| The Business of America and the Consumer Economy (1908-1935) |
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Sections:- Postwar Prosperity
- Scientific Management and the Reorganization of Work
- The Automobile and American Culture
- General Motors Eclipses Ford
- Warren Harding and the "Return to Normalcy"
- Protective Tariffs
- Silent Cal and the Business of America
- Prosperity as Virtue
- Advertising in the Jazz Age
- Credit and the Consumer
- Herbert Hoover and the End of Prosperity
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| Historical Context
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.
Attached Documents
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? |
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| Historical Context
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.
Attached Documents
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? |
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| Historical Context
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.
Attached Documents
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. |
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| Historical Context
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.
Attached Documents
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? |
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| Historical Context
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.
Attached Documents
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?
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| Historical Context
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.
Attached Documents
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. |
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| Historical Context
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.
Attached Documents
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?
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| Historical Context
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.
Attached Documents
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? |
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| Historical Context
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.
Attached Documents
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?
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| Historical Context
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.
Attached Documents
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? |
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| Historical Context
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.
Attached Documents
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? |
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