Prosperity and American Business Section 8.3

Objectives At the end of this lesson you should be able to: How was business viewed during the 1920s What is industrial productivity –Why did it boom during the 20s What is the corporate revolution Why did America change from small to large businesses Who is William Humphrey and what was his economic policy What is an oligopoly What is the managerial revolution

What is your view of businessmen (and women)?

Describe the view of business (in the 1920s). Portrayed business as holy/religious cause Bruce Barton quote in The Man Nobody Knows –“All work is worship; all useful service prayer” President Coolidge’s quote, –“The man who builds a factory builds a temple” Walter Chrysler –named Time magazine’s Man of the Year in 1929

Advertising and Credit

Describe the Booming Economy Economy greatly expanded Industrial productivity- –amount of goods produced by each hour of labor rose 70%( ) Company earnings & wages rose soared Why? Europe’s farms and factories were decimated Europe = debtor nations America= creditor

Urbanization & Roaring Economy

What was the Corporate Revolution? US changed from small family run businesses to large corporations Why? Small companies lack capital –(extra $ to invest in Research & Development, machinery) Corporations- business owned by many shareholders with limited liability –Only risk what you invest

How did the government encourage the business? William E. Humphrey –head of Federal Trade Commission (appointed by Coolidge) –YET had Laissez-Faire policy toward business mergers –FTC- “a publicity bureau to spread socialistic propaganda” –“ an instrument of oppression and…injury to business”

What is an oligopoly? Oligopoly –few powerful companies control entire industry > 3, 700 power companies 1930 – 72% of nation’s power controlled by 10 holding companies Banking and chain stores also controlled by a few powerful companies

What was the Managerial Revolution? Businesses run by anonymous, replaceable managers, rather than a known personality –Universities offered courses to train people for new ‘white collar’ jobs Northwest University –30 courses on business in 1928

What was the American Plan? Activities corporations used to destroy unions –The “Stick” of the Carrot and Stick approach Sounded patriotic Open shop associations Blacklisted union members Spied (reported labor discontent, leaders) Yellow Dog Contract –Employee promise not to join union

How did the Supreme Court curtail union power? Ruled against unions in several key decisions –Upheld yellow dog contracts –Limited workers right to picket –Made boycotts illegal Coronado Case (1922) –Unions could be sued for damages (during strikes)

What is Welfare Capitalism? Activities that were meant to reduce union appeal to workers –The “Carrot” of the Carrot and Stick approach Healthcare, clubs (baseball teams), group insurance programs, stockholder options Industrial democracy –Company controlled unions –Allowed elected employees to represent workers to management Known as “Kiss Me Clubs” –No real power

Booming Economy

Conclusion Unions were greatly weakened by these ‘Carrot and Stick’ measures B/t union membership dropped from 5 million to 3.5 million