An Economic RevolutionAfter today you should know:

1)How the economy changed in the 1920’s2)How industry changed society in the 1920’s?3)Who struggled economically in the 1920’s?

Ford Revolutionizes Industry

• First cars appeared in late 1800’s

• Owned by the wealthy• 1908 Henry Ford started

selling the Model T• Began mass producing

– Making identical cars and keeping them simple

Henry Ford Studies…• Studied manufacturing

processes• Hired experts in scientific

management• Adopted use of

interchangeable parts, moving belts

• Studied how workers should move to be the most efficient

The Assembly Line• Items move along a conveyor

belt to different work stations

• Each worker was assigned to a work station

• Their job was to complete a specific task in the manufacturing process– Same activity all day, every day

The Model T• 1917 – Model T sold for less

than $500– Still not cheap

• By 1920, Ford could produce a car every minute– Price went down

• Average Cost of Car in 1908– $850

• Average Cost of Car in 1925– $525

• Average Cost of Car today– $27,589

Competition and Productivity

• In 1920’s over half the cars on the road were Fords

• General Motors, Chrysler tried to improve Ford’s model– Developed new designs– Colors

• Competition caused industry to grow

• Ford didn’t change model until 1927

• Productivity rose by 60%– Measure of output per

unit of input (labor)• Auto industry boom

led to WELFARE CAPITALISM

Welfare Capitalism• Ever heard of a job with BENEFITS?

– Idea started in the 1920’s• A system in which a company provides benefits to

employees in an effort to promote worker satisfaction and loyalty– Paid pensions (retirement)– Recreation programs for workers

• Purpose was to encourage workers to shun unions and accept lower pay

What would life be like if cars were never invented?

Industry Changes Society• Car production boosted

steel, glass, rubber, and oil industries– Down since end of WWI

• Repair shops, motels, gas stations, restaurants

• Created tourist industry– Made travel easy, available

to everyone

Growth in Northern Cities• Automakers put

Detroit, MI on the map– 1910 – 500,000– 1930 – 1,500,000

• Other Northern cities exploded– Akron, Ohio – rubber

industry • Suburbs grew because

of access to cities by car• Florida

Change in the Consumer

• During the war Americans sacrificed buying things for their own pleasure

• In 1920’s consumers got back into the habit of buying and liking it

• New products and new entertainment exploded

New Products

• New, efficient and faster manufacturing processes helped factories produce more things and do it more quickly

• New products:– Refrigerators– Electrical appliances– Vacuum cleaners

• Electricity spread because of these new products

The Radio• The new favorite

technology was the RADIO

• By end of 1920’s - 4 in 10 homes had a radio

• Families gathered around the radio for news, dramas, comedy

• Connected the world

The Airplane

• Commercial flights began in 1920’s

• Travel cross country was more comfortable by train– Planes were

unpressurized and uninsulated

– Couldn’t fly at night

• People flew mostly for thrills

Advertising

• Modern, persuasive advertising developed

• Companies paid for ad space in newspapers, magazines, on radio

• Gave wide exposure to consumer products

• http://www.youtube.com/watch?v=cofP4NwNCQg&feature=related

Paying on Credit

• In early 1900’s people paid for items in full

• Borrowing money was not respected

• Installment buying introduced in 1920’s– Making for an item

over time in small payments

• People started buying on credit and loved it!

• By end of the 1920’s, 90% of long-lasting were bought on credit

• “Get what you want now!”

The Roaring 20’s

• Boom in cars, consumer goods, radio and advertising earned the 1920’s the nickname the ROARING 20’s

Trouble for Farmers

• European farmers returned to their fields– Tons of products

entered U.S. markets– U.S. farm prices

plunged• 19221 Fordney-

McCumber Tariff only helped a little

• Bugs destroyed cotton crops all over the South

• 1927 Mississippi River flood– 1,000 people died– Destroyed homes, farmland

• Hurricane struck Florida– Ended boom in Florida– Florida sunk into depression

Lasting Effects of WWI

War Debt• European nations borrowed $10 billion from the U.S.

– Struggled to pay it back– Couldn’t earn money to pay off debts to U.S.

• Germans couldn’t pay the reparations – U.S. started loaning money to Germany– Assumed the role of banker to all of Europe

Lasting Effects of WWI

Arms Race• Arms Race - nations competing to build more and

more weapons in an effort to avoid one nation gaining a power advantage– Peacetime brought pressure to reduce U.S. armed

forces to save money and reduce the threat of war• People feared that Britain and Japan were on the

verge of naval arms race

Lasting Effects of WWI

Arms Race• U.S. organized the Washington Naval Conference

in 1921– Major naval powers of the world attended– Agreed to cut back on the size of navies– Led to an agreement on issues that threatened world

peace– Considered a great success at the time

Lasting Effects of WWI

Air Power• General Billy Mitchell

encouraged U.S. to invest in building up its air power– Conducted tests to prove

air power is better than naval power

• People were not convinced

Lasting Effects of WWI

Treaties With Others• U.S. did not join League of Nations but wanted to

prevent another war• France proposed a treaty between U.S. and France, but

U.S. suggested a bigger plan• KELLOGG-BRIAN PACT - said countries would condemn

war as solution for international problems– 60 nations involved– But a countries word was the only enforcement