doesn’t mean never. NYT Magazine (Gift Article): They Got to Live a Life of Luxury. Then Came the Fine Print.