Henry Ford in 1920s
In the 1920s the motorcar came to represent the American dream, by offering independence and adventure. Cars fell in price dramatically, so that many Americans could afford them. They could be sold to a mass market because they could be made more cheaply, using assembly line methods. Henry Ford’s Assembly line brought the average price of a car down from $850 in 1908 to $250 in 1925. As a result, car factories paid high wages and jobs were sought after.
Henry Ford’s ideas, based on ‘Taylorism’, the time and motion studies of Frederick Taylor, revolutionised American industry. Instead of a car being made from start to finish by the same people, cars were made on assembly lines. Parts were added to the vehicle as it passed along the line. Workers did not have to learn skills. As all they had to do was learn how to fix one part. This meant that cars could be produced much more cheaply and much more quickly. The car industry led to the creation of many jobs in factories supplying parts. For every worker in a car factory, there were ten more making components. Ford’s ideas were soon adapted for use in other industries.
By 1925 Ford was producting a car every ten seconds. A new model T cost only $290. In 1920 some 9 million cars were registered in the US. By 1929 the figure had risen to 26 million. Almost 500, 000 workers were employed in teh automobile industry.
During the 1920s about $1, 000, 000, 000 was spent on building national highways.
The USA also had vast supplies of raw materials that had hardly been touched. Many Americans were immigrants who had come to the USA looking for a land of opportunity. They were prepared to work hard and take chances. New industries developed, especially production of electrical goods and man-made fibres. These all benefited from the introduction of the production line. The German chemical industry was held back by the war; the US took the lead, making dyes, fertilisers and plastics. This gave the USA an extra advantage in these new industries.
There was in effect a second industrial revolution, in consumer goods, like radios, cars, fridges, telephones and vacuum cleaners. These goods were not new but they had previously been available only to the rich. Now they were sold, in millions, to a mass market. The great benefit was that these products all made life easier. Less time had to be spent on routine household work, so people had more time for leisure.
More leisure time helped the film industry to boom. By 1930, 95 million cinema tickets a week were being sold. Not only were people now able to buy labour saving devices, but they could also enjoy better entertainment. At the same time, wages rose and prices remained the same or even fell. The price of a motorcar fell by 60 percent after the introduction of the assembly line. Everybody seemed to be getting better off. By 1927 sixty three percent of the population lived in homes lit by electricity! Between 1921 and 1930 refrigerator production increased from 5000 to a million units a year.
New industries boomed, but they were mainly producing consumer goods. As wages rose, they could sell more. It was a city-based boom. Cities got bigger, as suburbs developed and higher skyscrapers were built.
In the rural areas, or the areas of the old industries, there was very little change. The old industries, such as coal, textiles, shipbuilding and iron and steel declined because they were not able to make use of Henry Ford’s new methods. They either produced raw materials or very heavy goods like ships. They also relied on government contracts and orders from big businesses. Fewer ships were needed after the First World War. The USA imported and exported less than during the war. Coal became less important as electricity and oil replaced steam power. Cotton and wool were replaced by man-made fibres.
The Republican governments were prepared to give business its head. As Calvin Coolidge said: ‘the business of America is business’. There were few attempts to regulate business. Instead, taxes were cut, which encouraged people to spend more. In 1922 the government imposed the Fordney-McCumber Tariffs on imports. These made foreign goods very expensive, so people bought American. The average ad valorem tariff rate rose to about 40%. As a result many of America's trading partners also incrased their tariffs. France, for example raised the tariff on cars from 45 to 100%.
New methods of buying and selling and advertising were developed. Chain stores, hire purchase, mail order, travelling salesmen, the radio and the cinema were all exploited. This meant that it became much easier to order and pay for new purchases.
Calvin Coolidge, President of the USA 1923-29. Coolidge said "Advertising makes new thoughts, new desires, new actions. It is the most powerful influence in adaptinig and changing the habits and way of life, affecting what we eat, what we wear and the work and play of a whole nation."