1920s: Innovations in Communication and Technology

Manufacturing and Technology

• Driven by mass production, mechanization, and scientific management
• Electricity replaced steam
• The U.S. produced 40% of the world’s manufactured goods
• Average output per worker increased by 32%, wages increased by 8%

Developing Industries and Technologies

• Automotive
  • Moving assembly line
  • Ford Model T for $290
  • Competitors were General Motors and Dodge
  • Increased demand for steel and oil
  • Fordlandia in Brazil
• Petroleum
  • New refineries to meet demands of gasoline
  • Necessary to make synthetic rubber for tires
• Aviation
  • Increased demand and innovation from WWI
  • Air mail and commercial flights
• Electrical appliances
  • Washing machines, refrigerators, vacuum cleaners, ranges
  • General Electric
• Chemical industries
  • Development of synthetics such as rayon and cellophane
  • DuPoint

Welfare Capitalism

• Provides incentives and benefits to appeal to good will of workers leading to higher productivity
  • Kept them happy and loyal
  • Yellow-Dog Contracts kept workers from unions
• Personnel management
  • Controlled the “right way” to live
  • Drinking habits, marital relations, spending habits
• Benefits
  • Life insurance, pension plans, stock-purchase plans, profit sharing
• Anti-union policies
  • American Plan - open shops
  • Company unions
• Henry Ford
  • $5 a day compared to the $11 a week national average
  • Higher productivity
  • Workers could afford products

Stock Market and Business Profits

• Buying on margin
  • Investing with borrowed money
  • Amplifies gains and losses
  • If the account falls before the maintenance margin, the broker can sell some of all of the portfolio to get the account back in balance
  • Corporate profits increased by 62% and dividends increased by 65%

Economic Growth

• The economy grew by 42%
• New construction increased from $6.7 billion to $10.1 billion
  • Power plants, highway projects
  • Motels, service stations
  • Suburbs
• Real GDP in 1920 at $687.7 billion, $977 billion in 1929
• Stock market value increased by 20%
• Inflation remained relatively constant
• Unemployment remained relatively low

American Agriculture

• World War I increased prices and profits
  • Golden Age of Agriculture
• Mechanization and fertilizers increased production
• European demand decreased
• Per capita farm income was $273 compared to $681 national average
• Farm foreclosures increased and new farms declined

Socioeconomics and Standard of Living

• Standard of living increases
  • Due to mass production and welfare capitalism
  • Average income increased by 35%
  • Urban real wages increased by around 20%
  • Disposable income increased allowing for more indulgence in consumer culture and entertainment
• Socioeconomics
  • Top 1% owned 23.9% of national income
  • Top 0.1% owned as much as the bottom 43%
  • 80% of Americans had no savings
  • Top 0.1% owned 34% of savings
  • 60% of Americans lived under the poverty line earning below $2000

Mass Consumerism

• Mass production of consumer-durable goods
• New Marketing strategies and innovations
  • Use of psychology
  • Appeal to needs and desires and anxieties
  • Radio broadcasting
• Consumer debt
  • Installment plans
  • Credit cards
• Radio and film
  • ex. The Jazz Singer