The Business of The Business of America and the America and the

Consumer Consumer Economy in the Economy in the

1920’s1920’s

Postwar ProsperityPostwar Prosperity The "Second Industrial The "Second Industrial

Revolution" : WWI stimulated Revolution" : WWI stimulated development and investment in development and investment in new technology that contributed new technology that contributed to the business boom.to the business boom.

As electricity became As electricity became widespread and industrial widespread and industrial production more efficient, mass production more efficient, mass produced consumer goods produced consumer goods became available to the public became available to the public at attainable prices. at attainable prices.

Consumers were reading many Consumers were reading many materials and purchasing the materials and purchasing the same goods.same goods.

Communication innovations in Communication innovations in radio, advertising, and film radio, advertising, and film contributed to the contributed to the homogenization of ideas that led homogenization of ideas that led to the advent of national popular to the advent of national popular culture.culture.

Postwar ProsperityPostwar Prosperity

The cycle that created the business boom in the 1920's: The cycle that created the business boom in the 1920's: standardized mass production led to standardized mass production led to more efficient machines, which led tomore efficient machines, which led to higher production and wages, which led to higher production and wages, which led to increased demand for consumer goods, increased demand for consumer goods, which perpetuated more standardized mass production. which perpetuated more standardized mass production.

Postwar ProsperityPostwar Prosperity IndustryIndustry *Percentage Increase, 1922-28 *Percentage Increase, 1922-28 Industrial Production: 70%Industrial Production: 70% Gross National Product: 40%Gross National Product: 40% Per Capita Income: 30% Per Capita Income: 30% Output per factory man hour: 75%Output per factory man hour: 75% Corporate Profits: 62% (1923-1929)Corporate Profits: 62% (1923-1929) Electric PowerElectric Power *Percentage Increase, 1899-1929: 331%*Percentage Increase, 1899-1929: 331% Percentage of American Industries powered by Percentage of American Industries powered by

electricity, 1929: 50%electricity, 1929: 50% WorkersWorkers *Percentage Increase, 1923-29*Percentage Increase, 1923-29 Worker's incomes: 11% Worker's incomes: 11% Real Earnings (for employed wage earners) 22%Real Earnings (for employed wage earners) 22% Average Work Week: -4%Average Work Week: -4%

In what general ways did the economy change in the 1920's?

What changes in the average worker's wage, output, and work day length do you notice?

Scientific Management and Scientific Management and the Reorganization of Workthe Reorganization of Work

Industries began to employ Industries began to employ automated machinery and automated machinery and "scientific management" to "scientific management" to increase efficiency. increase efficiency.

The reorganization of work The reorganization of work resulted in more spare time resulted in more spare time and disposable income for and disposable income for average workers. average workers.

It also led to a decline in the It also led to a decline in the importance of skill in favor of importance of skill in favor of discipline and subordination. discipline and subordination.

Businesses financed industrial Businesses financed industrial research and time studies on a research and time studies on a grand scale.grand scale.

The Principles of Scientific The Principles of Scientific ManagementManagement (1911) by (1911) by engineer Frederick W. Taylor engineer Frederick W. Taylor was widely published and was widely published and applied - scientific applied - scientific management is also known as management is also known as "Taylorism." "Taylorism."

Industries took a more organized and scientific approach under

Taylorism.

Scientific Management and Scientific Management and the Reorganization of Workthe Reorganization of Work

Innovative industrialist Henry Ford masterfully applied Taylor's theory Innovative industrialist Henry Ford masterfully applied Taylor's theory of worker efficiency and wage motive. of worker efficiency and wage motive.

Ford began paying an unprecedented $5 a day- it was more than a pay Ford began paying an unprecedented $5 a day- it was more than a pay increase, it was a means for Ford to establish a measure of control over increase, it was a means for Ford to establish a measure of control over the workforcethe workforce

The price of Model-T was cut in half, thereby expanding the customer The price of Model-T was cut in half, thereby expanding the customer base. base.

