A B OOMING E CONOMY Chapter 16, Section 1

T HE A UTOMOBILE D RIVES P ROSPERITY Henry Ford did not develop the idea of mass production, he simply made it work on a much larger scale. Ford used scientific management techniques to improve efficiency in time, effort and expenses. He utilized the assembly line method to mass produce his first major automobile– the Model T. This method cut down on costs, so he could reduce the price to where the average person (including his workers) could by the Model T. He was also able to raise his workers wages using these new techniques.

T HE A UTOMOBILE D RIVES P ROSPERITY The automobile led to other changes in society as well, from the economy to residential patterns: Industries that manufactured supplies for the automobile boomed; Road construction increased– U.S. Highway System of 1926; Development of service stations, diners and motels; Other forms of transportation decline; New sense of freedom and prosperity; Movement to homes outside of the city.

A B USTLING E CONOMY A consumer revolution happens whenever there is a flood of new, affordable goods on the market. New methods of advertising attracted consumers; Emergence of installment buying– make a small down payment and pay the rest off in monthly increments; Surge in the stock market led people to want to purchase stock, but they had to purchase it on credit– known as buying on the margin ; This was only a successful option when the market was good, though.

C ITIES, S UBURBS AND C OUNTRY The general consensus of movement during the 1920s was to the cities– farmers, African Americans and even Mexican Americans to southwest cities. There was a group that was leaving the city instead and moving to the suburb– urban, middle class workers. This was aided by the development of the automobile. Not every person was feeling the benefits of the 1920s. Farm wages and industrial workers wages were still far below everyone elses.

T HE B USINESS OF G OVERNMENT Chapter 16, Section 2

T HE H ARDING A DMINISTRATION When Harding took office, he promised a return to normalcy. This included a return to policies that benefitted big business. After appointing Andrew Mellon as Secretary of the Treasury, Hardings administration cut spending. However, not all of Hardings appointments as president were as successful. He trusted much of the decision making to his close friends, known as the Ohio Gang. The worst of this gang was Secretary of the Interior Albert Fall.

T HE H ARDING A DMINISTRATION Fall had the ability to transfer oil reserves between different departments. He transferred reserves from the Navy Department to the Interior Department, which he then loaned to rich businessmen. The oil was on reserve for a time of emergency. Although Fall concocted the scheme, Harding signed the order to allow it to happen. It became known as the Teapot Dome Scandal, named after one of the locations of oil reserves.

C OOLIDGE P ROSPERITY When Warren Harding died, his vice-president Calvin Coolidge took over. Coolidge looked to continue the policies of his predecessor, including: Trimming the federal budget; Lowering taxes for incentives to big business; The chief business of the American people is business. However, Coolidge did not act on the troubles that plagued the country, such as low wages and labor unrest.

A MERICA S R OLE IN THE W ORLD In reaction to WWI, the U.S. took precautions during the 1920s to avoid another world conflict. They used their increased role in world trade to make the following happen: Washington Naval Conference to reduce arms race and size of navies of world powers; Kellogg-Briand Pact outlaw war… as an instrument of national policy.

A MERICA S R OLE IN THE W ORLD The U.S. wanted Britain and France to repay their war debts to them. But, Britain and France first needed Germany to pay the reparations agreed upon in the Treaty of Versailles. An agreement in 1924 known as the Dawes Plan arranged for the U.S. to loan Germany money, which could then be paid back to Britain and France. However, when the U.S. economy collapsed, other countries did not look as favorably upon the U.S.