Chapter 10 Section 2 A Growing Economy

American in the 1920s During the 1920s, Americans earned more money than ever before while working fewer hours. In a 1925 survey conducted in Muncie, Indiana, most of the families who owned cars did not have bathtubs with running water.

1920’s American Economy Mass production, or large scale product manufacturing done mainly by machinery, made more products available and lowered costs. This reshaped American economics and industry.

Henry Ford In 1926, Henry Ford cut the workweek of his employees from six days to five. He used the assembly line to build cars. The assembly line divided operations into simple tasks that unskilled workers could do and cut unnecessary motion to a minimum. This system also reduced production cost. Example - Ford was able to reduce the price of his Model T from $850 in 1908 to $295 in 1924.

Role of the Model T in other industries By lowering the price of his mass-produced car, the Model T, Ford created a huge demand. Auto workers were expected to meet requirements Sociological Department set by Ford’s and workers who misbehaved could be suspended or even fired. The automobile reduced the isolation of rural areas and created a new kind of consumer and worker, the auto commuter, allowing people to live farther from work. Additionally, The success of automakers spurred growth in other industries such as rubber, plate glass, nickel and lead.

Disposable Income Rising disposable income led to many new consumer products, allowing people to buy stuff such as frozen foods, household cleaners, washing machines, cosmetics, and facial tissues

Airplanes During the 1920s, the airlines industry expanded. American Glenn Curtiss invented ailerons, which can be used to help steer an airplane. The government used airlines to deliver mail and began building airports. The transatlantic solo flight of Charles Lindbergh in 1927 demonstrated the possibilities of commercial aviation.

Radios Also during the 1920s, the radio industry expanded. In 1926 the National Broadcasting Company (NBC) established a network of radio stations to distribute daily programs. In 1928 Americans experienced the first presidential election campaign conducted over the airwaves.

Borrowing Money (debt) One notable aspect of the economic boom of the 1920s was a change in attitudes toward debt or credit. Before the 1920s, most Americans thought that going into debt was shameful. This attitude changed, and more Americans went into debt to buy items such as furniture and bought cars on credit.

Advertising Inventors at this time had trouble getting people to buy products they did not know they needed. To create consumers for their new products, manufacturers turned to advertising. The goal of advertising is to convince consumers to buy new products that they may or may not need.

Farming During the World War I, the government had encouraged farmers to grow more to meet the need for food in Europe. Many farmers went into debt to buy more land and machinery to raise more crops. Sales and prices were high, so farmers prospered.

Farming After the war, Europeans began producing more farm products, so profits fell for American farmers. New technologies such as fertilizers, machinery, and new seed varieties allowed farmers to produce more, but demand for the products did not increase, so farmers received lower prices for their goods. Although farmers produced higher yields (more crops), without an increase in demand; they received lower prices for their crops.

Protective Tariffs In 1922 Congress passed the Fordney-McCumber Act. The Fordney-McCumber Act of 1922 reduced the American market for foreign goods and provoked a reaction in foreign markets against American agricultural products. This law raised tariffs to protect American industries from competition. Europeans reacted by buying fewer American agricultural products. Prices dropped even more when farmers could not sell their products overseas.

Trying to help the farmers Some congressmen tried to help the farmers sell their surpluses. They proposed a plan in which the government would buy the crop surpluses to sell abroad at a loss.

Vetoing the plan However, President Coolidge vetoed the bill. He thought it would encourage farmers to produce greater surpluses. As a result, American farmers stayed in a recession throughout the 1920s.