The Business of America and the Consumer Economy (1908-1935)
Sections:
  1. Historiography
  2. Postwar Prosperity
  3. Scientific Management and the Reorganization of Work
  4. The Automobile and American Culture
  5. General Motors Eclipses Ford
  6. Warren Harding and the "Return to Normalcy"
  7. Protective Tariffs
  8. Silent Cal and the Business of America
  9. Prosperity as Virtue
  10. Advertising in the Jazz Age
  11. Credit and the Consumer
  12. Herbert Hoover and the End of Prosperity
  13. Lesson Plans
  14. "The Business of America and the Consumer Economy in the 1920's" Powerpoint
HistoriographyTop
Focusing on the role of the model T in American culture during the early 1920’s, this article traces the development of the automobile industry and the ensuing consumer culture. Although it cost $850 when it was introduced in 1908, the model T, benefitting from Ford’s increasingly efficient mass production, was priced at $298 by 1923. Previously the product of the elite, the automobile became affordable to an ever increasing number of Americans. Despite this impressive reduction in price, the model T continued to outperform more expensive alternatives and, consequently, it captured the lion-sized share of the automobile market.

Christopher W. Wells, “The Road to the Model T: Culture, Road Conditions, and Innovation at the Dawn of the American Motor Age,” Technology and Culture, V. 48, N. 3, July 2007, p. 497-523.

Postwar ProsperityTop
Americans in the 1920's witnessed a proliferation of scientific and technical innovations that came to be known by historians as the "Second Industrial Revolution." WWI stimulated development and investment in new technology that contributed to the business boom in the inter-war period. As electricity became widespread and industrial production became more efficient, a range of mass produced consumer goods became available to the public at attainable prices. For the first time, consumers across the nation were reading many of the same books and news stories and purchasing the same goods. Communication innovations in radio, advertising, and film also contributed to the homogenization of ideas that led to the advent of national popular culture.

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

Questions to consider:
1. Why do some historians consider the 1920's to be the "second industrial revolution"?
2. Based on the economic statistics provided below, in what general ways did the economy change in the 1920's?
3. What changes in the average worker's wage, output, and work day length do you notice?
4. What groups profited the most in the post-war prosperity of the 1920's?
     cycle.gif
     The 1920s Economy Statistics.rtf  
Citations:
This charts and an explanation of these factors appears at: http://us.history.wisc.edu/hist102/lectures/lecture15.html
A statistical portrait of the 1920's economy was found at: http://bss.sfsu.edu/tygiel/Hist427/texts/1920seconomy.htm
Scientific Management and the Reorganization of WorkTop
In the late 19th and early 20th centuries, industries began to employ automated machinery and "scientific management" to increase efficiency. The reorganization of work to maximize production resulted in more spare time and disposable income for average workers. New scientific management practices also led to a decline in the importance of skill and craftsmanship in favor of discipline and subordination. As businesses began to take a more scientific, organized approach to management, they financed industrial research and time studies on a grand scale.

The Principles of Scientific Management (1911) by engineer Frederick W. Taylor was widely published and applied during the business boom of the 1920's. In fact, the practice of scientific management is also known as "Taylorism." The following document introduces the reader to the fundamentals of the system. (note: the word "soldiering" means to deliberately work slowly)
Innovative industrialist Henry Ford masterfully applied Taylor's theory of worker efficiency and wage motive. By the 1920's, he was able to cut the price of the Model-T in half, thereby expanding his customer base. This image of an assembly line at Ford Motor Company demonstrates both the principles of efficient production and the proliferation of mass produced consumer goods in the 1920's.
The final article announces the clamor in Michigan after Ford began paying an unprecedented $5 a day. The wage incentive was more than a pay increase, it was a means for Ford to establish a measure of control over the workforce.

Questions to consider:
1. What, according to Taylor, should be the principle aim of management?
2. What do the employer and the employees gain, respectively, from scientific management?
3. What should employers do to learn how to increase efficiency?
4. What changes did the Ford executives make to benefit workers and what was their professed motive?
     Frederick W Taylor The Principles of Scientific Management 1911.rtf  
     Ford Assembly line.jpg
     Acc683_$5day_Article.gif
Citations:
"The Principles of Scientific Management": http://www.fordham.edu/HALSALL/MOD/1911taylor.html
The assembly line photograph was found on the web at http://us.history.wisc.edu/hist102/lectures/lecture15.html
The Ford article was found at http://www.autolife.umd.umich.edu/Design/Gartman/D_Casestudy/10,000men_Ford_Profit.htm
The Automobile and American CultureTop
The explosive growth of the automobile industry in the 1920's truly revolutionized American life. Henry Ford's innovative production techniques made cars affordable for average Americans and set new standards for industry. By the end of the decade, there were enough cars on the road for every one in five persons. Related industries sprang up in response to the new American Car Culture, including service facilities, filling stations, and motels.