This image of a moving assembly line at Ford Motor Company This image of a moving assembly line at Ford Motor Company demonstrates both the principles of efficient production and the demonstrates both the principles of efficient production and the proliferation of mass produced consumer goods. proliferation of mass produced consumer goods.

Scientific Management and Scientific Management and the Reorganization of Workthe Reorganization of Work

This article announces the clamor in Michigan after Ford began paying $5 a day.

Scientific Management and Scientific Management and the Reorganization of Workthe Reorganization of Work

A furniture factory in 1903 A furniture factory in 1925

The Automobile and The Automobile and American CultureAmerican Culture

The explosive growth of the The explosive growth of the automobile industry automobile industry revolutionized American life. revolutionized American life.

Henry Ford's innovative Henry Ford's innovative production techniques made production techniques made cars affordable for average cars affordable for average Americans and set new Americans and set new standards for industry. standards for industry.

By the end of the decade, By the end of the decade, there were enough cars on there were enough cars on the road for every one in five the road for every one in five persons. persons.

Related industries sprang up Related industries sprang up including service facilities, including service facilities, filling stations, and motels. filling stations, and motels.

General Motors Eclipses General Motors Eclipses FordFord

Although Ford developed a Although Ford developed a system for mass-producing system for mass-producing cars and selling them cars and selling them cheaply, Ford Motor cheaply, Ford Motor Company failed to produce Company failed to produce options for consumers. options for consumers.

The utilitarian Model T was The utilitarian Model T was "available in any color, so "available in any color, so long as it was black" and long as it was black" and changed little in design over changed little in design over the years. the years.

When Alfred P. Sloan became When Alfred P. Sloan became president General Motors president General Motors Corporation in 1923, he Corporation in 1923, he introduced alternative makes introduced alternative makes like Chevrolet and Buick that like Chevrolet and Buick that came in a variety of colors for came in a variety of colors for increasingly sophisticated increasingly sophisticated consumers. consumers.

The Model T

General Motors Eclipses General Motors Eclipses FordFord

GM tapped into the emerging consumer psychology, annually GM tapped into the emerging consumer psychology, annually producing stylist updated models, marketing them aggressively, producing stylist updated models, marketing them aggressively, and promoting installment payment plans. and promoting installment payment plans.

Finally, in 1927, Ford Motor Company took a cue from GM's Finally, in 1927, Ford Motor Company took a cue from GM's success and introduced the Model A with a blitz of advertising success and introduced the Model A with a blitz of advertising and the offer of installment plans. The product was so highly and the offer of installment plans. The product was so highly anticipated that many were sold before it was even introduced. anticipated that many were sold before it was even introduced.

GM’s 1927 Cadillac La Salle- the first car

designed by a stylist.

Ford’s Model A

Warren Harding and the Warren Harding and the “Return to Normalcy”“Return to Normalcy”

The three Republican presidents The three Republican presidents of the 1920's pursued an of the 1920's pursued an economic agenda similar to that of economic agenda similar to that of modern day Republicans; cutting modern day Republicans; cutting taxes to free up capital for taxes to free up capital for investment and cutting federal investment and cutting federal spending. spending.

President Warren Harding's President Warren Harding's campaign slogan, "Return to campaign slogan, "Return to Normalcy," and his presidency Normalcy," and his presidency itself were mediocre and itself were mediocre and uneventful, save for the scandals uneventful, save for the scandals that came to light after his death that came to light after his death in office. in office.

He took a laissez-faire stance in He took a laissez-faire stance in economics and government, so economics and government, so accordingly, he opposed organized accordingly, he opposed organized

labor and anti-trust measureslabor and anti-trust measures..

Warren Harding and the Warren Harding and the “Return to Normalcy”“Return to Normalcy”

Though he was an steadfast Though he was an steadfast conservative, Harding took conservative, Harding took little initiative as a little initiative as a policymaker and delegated policymaker and delegated decision-making to a few key decision-making to a few key cabinet members. cabinet members.

