The motor car industry was one g the first to use the method of mass production. One of its pioneer’s was Henry Ford. Ford had the idea of making a car for the ordinary man and his family. In 1911 the first Model T was produced by methods of mass production. The use of mass- production methods meant that by the 1920’s a model T was being produced every 10 seconds. This allowed Ford to reduce his prices: in 1911 a Model T cost $1200; by 1920it was $295. One model T was identical to another – the same colour, the same engine size. This did not bother the American people. The ‘Tin Lizzie’, as it was known, became the most popular car in America. By the mid- 1920s one out of every two cars sold was a model T. It was not only the car industry which expanded during the 1920s, although it did help other industries to grow – steel, rubber, glass, leather, and oil were all in greater demand because of the car industry. The construction industry provided roads for the increased traffic. Consumer goods were also produced using mass-production methods: radio sets, telephones, refrigerators, vacuum cleaners, washing machines, ovens. These new ‘gadgets’ were attractive to the American people and sales rocketed.
This growth created a ‘cycle of prosperity’. The increased production of consumer goods created increased employment. This meant that people had more money to spend on consumer goods, especially as their prices were falling. This in turn created an increased demand for goods and encouraged further increased production. So the cycle went on.
Other factors also helped to maintain the boom. The Republican governments of the 1920s encouraged the growth of business by a policy of non-interference (called laissez-faire) and did not place any control on industry or financial institutions. They also lowered taxes on people’s incomes and on company profits: this gave people more money to spend on consumer goods and companies more money to invest in new factories and buildings.
Te ability to buy consumer goods was greatly helped by the introduction of hire purchase- buying on credit. This allowed people who did not have enough cash to pay the full cost of a product to obtain it by paying for it in instalments over a period of time. Mail order also increased the market for goods beyond the towns and cities into the more remote country areas. Advertisements appeared in magazines, newspapers, on the radio, in cinemas and on billboards- all trying to convince Americans that they should ‘keep up with the Jones’ and buy the products that every other American now had.
Throughout the 1920s there was a feeling of confidence among the American people, which encouraged them to buy goods by cash or by credit. It encouraged them to buy goods by cash or by credit. It encouraged them to invest some of their wages in companies by buying shares. Even this could be done on credit by buying ‘on the margin’. A person could buy shares by paying 10 per cent of their total value in cash and borrowing the remaining 90 per cent from the banks. Share prices soared as more and more were bought. It seemed that the good times were here to stay.
However, in reality there were still many Americans living in poverty. The new wealth in the USA was not shared by everyone. Some sections of the population suffered more than others.
Farmers had a hard time in the 1920s –and almost half the American people were engaged in agriculture. Farmers were able to grow more crops because of inventions such as combine harvesters. So much was produced that supply overweighed demand. As a result of this surplus, food prices dropped and many small farmers suffered from lower incomes. As incomes fell, farmers found it difficult to keep up with their mortgages payments- some farmers were evicted; others forced to sell their land. Farm labourers also found themselves out of work and drifted to towns or areas such as California where fruit farms promised work.
Black people had a similar experience. Almost one million black farm workers lost their jobs in the 1920s. Many moved from their homes in the south to the cities of the north. Here they were able to find jobs, but they were usually the lowest paid. The same was true for new immigrants.
Not all industries benefited from the boom. For example, the coal industry suffered as new forms of power – oil, gas, and electricity- became more widely used. The overproduction of coal led to wage cuts or. Worse, loss of jobs as mines closed down. Other older industries, such as cotton and textiles, suffered in a similar way.
