Birth of Modern America Chapter 11 Section 2 Mr. Smith

Consumer economy Economic system requiring individuals to make purchases –Not just buying the needs but also splurging on the wants Radio – king of purchases Automobile – over 400 hundred car companies Appliances – make life easier –Led to the development of new industries Shopping centers – early malls (first in Kansas City, MO) Fast food restaurants – A&W Root Beer (first chain) Advertising – businesses spend more than $1 billion in the 1920s

Installment plan Economic system that allowed consumers make partial payments over a period of time until the total debt is paid –Just like Rent-A-Center today 60% of all cars 70% of household furniture 80% of vacuum cleaners, radios, refrigerators 90% of sewing machines and washing machines

Electric Power Purchases of time/labor saving appliances creates increased demand for electricity –Demand increases by 400% –Americans with electric lights in their home increases from 16% to 63% during the 1920s –Downside found in only 4% of American farms had electricity

The Automobile & Michigan Henry Ford – wanted to “democratize the automobile” –Build and market affordable cars to the masses –Built on an assembly line of interchangeable parts and specialized skills for mass production –Used economies of scale to sell cars cheaply More cars made means less to produce each car –Used vertical consolidation to control auto industry

Industrial Growth: Fueled by Cars Industries involved in automobiles –15% of American steel –80% of American rubber –50% of American glass –65% of American leather –7 billion gallons of gasoline a year Residual effects of automobiles –Travel industry develops –Freight companies develop –Service stations and auto mechanics develop –Restaurant industry develops Laissez faire economics led to more business competition –“The business of America is business” was working