Secretary of the Treasury Secretary of the Treasury Andrew Mellon pushed Andrew Mellon pushed through tax cuts to wealthy through tax cuts to wealthy citizens and business, citizens and business, following the "trickle down" following the "trickle down" theory of economics.theory of economics.

Secretary of Commerce Secretary of Commerce Herbert Hoover and Herbert Hoover and Secretary of State Charles Secretary of State Charles Evans Hughes worked to Evans Hughes worked to secure foreign markets for secure foreign markets for American interests. American interests.

The influential Andrew Mellon on a postage stamp.

Inaugural Address of Inaugural Address of Warren Harding (1921)Warren Harding (1921)

““The forward course of the business cycle The forward course of the business cycle is unmistakable. …is unmistakable. …

I speak for administrative efficiency, for I speak for administrative efficiency, for lightened tax burdens, for sound lightened tax burdens, for sound commercial practices, for adequate credit commercial practices, for adequate credit facilities, … for the omission of facilities, … for the omission of unnecessary interference of Government unnecessary interference of Government with business, for an end to Government's with business, for an end to Government's experiment in business, and for more experiment in business, and for more efficient business in Government efficient business in Government administration. …”administration. …”

Protective Tariffs Protective Tariffs A A protective tariffprotective tariff is a tax on is a tax on

imported goods to make the them imported goods to make the them less competitive with American-less competitive with American-made goods. made goods.

The Emergency Tariff Act of 1921 The Emergency Tariff Act of 1921 and the Fordney McCumber Act of and the Fordney McCumber Act of 1922 imposed the highest tariff 1922 imposed the highest tariff rates in history at the time. rates in history at the time.

The national mood after WWI was The national mood after WWI was one of isolationism, nationalism, one of isolationism, nationalism, and concern for continued and concern for continued prosperity, thus lawmakers prosperity, thus lawmakers wanted to protect American wanted to protect American interests as Europe began to interests as Europe began to recover and export its goods. recover and export its goods.

The tariffs made it difficult for The tariffs made it difficult for Europe to pay war debts and Europe to pay war debts and eventually slowed international eventually slowed international trade by provoking other countries trade by provoking other countries to enact high tariffs on U.S. to enact high tariffs on U.S. exports.exports.

Silent Cal and the Business Silent Cal and the Business of Americaof America

When President Harding died in When President Harding died in office in August 1923, the office in August 1923, the famously laconic Calvin famously laconic Calvin Coolidge assumed the Coolidge assumed the presidency. presidency.

Coolidge's laissez-faire policy - Coolidge's laissez-faire policy - cutting taxes, reducing cutting taxes, reducing government spending, and government spending, and imposing high tariffs on foreign imposing high tariffs on foreign goods. goods.

He and Mellon were intensely He and Mellon were intensely focused on managing the focused on managing the government and its budget in government and its budget in an organized, business-like an organized, business-like manner. manner.

Coolidge's famous remark, "The Coolidge's famous remark, "The business of America is business of America is business," characterized the business," characterized the pro-business, pro-consumerism pro-business, pro-consumerism mentality of the Jazz Age.mentality of the Jazz Age.

Coolidge, Mellon, and Hoover

Inaugural Address of Calvin Inaugural Address of Calvin Coolidge (1925)Coolidge (1925)

“… “… unless we wish to hamper the people in unless we wish to hamper the people in their right to earn a living, we must have tax their right to earn a living, we must have tax reform. The method of raising revenue ought reform. The method of raising revenue ought not to impede the transaction of business; it not to impede the transaction of business; it ought to encourage it. I am opposed to ought to encourage it. I am opposed to extremely high rates, because they produce extremely high rates, because they produce little or no revenue, because they are bad for little or no revenue, because they are bad for the country, and, finally, because they are the country, and, finally, because they are wrong. … This country believes in prosperity. wrong. … This country believes in prosperity. It is absurd to suppose that it is envious of It is absurd to suppose that it is envious of those who are already prosperous.” those who are already prosperous.”