The design of the popular Model T underwent few changes between 1908 and 1927.
This 1924 Ford Advertisement appeared in mass publications catering to young men and boys. Note the last line, "Let us tell you how easy it is to buy a Ford on the Weekly Purchase Plan." Part of the growth of consumerism in the 1920's can be attributed to the widespread use of installment payment plans.
The document below comes from the sociological study Middletown by Robert and Helen Lynd. The Lynd's researched the impact of industrialization on the small town of Muncie, Indiana in 1924 and 1925. The excerpt focuses on concerns that "the automobile appears to some as an 'enemy' of the home and society."

Questions to consider:
1. What kinds of concerns did the residents of Middletown express in relation to the automobile?
2. List some ways that the automobile impacted life in the 1920's. Consider family life, other industries, etc.
     model T.jpg
     1924 Ford Advertisment.jpg
     Robert and Helen Lynd Middletown 1929.rtf  
Citations:
The Model-T photograph was found on the web at http://www.hfmgv.org/exhibits/showroom/1908/model.t.html
The Ford advertisement was found at http://www.hfmgv.org/exhibits/showroom/1908/boy.jpg
The "Middletown" study was found on the web at http://ecuip.lib.uchicago.edu/diglib/social/chi1919/dline/d5/angle.html
General Motors Eclipses FordTop
Although Henry Ford was the innovator who developed a system for mass-producing cars and selling them cheaply, Ford Motor Company failed to produce options for consumers. The utilitarian Model T was "available in any color, so long as it was black" and changed little in design over the years. When Alfred P. Sloan became president of the reorganized General Motors Corporation in 1923, he introduced alternative makes like Chevrolet and Buick that came in a variety of colors. GM tapped into the emerging consumer psychology of the Jazz Age, annually producing updated models, marketing them aggressively, and promoting installment payment plans. Thus, Ford's sales were assailed by both the new GM models and the used car market.
Finally, in 1927, Ford Motor Company took a cue from GM's success and introduced the Model A with a blitz of advertising and the offer of installment plans. The product was so highly anticipated that many were sold before it was even introduced.

This popular 1928 song "Henry's Made a Lady Out of Lizzie" (2:51 minutes) refers to the refined new Model A. The utilitarian Model T was known as the "Tin Lizzy", and this song dubbs the Model A "Queen Elizabeth".
The 1929 article "Keep the Consumer Dissatisfied," written by the research director at GM justifies the continual refining of cars as a necessary stimulant to the economy.

Questions to consider:
1. How did competition from GM affect the auto industry?
2. Why does Charles Kettering feel that continual refinement of car design to spur consumerism is essential?
3. What do these developments in the auto industry say about the state of American consumerism?
     BillyJonesErnestHare-HenrysMadeaLadyOutofLizzie.mp3  
     Charles F Kettering Keep the Consumer Dissatisfied.rtf  
Citations:
The audio clip was found on the web at http://www.archive.org/details/BillyJonesErnestHare
"Keep the Consumer Dissatisfied" was found at http://www.wwnorton.com/college/history/tindall/workbknf/tinprs27a.htm
Warren Harding and the "Return to Normalcy"Top
The three Republican presidents of the 1920's pursued an economic agenda similar to that of modern day Republicans; cutting taxes to free up capital for investment and cutting federal spending. President Warren Harding's campaign slogan, "Return to Normalcy," and his presidency itself were mediocre and uneventful, save for the scandals that came to light after his death in office. He took a laissez-faire stance in economics and government, so accordingly, he opposed organized labor and anti-trust measures. Though he was an steadfast conservative, he took little initiative as a policymaker and delegated decision-making to a few key cabinet members. Secretary of the Treasury Andrew Mellon pushed through tax cuts to wealthy citizens and business, following the "trickle down" theory of economics. Secretary of Commerce Herbert Hoover and Secretary of State Charles Evans Hughes worked to secure foreign markets for American interests.

