Singer Sold Sewing Machines on Installment in 1856 and Invented Modern Consumer Credit

When Isaac Merrit Singer patented his sewing machine on August 12, 1851, the device was a luxury good. A complete Singer machine cost about $100 — roughly the wages of a working family for several months. Most households didn't buy one. Singer's lawyer-partner Edward Clark figured out, in the next decade, how to get one onto every kitchen table in America.

There were two problems to solve. The first was patent. Singer's machine combined Singer's own up-and-down needle motion with several mechanisms — including the lockstitch — that Elias Howe had patented in 1846. Howe sued and won in 1854. Rather than continue fighting, the major manufacturers — Singer, Howe, Wheeler & Wilson, and Grover & Baker — formed the Sewing Machine Combination, the first patent pool in U.S. industry, and divided the licensing revenues among themselves. The pool stayed in force until 1877.

The second problem was money. In 1856, Clark introduced what he called the hire-purchase plan: a customer could rent a Singer machine for a low monthly fee, and the rent payments would, over time, be credited toward the full purchase price. If the customer fell behind, Singer repossessed the machine. This wasn't a brand-new idea in commerce — installment buying existed for some agricultural equipment — but Clark applied it to a small consumer good for the first time, paired it with door-to-door demonstration sales, and watched volumes explode. Singer made 810 machines in 1853. By 1876, the figure was 262,316. The company became the largest sewing-machine maker in the world by 1860, won first prize at the Paris World's Fair in 1855, and by the late nineteenth century had effectively invented the consumer-credit retailing model that car dealers, appliance stores, and mortgage lenders all later adopted.