Advertising in the Jazz Advertising in the Jazz Age Age

Advertising techniques Advertising techniques refined as the mutually refined as the mutually supportive phenomena of supportive phenomena of mass production and mass mass production and mass media exploded into the media exploded into the American consciousness. American consciousness.

Modern advertising, using Modern advertising, using popular culture and popular culture and celebrities to fuel celebrities to fuel consumption, began to take consumption, began to take shape.shape.

The array of new appliances The array of new appliances and consumer goods available and consumer goods available at a lower cost due fueled at a lower cost due fueled consumption.consumption.

Businesses conquered the Businesses conquered the challenge of efficiently challenge of efficiently producing enough goods; now producing enough goods; now the focus was creating desire.the focus was creating desire.

This ad uses a celebrity endorsement to glamorize smoking and exploits the

image of the “new woman” of the 1920’s.

Advertising in the Jazz Advertising in the Jazz AgeAge

Another ad legitimizing desire; it associates the product with glamour and modernity

Advertising in the Jazz Advertising in the Jazz AgeAge

See this ad, buy the radio, hear more ads, buy more stuff!

President Coolidge on President Coolidge on Advertising (1926)Advertising (1926)

““It makes new thoughts, new desires, and new It makes new thoughts, new desires, and new actions. ... It is the most potent influence in actions. ... It is the most potent influence in adopting and changing the habits and modes adopting and changing the habits and modes of life, affecting what we eat, what we wear, of life, affecting what we eat, what we wear, and the work and play of the whole Nation. …”and the work and play of the whole Nation. …”

““Mass production is only possible where there Mass production is only possible where there is mass demand. Mass demand has been is mass demand. Mass demand has been created almost entirely through the created almost entirely through the development of advertising. …”development of advertising. …”

““Advertising ministers to the spiritual side of Advertising ministers to the spiritual side of trade. … It is all part of the greater work of trade. … It is all part of the greater work of regeneration and redemption of mankind.”regeneration and redemption of mankind.”

Credit and the Consumer Credit and the Consumer As consumerism became a As consumerism became a

hallmark of Modernism, the hallmark of Modernism, the stigma of purchasing goods stigma of purchasing goods on "installment plans" faded. on "installment plans" faded.

The automobile industry was The automobile industry was one of the first to capitalize one of the first to capitalize on the potential of consumer on the potential of consumer credit, but other industries credit, but other industries quickly followed suit. quickly followed suit.

This ad characterizes credit as a prudent financial decision and a way

to gain instant gratification.

Herbert Hoover and the Herbert Hoover and the End of ProsperityEnd of Prosperity

Herbert Hoover served Herbert Hoover served successfully as Secretary of successfully as Secretary of Commerce under Presidents Commerce under Presidents Harding and Coolidge. Harding and Coolidge.

He was elected after He was elected after Coolidge retired from Coolidge retired from politics in 1928.politics in 1928.

Despite his experience and Despite his experience and predictions of prosperity, predictions of prosperity, the stock market crashed the stock market crashed just months in to his just months in to his presidency. presidency.

He retained his conservative He retained his conservative ideological principles of a ideological principles of a balanced budget, low taxes, balanced budget, low taxes, and government non-and government non-interference, which made interference, which made him vulnerable to criticism him vulnerable to criticism from the stricken nation. from the stricken nation.

