AMH Chapter 10 Section 2

Chapter 10
Section 2
A Growing Economy
American in the 1920s
• During the 1920s, Americans earned more
money than ever before while working fewer
• In a 1925 survey conducted in Muncie,
Indiana, most of the families who owned cars
did not have bathtubs with running water.
1920’s American Economy
• Mass production, or
large scale product
manufacturing done
mainly by machinery,
made more products
available and lowered
• This reshaped American
economics and industry.
Henry Ford
• In 1926, Henry Ford cut the
workweek of his employees
from six days to five.
• He used the assembly line to
build cars.
– The assembly line divided
operations into simple tasks
that unskilled workers could do
and cut unnecessary motion to
a minimum.
• This system also reduced
production cost.
• Example - Ford was able to
reduce the price of his Model
T from $850 in 1908 to $295 in
Role of the Model T in other industries
By lowering the price of his massproduced car, the Model T, Ford
created a huge demand.
Auto workers were expected to meet
requirements Sociological
Department set by Ford’s and
workers who misbehaved could be
suspended or even fired.
The automobile reduced the isolation
of rural areas and created a new kind
of consumer and worker, the auto
commuter, allowing people to live
farther from work.
Additionally, The success of
automakers spurred growth in other
industries such as rubber, plate glass,
nickel and lead.
Disposable Income
• Rising disposable
income led to many
new consumer
products, allowing
people to buy stuff
such as frozen foods,
household cleaners,
washing machines,
cosmetics, and facial
• During the 1920s, the
airlines industry expanded.
• American Glenn Curtiss
invented ailerons, which can
be used to help steer an
• The government used
airlines to deliver mail and
began building airports.
• The transatlantic solo flight
of Charles Lindbergh in
1927 demonstrated the
possibilities of commercial
• Also during the 1920s, the
radio industry expanded.
• In 1926 the National
Broadcasting Company
(NBC) established a
network of radio stations
to distribute daily
• In 1928 Americans
experienced the first
presidential election
campaign conducted over
the airwaves.
Borrowing Money (debt)
• One notable aspect of the
economic boom of the
1920s was a change in
attitudes toward debt or
• Before the 1920s, most
Americans thought that
going into debt was
• This attitude changed, and
more Americans went into
debt to buy items such as
furniture and bought cars
on credit.
• Inventors at this time had
trouble getting people to
buy products they did not
know they needed.
• To create consumers for
their new products,
manufacturers turned to
• The goal of advertising is
to convince consumers to
buy new products that
they may or may not
• During the World War I,
the government had
encouraged farmers to
grow more to meet the
need for food in Europe.
• Many farmers went into
debt to buy more land
and machinery to raise
more crops.
• Sales and prices were
high, so farmers
• After the war, Europeans
began producing more farm
products, so profits fell for
American farmers.
• New technologies such as
fertilizers, machinery, and new
seed varieties allowed farmers
to produce more, but demand
for the products did not
increase, so farmers received
lower prices for their goods.
• Although farmers produced
higher yields (more crops),
without an increase in
demand; they received lower
prices for their crops.
Protective Tariffs
• In 1922 Congress passed the
Fordney-McCumber Act.
• The Fordney-McCumber Act of
1922 reduced the American
market for foreign goods and
provoked a reaction in foreign
markets against American
agricultural products.
• This law raised tariffs to protect
American industries from
• Europeans reacted by buying
fewer American agricultural
• Prices dropped even more when
farmers could not sell their
products overseas.
Trying to help the farmers
• Some congressmen tried to help the farmers
sell their surpluses.
• They proposed a plan in which the
government would buy the crop surpluses to
sell abroad at a loss.
Vetoing the plan
• However, President
Coolidge vetoed the bill.
• He thought it would
encourage farmers to
produce greater
– As a result, American
farmers stayed in a
recession throughout
the 1920s.

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