In this sound clip (0:27 minutes)from a 1920 speech by presidential hopeful Warren Harding, he expresses the notion that Americans desire a "return to normalcy" and calm following the upheaval of the war years.
In Harding's 1921 Inaugural Address, he emphasizes the need America to return to stability and change from a spartan wartime economy to a prosperous and stable peacetime economy. He lists the economic strategies of the administration to restore the economy, which are indicative of the general ideological inclinations of all three Republican presidents of the 1920's.

Questions to consider:
1. How does the idea of a "return to normalcy" relate to the interest in materialism following WWI?
2. According to Harding, what kind of transition does the post-WWI economy need to make?
3. What does remedies does Harding propose stabilize and strengthen the economy?
     Warren Harding Readjustment1.wav  
     Inaugural Address of Warren G. Harding 1921doc.rtf  
     Warren Harding.jpg
Citations:
The sound clip was found on the web at http://memory.loc.gov/learn/collections/nforum/history.html
Harding's Inaugural address was found at : http://www.yale.edu/lawweb/avalon/presiden/inaug/harding.htm
The photo of Harding appears at: http://www.senate.gov/artandhistory/history/resources/graphic/large/WarrenHarding2.jpg
Protective TariffsTop
Part of the success of American business interests in the 1920's can be attributed to the high tariffs imposed by the Congress and all three presidents. A protective tariff is a tax on imported, foreign-made goods levied by the government to make the prices of those goods less competitive with the prices of American-made goods. Two major pieces of tariff legislation were passed during the 1920's: The Emergency Tariff Act of 1921 and the Fordney McCumber Act of 1922. These measures resulted in the highest tariff rates in history at the time. The national mood in the United States after WWI was one of isolationism, nationalism, and concern for continued economic prosperity. This provided an opportunity for lawmakers to protect American interests as Europe began to recover and export its goods. The tariffs made it more difficult for Europe to pay its war debts, facilitated the growth of monopolies, and eventually slowed international trade by provoking other countries to enact high tariffs on U.S. exports.

Excerpts from the Republican Party Platform of 1924 highlight the party's justification for enacting protective tariff legislation and including an "elastic provision" to allow the president to adjust tariff rates.
Excerpts from the Democratic Party Platform of 1924 denounces the protective tariff policies as a mechanism for nurturing monopolies and increasing the cost of living for the average American.

Questions to consider:
1. Summarize the Republican Party's justification for high tariffs.
2. Summarize the reasons for the Democratic Party's opposition to the Republican Party's tariff policies.
3. List the instances in which the parties make completely opposite assessments on the same points.
     Excerpts on Tariffs from the Republican Party Platform of 1924.rtf  
     Excerpts on Tariffs from the Democratic Party Platform of 1924.rtf  
Citations:
The Republican Party Platform was found on the web at http://www.presidency.ucsb.edu/showplatforms.php?platindex=R1924
The Democratic Party Platform was found at http://www.presidency.ucsb.edu/showplatforms.php?platindex=D1924

Silent Cal and the Business of AmericaTop
When President Harding died in office in August 1923, the famously laconic and reserved Calvin Coolidge assumed the presidency. Coolidge's laissez faire policy extended toward both government and business alike. His efforts were focused on cutting taxes, reducing government spending, and imposing high tariffs on foreign goods. He and Mellon were also intensely focused on managing the government and its budget in an organized, business-like manner. Coolidge's famous remark, "The business of America is business," characterized the pro-business, pro-consumerism mentality of the Jazz Age.

Excerpts from the Platform of the Republican Party for 1924 communicate the party's basic philosophy of low taxes, non-interference by the government, and protective tariffs.
Coolidge was handily elected in his own right in 1924 by an electorate satisfied with the general prosperity of his term. A version of his 1925 inaugural address edited for comments pertaining to economics appears below. Coolidge focuses on tax relief and thrift in government to maintain America's economic prosperity.
The following photo is of Calvin Coolidge, Andrew Mellon, and Herbert Hoover. Mellon served as Secretary of the Treasury from 1921 to 1932 and was extremely influential in shaping the country's economic policies in the 1920's. Herbert Hoover served as the Secretary of Commerce under Harding and Coolidge. He and Mellon were responsible for assisting big business through policies like high tariffs and information on tax loopholes.