Herbert Hoover and the Herbert Hoover and the End of ProsperityEnd of Prosperity

November, 1929November, 1929““Any lack of confidence in the economic future or the basic Any lack of confidence in the economic future or the basic

strength of business in the United States is foolish.”—strength of business in the United States is foolish.”—Herbert HooverHerbert Hoover

January 21, 1930January 21, 1930““Definite signs that business and industry have turned the Definite signs that business and industry have turned the

corner from the he temporary period of emergency… were corner from the he temporary period of emergency… were seen today by President Hoover. The President said the seen today by President Hoover. The President said the reports to the Cabinet showed that the tide of employment reports to the Cabinet showed that the tide of employment had changed in the right direction.”—News dispatch from had changed in the right direction.”—News dispatch from WashingtonWashington

March 8, 1930March 8, 1930““President Hoover predicted today that the worst effect of President Hoover predicted today that the worst effect of

the crash upon unemployment will have been passed the crash upon unemployment will have been passed during the next sixty days.”—Washington dispatchduring the next sixty days.”—Washington dispatchWhat erroneous assertions were made about the economic

situation at the start of the Great Depression?

Herbert Hoover and the Herbert Hoover and the End of ProsperityEnd of Prosperity

Hoover became a scapegoat for the hardships of the Great Hoover became a scapegoat for the hardships of the Great Depression as the Jazz Age met its abrupt demise. Depression as the Jazz Age met its abrupt demise.

Communities of makeshift houses became known as Communities of makeshift houses became known as "Hoovervilles" as the Depression worsened in the early 1930's. "Hoovervilles" as the Depression worsened in the early 1930's. This photo shows a 1935 Hooverville in a riverbed. This photo shows a 1935 Hooverville in a riverbed.

"You recognize this man. … "You recognize this man. … Though faced with Though faced with unemployment, he is unemployment, he is combating adversity with combating adversity with courage. ... He has spread his courage. ... He has spread his slender resources as far as slender resources as far as they will go. This winter he they will go. This winter he and his family will need your and his family will need your help. …This is an emergency. help. …This is an emergency. It is temporary. But it exists. … It is temporary. But it exists. … All that America needs right All that America needs right now is courage. We have the now is courage. We have the resources. We have the man resources. We have the man power. We have the power. We have the opportunity for world opportunity for world leadership,. Let's set an leadership,. Let's set an example to all the world. Let's example to all the world. Let's lay the foundation for better lay the foundation for better days that are sure to come." days that are sure to come."

1931

Business of America and the Consumer Economy Powerpoint Citations Business of America and the Consumer Economy Powerpoint Citations Slide 2: http://lcweb2.loc.gov/pnp/thc/5a48000/5a48500/5a48574r.jpgSlide 2: http://lcweb2.loc.gov/pnp/thc/5a48000/5a48500/5a48574r.jpg Slide 3: Slide 3: http://us.history.wisc.edu/hist102/lectures/lecture15.htmlhttp://us.history.wisc.edu/hist102/lectures/lecture15.html Slide 4: http://bss.sfsu.edu/tygiel/Hist427/texts/1920seconomy.htmSlide 4: http://bss.sfsu.edu/tygiel/Hist427/texts/1920seconomy.htm Slide 5: http://ecuip.lib.uchicago.edu/diglib/social/chi1919/dline/d2/rand_ad.bmp.gifSlide 5: http://ecuip.lib.uchicago.edu/diglib/social/chi1919/dline/d2/rand_ad.bmp.gif Slide 6: Slide 6: http://us.history.wisc.edu/hist102/lectures/lecture15.html http://us.history.wisc.edu/hist102/lectures/lecture15.html Slide 7: Slide 7:

http://www.autolife.umd.umich.edu/Design/Gartman/D_Casestudy/10,000men_Ford_Profit.htmhttp://www.autolife.umd.umich.edu/Design/Gartman/D_Casestudy/10,000men_Ford_Profit.htm Slide 8: Slide 8: http://www.rosevalley.boroughs.org/images/history3.gifhttp://www.rosevalley.boroughs.org/images/history3.gif, http://www.grpl.org/photocoll?, http://www.grpl.org/photocoll?

