The Twenties A Booming Economy

Prosperity 1920’s was country’s most economically prosperous era Factories were producing more & more goods Stock prices were rising rapidly Wages on the rise More & more people could afford to buy stocks Most of explosive growth sparked by 1 industry: – Automobiles

Automobiles Henry Ford revolutionized the industry Introduced ideas that revolutionized production, wages, working conditions, and daily life Mass Production: rapid manufacture of large numbers of products – Previously used on sewing machines & typewriters – Used mainly hundreds of parts, not thousands Ford brought mass production to fore front

Automobiles Contd. Owning car was seen as symbol of class Only wealthy people could afford new cars Ransom Olds introduced less expensive Oldsmobile in Ford brought automobile to the people – 1908, Model T introduced – Sold for $850 – Opened new plant on Detroit River – Access to steel, glass, oil, & rubber manufacturing Scientific Managers hired to improve mass- production

Model T

Assembly Lines - New method of improving efficiency -Reduced time, effort, & expense -Studied meatpacking methods => carcasses moved on chains => moved past series of cutters => each cutter cut off specific parts -Ford reversed process & put cars onto assembly lines -Workers at each step add something to the car -In two years, time went from 12 hours to just 90 minutes -Allowed Ford to drop prices -Went from $350 in 1916 to $290 in In 1919, only 10% of families owned a car -By 1927, 56% of families owned a car

Impact on Workers Ford believed in innovation when managing workers 1914, he doubled the wages of many of his workers from $2.35 to $5.00 per day Reduced workday from 9 hours to 8 hours 1926, first industrialist to give his workers Saturday & Sunday off Realized that if workers made more money & had leisure time, they would work harder & possibly become customers These ideas made Ford very rich

How Automobiles Changed America Stimulated growth in other industries as well – Steel, glass, rubber, asphalt, wood, gasoline, insurance, & road construction all grew 1/7 of American steel used to make cars Oil was discovered in CA, TX, NM, & OK Road construction boomed – Service stations, diners, and motels Railroad & trolley use declined Cars allowed Americans to go wherever they wanted

“American Dream” New sense of freedom & prosperity Americans are now more mobile than ever Families took vacations & Sunday drives Did not have to travel along set tracks on set schedules Residential patterns became altered Suburban communities developed Los Angeles was one of the first cities whose growth was influenced by the automobile

Los Angeles

Bustling Economy 1920’s saw a “consumer revolution” – Flood of new, affordable goods became available to the public Electricity – Washing machines, vacuum cleaners, irons – All of these made housekeeping easier – Contributed to radio & refrigerator sales

Advertising & Credit Advertisers used “scientific” techniques & psychological research Able to sell more products to more people than ever before Magazines & Newspapers focused on desires vs. needs – Advertisers convinced people they could be the person they wanted to be by buying the right product New waves of buying fueled customer revolution Installment buying – “Credit” – Consumer makes small down payment & then paid off debt in regular monthly payments

Credit Issues

Bull Market Bull Market: period of rising stock prices Americans put money into stocks to get rich quick By 1929, approx. 4 million Americans owned stock Investors led to ignore risks b/c they were making so much money Buying on Margin introduced – Buyer paid as little as 10% upfront to a broker – Buyer then paid broker for rest of stock over period of months – Stock served as collateral for the broker’s loan – As long as price of stock rose, buyer could pay off loan, making a profit – If price fell, buyer still had to pay off the loan

-Market on very shaky ground -Most people ignored dangers of market -As market prices continued upward, boom-and-bust economies would become a thing of the past

Cities People moved toward cities Immigrants settled in cities Farmers left fields for cities African Americans moved toward northern cities Mexican Americans moved toward SW cities Skyscraper technology changed shape of cities 1931, Empire State building symbolized power & majesty of the U.S.

Empire State Building

Suburbs Mass transit & more cars cause cities to expand outward Urban workers move to the suburbs Suburbs grew faster than inner cities Suburbs also drained people & resources from cities Middle and upper-class lived in suburbs, tended to be more conservative & Republican Inner cities began slow & steady decline

Hardships Americans enjoyed prosperity in suburbs & cities Wealthiest residents=> owners & managers of businesses – These people reaped financial rewards – Often pumped money back into bull market America’s wealth was poorly distributed Industrial wages rose at much slower rate than corporate salaries Farm industry declined “Another America” – poorer & outside the economic boom Farmers suffered from growing debt & falling farm prices