Questions to consider:
1. Summarize the Republican Party's economic philosophy in 1924.
2. According to President Coolidge, what are the affects of over-taxation on individual wage earner? What about on the wealthy and the business owner?
3. Coolidge characterizes excess taxes as "a species of legalized larceny." In what other ways does the President relate taxation to morality?
4. What does Coolidge identify as positive developments in the economy?
     Republican Party Platform of 1924.rtf  
     Calvin Coolidge Inaugural 1925.rtf  
     coolidge_mellon_hoover.jpg
Citations:
The Republican Party Platform was found on the web at http://www.presidency.ucsb.edu/showplatforms.php?platindex=R1924
The Inaugural address of Coolidge was found at http://www.yale.edu/lawweb/avalon/presiden/inaug/coolidge.htm
The Coolidge photo was found at http://www.tax.org/Museum/coolidge_mellon_hoover.jpg
Prosperity as VirtueTop
Optimism and renewed admiration for industry and entrepreneurship characterized the economic mood of the 1920's. Many Americans came to regard commerce as a fulfillment of America's promise and destiny. As the age of consumerism dawned in America, financial success became a symbol of America's power and virtue.

President Coolidge, like the other chief executives of the 1920's, was an indispensable ally to big business and commerce. President Calvin Coolidge's speech connecting spirituality with commerce in the aftermath of World War I appears below.
In his 1925 bestseller The Man Nobody Knows: A Biography of Jesus, advertising expert Bruce Barton argues that Jesus and his Apostles were the ultimate marketing and business team.

Questions to consider:
1. According to President Coolidge's speech, what new role does America have in in the post-WWI world order?
2. Barton's book, The Man Nobody Knows was tremendously popular. TIME magazine even used a free copy of the book to entice readers into an 18 month subscription. What the the success of Barton's book reveal about American's attitude toward business and prosperity in the 1920's?
     Coolidge Speech on the Spirituality of Commerce.rtf  
     Bruce Barton The Man Nobody Knows.rtf  
Citations:
The Coolidge speech was found on the web at http://historymatters.gmu.edu/d/4991/
"The Man Nobody Knows" was found at http://www.materialreligion.org/documents/july97doc.html
Advertising in the Jazz AgeTop
Advertising techniques became more slick and refined throughout the 1920's as the mutually supportive industries of mass production and mass media exploded into the American consciousness. The wide array of new appliances and consumer goods available at a lower cost due to advances in production techniques fueled consumption in the emerging culture of Modernism.

In his address before the American Association of Advertising Agencies, President Coolidge identifies the advertising as a key component in perpetuating American prosperity. Coolidge was known for a reverential attitude toward business and wealth, and here he exalts advertising as "part of the greater work of regeneration and redemption of mankind."
The 1927 ad for a photo studio illustrates the use of class consciousness by advertisers. Note that the ad is directed toward other advertisers- the advent of modern consumer culture spawned a number of related industries.
This 1926 ad for refrigerators was shown in movie theaters. (0:43 minutes)

Questions to consider:
1. According to the President, how does advertising fit into the broader economic system? What are the results of successful advertising on the individual, industry, and the nation?
2. Identify a few key phrases in the President's address that characterize his attitude toward business and advertising and compare these phrases to those in other Coolidge speeches in this module.
3. What does Coolidge predict for the future of the American economy? Is he correct?
4. How did technology impact both advertising and consumerism in the 1920's?
     President Calvin Coolidge Address Before the American Association of Advertising Agencies 1926.rtf  
     Apeda Photo Ad.jpg
     Buy the Electric Refrigerator.mov  Download Quicktime®
Citations:
The Coolidge address was found on the web at : http://international.loc.gov/cgi-bin/query/r?ammem/cool:@field(DOCID+@lit(ms221))
The print advertisement was found at http://historyproject.ucdavis.edu/imageapp.php?Major=AD&Minor=C&SlideNum=44.00
The movie advertisement was found at http://memory.loc.gov/cgi-bin/query/r?ammem/coolbib:@field(SUBJ+@band(Advertising--Electric+household+appliances--Pennsylvania--Pittsburgh+))
Credit and the ConsumerTop
As consumerism became a hallmark of Modernism, the stigma of purchasing goods on "installment plans" faded. The automobile industry was one of the first to capitalize on the potential of consumer credit, but other industries quickly followed suit.

