Angela Brown Chapter 11 A B USINESS B OOM 1

A C ONSUMER E CONOMY  Consumer Economy – One that depends on a large amount of buying by consumers  Consumers – individuals who use products  Wages rose 28%  # of millionaires doubled 2 /Rexall%20warehouse-1920%27s.jpg

B UYING ON C REDIT  Installment Plan – a system that lets customers make partial payments (installments) at set intervals over a period of time until the total debt is paid – fueled consumer economy  Up to this time borrowing money for anything except a house or land unthrifty even immoral  People bought who would not have – despite interest rates from 11 to 40%  % cars; 70% furniture; 80% vacuum cleaners, radios, and refrigerators; 90% sewing machines, washing machines 3

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E LECTRIC P OWER  customers quadrupled  63% people with electric power (urban)  4% American farms (many used wind powered generators)  GE formed 1892 – take over Thomas Edison’s electric light business  Sold household electrical appliances – electric motors 5

New Products to Buy  Electric toasters,  ovens,  sewing machines,  coffee pots,  irons, and  vacuum cleaners,  telephones,  cosmetics Ford and the Automobile  Ford and the “Model T”  1896 perfected first version of lightweight, gas- powered car called quadricycle (sold it to make a better one)  1903 started automobile company  1908 sold 30,000 Model T’s 6

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F ORD ’ S A SSEMBLY L INE  wanted to “democratize the automobile” produce sell cars at prices ordinary people could afford  assembly line – manufacturing process in which each worker does one specialized task in the construction of the final product  Made assemble line more efficient – like today  Model T made every 24 seconds 8

M ODEL T  1914 (first year of assembly line) Model T’s $490 each (1/2 price from year before)  Ford “any color as long as its black” – black paint dried faster – 1928 Model A color variety  General Motors – low priced Chevrolet – many colors  Ford – vertical consolidation – controlled businesses that make up phases of products development (raw ore, coal mines, wood, rubber, glassworks, railroads, fleet of ships, tools) 9 msarosy/images/model-t.gif

C OMPLEX B USINESSMAN  1914 praised for $5-a-day rate for workers (double other factories)  used violence to fight unions  gave millions of Americans cars – but refused to meet tastes  1936 slipped to 3 rd place in car business  contempt for history  1915 tried to talk Europe out of WWI  1920 blamed Jews for world’s problems in his newspaper – sued for slander – apologized – sold paper 10

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I NDUSTRIAL G ROWTH  nation’s biggest single industry – automotive  garages, car dealerships, motels, campgrounds, gas stations, restaurants, truck lines  3.7 million people employed directly or indirectly because of automobile in 1929  $2 million spent to build/maintains roads and bridges  Power of monopolies declined even while American business was getting bigger  Publishing, motion picture, machine making, industries boomed 12