In the 1920s, widespread ownership of automobiles, radios, and other innovations changed how Americans lived. The Coolidge administration tried to promote stability in international affairs and encouraged business growth.
The Rise of New Industries
How did new industries change the lives of Americans in the 1920s?
By the 1920s, the automobile had become part of American life. A 1925 survey conducted in Muncie, Indiana, found that 21 out of 26 families who owned cars did not have bathtubs with running water. As one farm wife explained, “You can’t ride to town in a bathtub.”
Increased automobile ownership was just one example of Americans’ rising standard of living. Real per capita earnings soared 22 percent between 1923 and 1929 even as work hours decreased. In 1923 U.S. Steel cut its daily work shift from 12 hours to 8 hours. In 1926 Henry Ford cut the workweek for his employees from six days to five, and farm machinery company International Harvester instituted an annual two-week paid vacation for employees. Mass production, or large-scale manufacturing done with machinery, made these changes possible by increasing supply and reducing costs. Workers made more and the goods they bought cost less.
Ford, the Assembly Line, and the Model T
The moving assembly line divided operations into simple tasks and cut unnecessary motion to a minimum. In 1913 automaker Henry Ford installed the first moving assembly line at a plant in Highland Park, Michigan. By the following year, workers were building an automobile every 93 minutes. By 1925, a Ford car was rolling off the line every 10 seconds.
Ford’s assembly line product, the Model T, demonstrated the economic concept of elasticity, or how sensitive product demand is to price. In 1908, the Model T’s first year, the car sold for $850. In 1914 mass production reduced the price to $490. Ford also increased his workers’ wages in 1914 to $5 a day—doubling their pay—and reduced the workday to eight-hour shifts. He took these dramatic steps to win workers’ loyalty and to undercut union organizers. By 1924, Model Ts were selling for $295, and Ford sold millions of them.
"There is one rule for the industrialist and that is: Make the best quality of goods possible at the lowest cost possible paying the highest wages possible."
—Henry Ford, quoted in Mass Production, the Stock Market Crash, and the Great Depression, 1996
Ford’s mass-production methods opened the door for new companies to manufacture cars. By the mid-1920s, General Motors and Chrysler competed successfully with Ford. The auto industry also spurred growth in the production of steel, petroleum, rubber, plate glass, nickel, and lead.
Cars revolutionized American life. They eased the isolation of rural families and let more people live farther from work. A new kind of worker, the auto commuter, appeared. Other forms of urban transportation, such as the trolley, became less popular.
Consumer Products
In response to rising disposable income, many other new goods came on the market. Americans bought such innovations as electric razors, facial tissues, frozen foods, and home hair color. Mouthwash, deodorants, cosmetics, and perfumes became popular products.
Companies created many new products for the home. As indoor plumbing became more common, Americans’ concern for hygiene led to the development of numerous household cleaning products. New appliances advertised as labor-savers—such as electric irons, vacuum cleaners, washing machines, and refrigerators—changed the way people cleaned their homes and clothing and prepared meals.
Birth of the Airline Industry
After the Wright brothers’ first successful flight in 1903, the aviation industry began developing. Leading the way was American inventor Glenn Curtiss, who invented ailerons—surfaces attached to wings that could be tilted to steer the plane. Ailerons made it possible to build rigid wings and much larger aircraft. The federal government began to support the airline industry. In 1918 the postmaster general introduced the world’s first airmail service.
In 1925 Congress passed the Kelly Act, authorizing postal officials to hire private airplane operators to carry mail. The Air Commerce Act of 1926 provided federal aid to build airports. The transatlantic solo flight of former airmail pilot Charles Lindbergh in 1927 banished doubt about the potential of aircraft. By 1928, 48 airlines were serving 355 American cities.
The Radio Industry
In 1913 American engineer Edwin Armstrong invented a special circuit that made it practical to transmit sound via long-range radio. The radio industry began a few years later. In November 1920, the Westinghouse Company broadcast the news of Harding’s landslide election victory from station KDKA in Pittsburgh—one of the first public broadcasts in history. That success persuaded Westinghouse to open other stations.
In 1926 the National Broadcasting Company (NBC) set up a network of stations to broadcast daily radio programs. By 1927, almost 700 stations dotted the country. Sales of radio equipment grew from $10.6 million in 1921 to $411 million in 1929, by which time more than 12 million radios were in use across the country.
In 1928 the Columbia Broadcasting System (CBS) assembled a coast-to-coast network of stations to rival NBC. The two networks sold advertising time and hired musicians, actors, and comedians from vaudeville, movies, and the nightclub circuit to appear on their shows. Americans experienced the first presidential election campaign to use radio in 1928, when the radio networks sold more than $1 million in advertising time to the Republican and Democratic Parties.