In the following excerpts from Social and Economic Consequences of Buying on the Installment Plan by Wilbur C. Plummer, some of the main causes and effects of the expansion of credit are explained.

Questions to consider:
1. According to Plummer, what are the main causes and effects of the installment plan?
2. How does the furniture advertisement below characterize buying on credit? What does the ad reveal about the motivation behind consumerism in the 1920's?
     Coolidge with the Creditmen.jpg
     Plummer Social and Economic Consequences of Buying on the Installment Plan 1927.rtf  
     Budget.gif
     The Engaged Girl.gif
Citations:
The photo of President Coolidge posed with members of the National Association of Creditmen appears at: http://international.loc.gov/cgi-bin/query/I?coolbib:1:./temp/~ammem_Qakx::displayType=1:m856sd=cph:m856sf=3c11733:@@@
"Social and Economic Consequences of Buying on the Installment Plan" was found at http://international.loc.gov/cgi-bin/query/r?ammem/cool:@field(DOCID+@lit(lg25T000))::bibLink=D?coolbib%3A5%3A./temp/~ammem_h6lt%3A%3A
A pamphlet extolling the virtues of buying on credit at a household goods store apears at: http://memory.loc.gov/cgi-bin/ampage?collId=amrlm&fileName=mc09page.db&recNum=10&itemLink=D?coolbib:2:./temp/~ammem_zokJ::
The "testimonial" from the same pamphlet appears at: http://memory.loc.gov/cgi-bin/ampage?collId=amrlm&fileName=mc09page.db&recNum=25&itemLink=D?coolbib:2:./temp/~ammem_zokJ::
Herbert Hoover and the End of ProsperityTop
After a lifetime of distinguished public service, Herbert Hoover served successfully as Secretary of Commerce under Presidents Harding and Coolidge. When Coolidge retired from politics, Hoover became the natural Republican candidate in 1928. Despite his experience and predictions of prosperity, the stock market crashed just months in to his presidency. He retained his conservative ideological principles of a balanced budget, low taxes, and government non-interference, which made him vulnerable to criticism from the stricken nation. Hoover thus became a scapegoat for the hardships of the Great Depression as the Jazz Age met its abrupt demise.

Hoover's 1928 "Rugged Individualism" campaign speech demonstrates his dedication to the traditional conservative principle of laissez faire capitalism. Communities of makeshift houses became known as "Hoovervilles" as the Depression worsened in the early 1930's. This photo shows a 1935 Hooverville in a riverbed.

Questions to consider:
1. What conservative principles does Hoover reiterate in his "Rugged Individualism" campaign speech?
2. Based on the selected quotations below, what erroneous assertions did Herbert Hoover make about the economic situation at the start of the Great Depression? What do you think the public reaction to those statements were?
     Hoover on Rugged Individualism 1928.rtf  
     President Herbert Hoover Selected Quotes Predicting Prosperity.rtf  
     Hooverville.jpg
Citations:
"Rugged Individualism" appears in its entirety at: http://coursesa.matrix.msu.edu/~hst203/documents/HOOVER.html
The selected quotes by Herbert Hoover predicting prosperity appear at: http://historymatters.gmu.edu/d/5063/
The photo was found on the web at http://academic.brooklyn.cuny.edu/history/core/pics/0255/img0015.jpg
Lesson PlansTop
Lesson plans relevant to this topic appear below.
     TM Model T Road Trip Some Affects of the Automobile on America Grades 9 through 12.rtf  
     TM Stock Market Crash Grade 9.rtf  
     TM Hoover and the Depression Grade 9.rtf  
"The Business of America and the Consumer Economy in the 1920's" PowerpointTop
This powerpoint closes follows the material in the module and is supplemented with additional pictures.

Questions for class discussion:
1. What changes took place in industry during the 1920's?
2. What was the impact of technology on industry, advertising, and consumerism?
3. The auto industry was emblematic of the evolution of the consumer economy. They started out simple and utilitarian, then became more stylish and varied throughout the decade. One's car became indicative of one's status and taste, and the latest models were always in demand. What modern inventions could you compare to car?
4. Compare the culture of consumerism of the 1920's with that of today. Do you notice any similarities?
5. Discuss the relationship between government and business in the 1920's.
6. Trace the arc of prosperity over the decade for the average American. How did the standard of living change?
     The Business of America and the Consumer Economy.ppt  
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