Chapter 13, Section 1 Things to Know How was Henry Ford able to reduce the sale price of the Model T Ford? What was the result of Ford’s innovative manufacturing techniques? The largest increase in sales of automobiles happened between what two years? What stimulated growth in many other industries? When was buying on stock margin profitable? What happened to farm incomes as the 1920’s progressed?

Section 1: A Booming Economy Chapter 13: The Twenties Section 1: A Booming Economy

Why It Matters In the decades after World War I, the American economy experienced tremendous growth. Using revolutionary mass production techniques, American workers produced more goods in less time than ever before. The boom fundamentally changed the lives of millions of people and helped create the modern consumer economy.

The Automobile Drives Prosperity The US has never before experienced such an economic boom as it did in the 1920s. The US economy was sparked by the post-war production. Factories produced more product than ever before and as wages were on the rise, more people could afford to buy these goods. One man and his inventions helped to spark this growth – Who was it? Henry Ford.

The Automobile Drives Prosperity Henry Ford introduced a series of methods and ideas that revolutionized production, wages, working conditions, and daily life. What inventions/ideas did he use? Mass production Scientific management Assembly lines

The Automobile Drives Prosperity What is mass production? The rapid manufacture of large numbers of identical products. It was previously used to manufacture small items such as typewriters and sewing machines. Ford would now use it to produce a large item. Before his use of mass production, the automobile was only sold to the wealthy. Now, everyone could purchase a vehicle.

The Automobile Drives Prosperity How much was the price of the first Model T? $850 – which would be compared to $19,760 in today’s money. Ford Hired scientific management experts to improve his mass-production techniques. This was a relatively new method of improving efficiency, in which experts looked at every step of a manufacturing process to find ways to reduce time, effort, and expense. To lower the sale prices of the Model T, he put his car on an assembly line. At each step, a worker added something to construct the automobile. Ford got his idea from a Chicago stockyard that moved carcasses on chains past a series of meat cutters, each whom cut off a particular part from the carcass.

The Automobile Drives Prosperity As a result of his innovative manufacturing techniques, the price of the automobile went down. The Model T went from $850 in 1908 to $290 in 1927. Because of this, the largest increase in the number of automobiles sold was between 1927 and 1928. Because of this drop in manufacturing costs and the rise in sales, the wages of workers also increased. In 1914, Ford nearly doubled the wages of his workers, from $2.50 to $5 a day. He also reduced the workdays from 9 hours to 8 hours and he gave his workers Saturday and Sunday off. Before this, there was no such thing as a “weekend.” Ford realized that if his workers were paid more money and had more leisure time, they would possibly become potential customers.

The Automobile Drives Prosperity The boom in the automotive industry stimulated growth in other industries related to car manufacture or use. Because of this boom, the gasoline and oil industries boomed, mainly because these vehicles needed these products. Road construction also boomed, especially when the federal government introduced the system of numbered highways. Service stations, diners, and motor hotels (later shortened to motels) began to spring up around the country. Consequently, the other forms of ground transportation – railroads and trolleys – suffered a decline in use. Overall, the automobile gave people a new sense of freedom and prosperity and it altered residential patterns.

The Bustling Economy The 1920s saw what has been called a consumer revolution, in which a flood of new, affordable goods became available to the public. The availability of electricity and the low price of consumer products such as the washing machine, vacuums, and irons made housekeeping easier and less time-consuming. Also, the radio and the refrigerator became more available.

The Bustling Economy The use of new technologies and “scientific” techniques such as psychological research allowed advertisers the ability to sell more products to more Americans than ever before. Installment buying became more popular. Using installment buying, a consumer would make a small down payment and then pay off the rest of the debt in regular monthly payments. This allowed Americans to own products they might otherwise have had to save up for years in order to buy.

The Bustling Economy During the 1920s, the stock market enjoyed a dizzying bull market, which is a period of rising stock prices. Because of this, by 1929, around 4 million Americans owned stocks. The idea of buying on margin – another form of buying on credit, was used to increase wealth. Purchasing stock on margin was profitable as long as stock prices rose, if they fell, the purchaser would owe more than the stock was worth. This was basically a gamble. Experts believed the stock market would continue to rise and that the stock market had entered a “new era.”

Cities, Suburbs, and Country During the 1920s, where was the main flow of people, from city to country or from country to city? Country to city. People left the farms in search of steady jobs and income. The building of New York’s Empire State Building, which finished in 1931, symbolized the power and majesty of the US.

Cities, Suburbs, and Country Improved mass transportation and the widespread use of automobiles caused cities to expand outward. Suburbs rapidly drained people and resources from the cities. Catering to middle- and upper-class residents, suburbs tended to be more conservative and Republican. At the same time, the inner cities at the heart of older urban areas began a slow but steady decline.

Cities, Suburbs, and Country As the suburbs pulled people and wealth from the cities, others outside of the city began to decline in wealth. Farm incomes declined during the decade of the 1920s. These people in the country did not participate in the consumer benefits and economic gains of the decade. They began to be known as the “other Americans” because they did not see these gains.