The Consumer Society
How did attitudes toward credit and consumerism change in the 1920s?
Higher wages and shorter workdays resulted in a decade-long buying spree that kept the economy booming. Shifting from traditional attitudes of thrift and prudence, Americans in the 1920s enthusiastically accepted their new role as consumers.
Easy Consumer Credit
One notable aspect of the economic boom was the growth of individual borrowing. Credit had been available before the 1920s, but most Americans had considered debt shameful. Now attitudes toward debt started changing, as people began believing in their ability to pay their debts over time. Many listened to the sales pitch “Buy now and pay in easy installments,” and began to accumulate debt. Americans bought 75 percent of their radios and 60 percent of their automobiles on the installment plan. Some started buying on credit at a rate exceeding their income.
Mass Advertising
When Otto Rohwedder developed a commercial bread slicer in 1928, he faced a problem common to inventions: the invention—sliced bread—was something no one knew they needed. To attract consumers, manufacturers turned to advertising, another booming industry in the 1920s.
Advertisers linked products with qualities associated with the modern era, such as progress, convenience, leisure, success, and style. Advertisers also preyed on consumers’ fears and anxieties, such as insecurities about one’s status or weight. For example, a 1923 advertisem*nt for face cream read: “These premature lines are only the troubles of a skin allowed to be too dry. . . . The society woman keeps her skin smooth and fresh season in and season out.”
The Managerial Revolution
By the early 1920s, many industries had already created modern organizational structures. Companies were split into divisions with functions such as sales, marketing, and accounting. Managers were hired to run these divisions, freeing executives and owners from the day-to-day running of the companies. The large numbers of new managers helped expand the middle class, adding to the nation’s prosperity. These new developments in business organization generated more business profit, which improved the nation’s standard of living.
"[I]t is not only by technical skill that modern civilization is sustained. It depends to a large degree on accumulated and invested capital. . . . Civilization and profits go hand in hand."
—Calvin Coolidge, quoted in the New York Times, November 28, 1920
In addition to these innovations in management, companies in the 1920s began conducting time and motion studies, applying the ideasin Frederick Taylor's Principles of Scientific Management.They systematically broke down manufacturing work into small discrete tasks and then analyzed how best to use workers to do each task as efficiently as possible. Henry Ford’s assembly line was an example of this approach. Time-study analysis made workers more productive, but in some ways it made work more difficult. Instead of a variety of changing tasks, workers on an assembly line had to do the same repetitive task over and over again.
Uneven Prosperity
Not all Americans shared in the economic boom. For example, thousands of African Americans who held factory jobs during World War I were replaced by returning servicemen. Native Americans, though granted citizenship in 1924, were often isolated on reservations where there was little productive work. Also, many immigrants had difficulty finding work. Most were farmers and factory workers with pitifully low wages. Many people in the Deep South were also left out of the economic boom as the traditional agricultural economic base there eroded after the war.
The Farm Crisis
Why did farmers miss out on the prosperity of the 1920s?
American farmers did not share in the prosperity of the 1920s. On average, they earned less than one-third of the income of other American workers. Technological advances in fertilizers, seed varieties, and farm machinery allowed them to produce more, but higher yields without an increase in demand meant that they received lower prices. Between 1920 and 1921, corn and wheat prices declined considerably. Costs for improved farming technology, meanwhile, continued to increase.
Many factors contributed to this “quiet depression” in American agriculture. During the war, the government had urged farmers to produce more to meet the great need for food in Europe. Many farmers borrowed heavily to buy new land and new machinery to raise more crops. Sales were strong, prices were high, and farmers prospered. After the war, however, European farm output rose, and the debt-ridden countries of Europe had little money to spend on American farm products. In addition, Congress passed the Fordney-McCumber Act in 1922, making matters worse by raising tariffs dramatically. This dampened the American market for foreign goods and sparked a reaction in foreign markets against buying American agricultural products.
Congress tried to pass legislation to help farmers sell their surpluses, but President Coolidge vetoed the bills. He argued that with money flowing to farmers under the proposed law, they would be encouraged to produce even greater surpluses. Agriculture remained in recession throughout the 1920s.
SKILLS PRACTICE
Look back through the lesson at the headings, important words and pictures. Retell the story of the 1920s economy using words you know.
Reviewing Vocabulary
TEKS: 16A, 27C, 28A
Using Your Notes
TEKS: 16A
Answering the Guiding Questions
TEKS: 16A, 27A, 27C, 28A
TEKS: 27A, 27B
Writing Activity
TEKS: 6B, 28A