cat=furniture#midcat=furniture#mid Slide 9: Slide 9: http://www.hfmgv.org/exhibits/showroom/1908/boy.jpghttp://www.hfmgv.org/exhibits/showroom/1908/boy.jpg Slide 10: Slide 10: http://www.hfmgv.org/exhibits/showroom/1908/model.t.htmlhttp://www.hfmgv.org/exhibits/showroom/1908/model.t.html Slide 11: http://www.gm.com/company/corp_info/history/gmhis1920.html, Slide 11: http://www.gm.com/company/corp_info/history/gmhis1920.html,

http://www.oregoncamshaft.com/Model-A.gifhttp://www.oregoncamshaft.com/Model-A.gif Slide 12: http://www.senate.gov/artandhistory/history/resources/graphic/large/Slide 12: http://www.senate.gov/artandhistory/history/resources/graphic/large/

WarrenHarding2.jpgWarrenHarding2.jpg Slide 13: http://www.1847usa.com/identify/1950s/1072.jpgSlide 13: http://www.1847usa.com/identify/1950s/1072.jpg Slide 14: http://www.yale.edu/lawweb/avalon/presiden/inaug/harding.htmSlide 14: http://www.yale.edu/lawweb/avalon/presiden/inaug/harding.htm Slide 15: http://sdrcdata.lib.uiowa.edu/libsdrc/details.jsp?id=/lybarger/1&page=1Slide 15: http://sdrcdata.lib.uiowa.edu/libsdrc/details.jsp?id=/lybarger/1&page=1 Slide 16: http://www.tax.org/Museum/coolidge_mellon_hoover.jpgSlide 16: http://www.tax.org/Museum/coolidge_mellon_hoover.jpg Slide 17: http://www.yale.edu/lawweb/avalon/presiden/inaug/coolidge.htmSlide 17: http://www.yale.edu/lawweb/avalon/presiden/inaug/coolidge.htm Slide 18: http://www.wclynx.com/burntofferings/luckystrikebettycompson.jpgSlide 18: http://www.wclynx.com/burntofferings/luckystrikebettycompson.jpg Slide 19: Slide 19:

http://www.assumption.edu/users/McClymer/his394/Consumerethos/Chesterfieldwomansmokinghttp://www.assumption.edu/users/McClymer/his394/Consumerethos/Chesterfieldwomansmoking33.jpg33.jpg

Slide 20: http://www.museum.state.il.us/exhibits/athome/1920/clues/index.htmlSlide 20: http://www.museum.state.il.us/exhibits/athome/1920/clues/index.html Slide 21: http://international.loc.gov/cgi-bin/query/r?ammem/cool:@field(DOCID+@lit(ms221))Slide 21: http://international.loc.gov/cgi-bin/query/r?ammem/cool:@field(DOCID+@lit(ms221)) Slide 22: http://memory.loc.gov/cgi-bin/ampage?Slide 22: http://memory.loc.gov/cgi-bin/ampage?

collId=amrlm&fileName=mc09page.db&recNum=10&itemLink=D?coolbib:2:./temp/collId=amrlm&fileName=mc09page.db&recNum=10&itemLink=D?coolbib:2:./temp/~ammem_zokJ::~ammem_zokJ::

Slide 23: http://www.authentichistory.com/audio/1930s/history/images/herbert_hoover_01.jpgSlide 23: http://www.authentichistory.com/audio/1930s/history/images/herbert_hoover_01.jpg Slide 24: http://historymatters.gmu.edu/d/5063/Slide 24: http://historymatters.gmu.edu/d/5063/ Slide 25: http://academic.brooklyn.cuny.edu/history/core/pics/0255/img0015.jpgSlide 25: http://academic.brooklyn.cuny.edu/history/core/pics/0255/img0015.jpg Slide 26: http://historyproject.ucdavis.edu/imageapp.php?Slide 26: http://historyproject.ucdavis.edu/imageapp.php?

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