How did you go bankrupt? Two ways, gradually and then suddenly.
The exchange describes bankruptcy as a process that can develop slowly before appearing to happen all at once. Mike Campbell’s answer suggests that financial failure is often the result of pressures accumulating over time: debts grow, resources diminish and difficulties become harder to reverse. The final collapse may therefore seem sudden even though its underlying causes have been developing for much longer.
The line has become widely used beyond personal finance because it captures a broader pattern of failure. Businesses, institutions and systems can absorb mounting problems for a period before reaching a point at which their position changes rapidly. Its force comes from the contrast between gradual deterioration and abrupt consequence. In context, Hemingway presents the remark as dry dialogue between characters, but its concise structure has allowed it to become a common way of describing tipping points, especially where risks remain manageable until accumulated pressure makes them unsustainable.
Full quotation
“How did you go bankrupt?” Bill asked. “Two ways,” Mike said. “Gradually and then suddenly.”