1. The 1920s: Mixed Economic Development

2. Mixed Economic Development
Politics took a back seat to the economy in the 1920s
Economics in the 1920s:
Began with brief post-war recession (1921)
Included lengthy period of prosperity ( )
Ended with the worst economic disaster in U.S. history (Oct. 1929)
In the boom years:
Unemployment below 4%
Standards of living improved
Indoor plumbing, central heating, electricity became commonplace in homes
Real income increased substantially

3. Mixed Economic Development
40% of families had incomes in the poverty range
Struggled to live on less than $1,500 a year
Farmers did not share in the booming economy

4. Causes of Business Prosperity: Industrial Productivity
Manufacturing process made more efficient by improving methods of mass production
1914: Henry Ford implements the assembly line to manufacture his vehicles
Workers remained in one place, performed the same task daily (specialization)
End of 1920s: most major industries adopted the use of the assembly line
Huge gains in productivity

5. Causes of Business Prosperity: Energy Technologies
Oil and electricity were increasingly used to power factories
Oil also provided gasoline for the rapidly increasing number of automobiles
1930: Oil accounted for 23% of U.S. energy
Factories and new appliances in homes resulted in a 300% increase in electrical generation over the decade

6. Causes of Business Prosperity: Government Policy
Government at all levels favored big businesses
Corporate tax cuts
Little to no regulation of trusts
Large tax cuts for higher income Americans
FEDs relaxed regulation then tightened the money supply at the wrong time

7. A Consumer Economy
Electricity in homes resulted in the purchase of new consumer appliances
Automobiles were being sold by the millions
Horse-and-buggy travel a thing of the past
Businesses used new, more aggressive advertising techniques
Stores increased sales by allowing customers to buy on credit
Included a greater variety of products which threatened smaller neighborhood stores

8. Impact of the Automobile
Changed society more than anything in the 1920s
1929: 26.5 million automobiles registered versus 1.2 million in 1913
Average of nearly one car per American family
Production of the automobile replaced the railroads as the key promoter of economic growth
Industries like steel, glass, rubber, gasoline, and highway construction all depended on the automobile industry
Affected social life:
Traveling and shopping for pleasure, commuting to work, dating
New problems:
Traffic jams, pollution, deaths/injuries in car wrecks

9. Farm Problems
Farmers only experienced prosperity between the years of
Wartime demand in Europe and wartime policies in the U.S. kept crop prices artificially high
After the war, crop prices dropped and farmers who borrowed heavily during the war were now in debt
New technologies (chemical fertilizers, gas-powered tractors) increased productivity but this only increased farmers’ debts
More and more crops were being produced- extra surplus meant even lower prices for crops

10. Labor Problems Wages rose, but the union membership declined over 20%
Most union efforts at strikes failed during this decade
Most companies kept an open shop policy
Only hired nonunion workers
Some companies began to practice welfare capitalism
Improved benefits and higher wages to discourage joining unions
Southern companies used militias and local mobs to violently resist unionization in the textile industry

11. ? Give a very brief timeline of the economy in the 1920s
Describe how economic development was “mixed”
How is Henry Ford connected to increased industrial productivity of this era?
What two sources of energy were increasingly used to power factories and homes?
How did government policies affect the economy in the 1920s?
How did electricity change the daily lives of Americans?
Why did farmers only enjoy prosperity during the wartime years of ?
How did new technologies actually hurt farmers during this time?
What was an open shop policy?
What was welfare capitalism?