T HE T WENTIES ! A Booming Economy 11.1

O BJECTIVES Explain the impact of Henry Ford and the auto industry on the country Analyze the consumer revolution and the bull market of the 1920s. Compare the different effects of the economic boom on urban and rural America

S ETTING THE S TAGE After a brief recession just after the war, the decade after WWI was known for its booming economy and the creation of the modern consumer!

T HE A UTOMOBILE D RIVES P ROSPERITY Quick end to the postwar recession Stock prices quickly and steadily rose Factories produced more and more goods Wages increasing ∴ ppl buying more stuff! Much of this was sparked by the auto industry Henry Ford revolutionized product, wages, working conditions, and daily life for people

F ORD P IONEERS M ASS P RODUCTION Did not invent the idea of mass production, but he revolutionized and perfected it Rapid manufacture of large numbers of identical products Under Ford, now thousands of standard pieces assembled to create a standard product

F ORD P IONEERS M ASS P RODUCTION Early 1900s – only the wealthy could afford cars “To the countryman…cars are a picture of wealth and arrogance”  kicking up dirt around the countryside

H ISTORY OF THE A UTOMOBILE Oldsmobile first affordable car but Ford’s Model T really appeal to the people Reliable and cheap ($850) Opened a factory in Detroit: Close to all necessary materials Steel, glass, oil, rubber all in the midwest!

I MPROVEMENTS ON M ASS P RODUCTION Ford hired scientific management experts to improve his mass production techniques. Experts look at every step of the production finding ways to reduce time, effort, + expense Studied Chicago meatpacking plants and reversed the process to become an assembly line : Put cars on a conveyor belt for the workers to add parts at each step on the line Production time went from 12 hours to 90 minutes to produce a Model T Cost went down to $350 (1916) to $290 (1927) 1919 – 10% of Americans owned cars, 1927 – 56%

I MPROVEMENTS FOR W ORKERS Ford the Innovator: Encouraged worker loyalty!  welfare capitalism Doubled the wages of his workers from $2.5 to $5 so they could afford cars of their own! Reduced workday from 9 hrs to 8 hrs 1926  gave the first “Weekend!” “Five dollar hour/ forty hour week” idea started w/ Ford = Ford the rich man and workers happy!

T HE A UTOMOBILE C HANGES A MERICA Because of the growth and success of the auto industry other complementary goods + industries became more successful as well! Goods/industries related to car manufacture all experience growth! Glass, rubber, gasoline, oil, wood, asphalt, insurance, construction, steel

T HE A UTOMOBILE C HANGES A MERICA Oil in the Southwest! 1926 Highway System! Diners, motels, service stations, popped up and lined roads Decline in other modes of transportation Subway, railroads, trolleys etc These had set tracks and schedules…ew!

A B USTLING E CONOMY 1920s consumer revolution ! Flood of affordable goods that became available to the public and the public was buying Electrical power became widely available! = more stuff to buy and life becomes easier Washing machines, irons, vacuums etc Radio and refrigerator sales increased too!

A DVERTISING TO THE C ONSUMER What is a problem in your life that a product could help you solve?

A DVERTISING AND C REDIT B UILD A C ONSUMER C ULTURE Advertising companies began using psychological research of consumers to sell more products Focused on desires and fears of Americans more than on what they actually needed Consumption just for the sake of consuming Things help you become who you have wanted to be Buying on credit  buy things you couldn’t afford before Installment buying: small down payment on a good then pay the rest of the debt off monthly

T HE B IG B ULL M ARKET M AKES F ORTUNES 1920s stock market was a Bull Market Period of continuous growth in stock prices By million Americans owned stocks Seen as a way to get rich quick during this time More ppl acting financially risky to get rich Buying on margin: borrowing $ to buy stocks Slowly pay back the broker w/ the stock at collateral This was okay as long as the price of the stock rose ∴ the owner would continue to make money on it

L ONG T ERM B ULL M ARKET ? If the price of stocks fell, the buyer would still have to pay off the loan Bull Market can never last forever  on shaky ground b/c of all the borrowing of $ However, there was continued prosperity throughout the 1920s!

C ITIES, S UBURBS, AND THE C OUNTRY Ppl in the cities and suburbs experienced an improvement in daily life while those in the country suffered…

P EOPLE F LOCK TO C ITIES Immigrants and farmers fled towards the cities even more so than before Farmers left the field for factory jobs Great Migration = African Americans to the cities Mexican immigration to Southwest cities Cities grew and changed shape Skyscrapers popped: illustrated the strength of American cities Empire State Building = dominance of America

T HE S UBURBS G ROW Improved mass transport and increased use of the automobile = ppl can expand outward Suburbs became a very popular place for factory workers to live The inner cities began a slow but steady depletion of ppl and resources Suburbs appealed to the upper and middle class ∴ mostly Republican and conservative

M ANY A MERICANS F ACE H ARDSHIP Growing wealth gap = wealth unequally distributed Industrial workers’ wages rose much slower than corporate salaries Business owners working the bull market Farm income declined  they were not effected by the economic boom Growing debt from falling crop prices

11-2 T HE B USINESS OF G OVERNMENT Reading Guide How did the banking policies of Andrew Mellon affect the economy? How did Herbert Hoover tackle the social issues of the time? Describe the Ohio Gang and how they differed from Mellon and Hoover? What Was the Teapot Dome Scandal and what were its effects? Identify Calvin Coolidge's defining characteristics as president (both personal and political) What were some of the unseen problems in America at the time? Describe how political actions such as the Washington Naval Disarmament Conference and the Kellogg-Briand Pact strove to achieve world peace Describe post-war debt in Europe and how the Dawes Plan tried to ease pressure off of war torn counties