How did America Become Prosperous in the 1920(TM)s

History Essay:

How did America Become Prosperous in the 1920’s

Mass Production, the Car Industry and the Consumer Industry

Mass production is one of the key factors that lead to the American boom. Mass production allowed industries to produce large quantities of produce such as cars and radios which meant a larger need for basic construction materials like steel, rubber and glass. The reason it was so important to America’s prosperity is that it allowed businesses such as ford to make huge amounts of their product i.e. the Model T car in very little time, one car a minuet by 1929; and with very little cost, ford had the idea of making a car for the ordinary man and changed the price of his cars from $1200 in 1911 to $295 in 1920. Mass production was invented in the Ford Motor Company by Henry ford who came up with the idea of “Pulling the machine past the man, not man past the machine” meaning that the workers did not have to waste time moving between the machine and their work station, this was the idea of the conveyor belt, the machine would move past them as they put on their part. This also brought on the idea of repetitive jobs which meant that skilled workers weren’t needed because anyone can learn to do a repetitive job; this meant that they didn’t need to pay higher wages.

Mass Production of cars meant that businesses like ford could sell their products at very low prices which made them very cheap and so very popular, which increased demand. This increase in demand meant an increase in demand for basic materials like steel, rubber and glass which increased profit in both the company supplying the basic material and the company using the basic material because it meant they could buy in bulk, lowering prices. As over 1 in 5 Americans owned a car this lead to other businesses prospering too; motels, diners and gas stations are just some of them. This meant there were more people with jobs, so more people with money and so more people able to buy consumer goods and cars. This is called the cycle of prosperity and is not only connected with the car industry.

Mass production did not just affect the car industry; it also affected the Consumer industry as well. Like with the car industry the consumer industry benefited with the invention of mass production to with higher profits. This allowed the average working class person to buy luxury items like vacuum cleaners and radios

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Although mass production has many benefits for the company’s involved and the consumer’s there are some disadvantages for the employees. The pace at which they work is governed by the manager and so if he wants to speed up production all he has to do is speed the conveyor belt. This means that workers can’t stop work and may sometimes have to do the same uncomfortable movement over and over again. Workers were also not allowed unions, this prevented strike but made conditions worse. They would also put different ethnic minorities against each other for example if someone complained they would threaten to give their job to someone ells. However for all its problems the fact that it paid the highest wage for unskilled work ever was enough to convince people that it was worth it.

Credit Facilities

Credit facilities gave ordinary working class people the ability to buy on credit. Buying on credit was the same as buying a phone on contract; you would buy the product, paying for it on a standard rate every day/week/month depending on the product. This would allow more of the general public to buy consumer goods and so increased the cycle of prosperity. Credit facilities also allowed people to buy on “mail order” which meant that people who lived in remote towns could buy items that they would normally be unable to get. All of this had a knock on affect to every other business because it meant that they could advertise in media and it meant they had increased profits.

Government Policy

Throughout the 1920’s the government had a policy of non-interference which meant that the government would interfere as little as possible. The president of the US from 1921 to 1929 was Calvin Coolidge, an adept businessman who did not run for president again because he was a millionaire. Coolidge believed that “The chief business of the American people is business”. Throughout the 1920’s businesses received substantial encouragement from the government in the form of construction loans and the lowering of tax. These loans allowed start up businesses such as that in the Florida land boom to get up and running quickly which created more jobs and so increasing the cycle of prosperity. Tariffs put on foreign goods meant that American businesses where protected as people would be more likely to buy the cheaper American goods as a result. This increased the American foreign policy of isolationism which was helped by the restriction of the flow of immigrants to the US.

Florida Land Boom and the Stock Market

The Florida boom came as a result of Americas “get rich quick schemes”. It came as people invested in land when it was cheep for a 10% binder or deposit which gave you the right to buy the land when you had enough money. This binder was then sold on to others at a higher price as land prices rose. From this transaction of land Florida future was shaped and as a result entire cities where built upon what was only recently swampland. This massive rise in land prices allowed working class Americans to make large amounts of money in relatively short amounts of time hence the name get rich quick schemes. However this was not to last, land prices sharply fell as investors started to realise that they were being cheated by false advertising. Advertisements that said “seaside view” might actually be miles away from the sea and the IRS’s scrutiny of Florida’s real estate as being a giant shame operation didn’t help. However the boom had already created many jobs and had helped the economy greatly.

Another get rich quick scheme proved to be the stock market bubble which came as a result of new technologies such as cars, radios and aviation. As with the Florida land boom people bought a 10% margin or deposit from a broker and the rest was paid of once enough money had been earned. This allowed the owners of stocks to either earn dividends, a fraction of the company profit or sell their sell their stocks as prices rose. This meant that more Americans could invest in stocks and many earned money from it, helping America’s economy.

Did Everyone Share in the Wealth?

To say that everyone shared in the wealth of America is naive. In fact over 50% of America’s population lost jobs and money due to the boom which helped people vary selectively. Probably those most directly affected by the car industry and the rise in technology where the industrial workers. These where the coal miners or the cotton and textiles industries that where made redundant by the new sources of energy such as oil and gas and electricity and the textiles by new synthetic materials like nylon. The textiles industries were also affected by the new shorter fashions which required fewer materials to make them. This caused a mass loss in jobs and a drop in pay. A same loss in jobs and pay was felt in the farming industry. New machines such as combine harvesters allowed farmers to produce more grain which in turn caused an excess, lowering the prices. Many farmers and farm workers lost their jobs as a result. This affected the black community as well as after the abolition of the slave trade many black Americans stayed on the plantations as workers who shared in a portion of the profit made. As the farms and plantations lost money many of the black workers lost their jobs and where forced to move north in search of work although they were usually the lowest paid in any job they found. The same can be said for many immigrants who worked on farms or industrial work.

Alexander Achilleos A1

History Essay, 13/10/08