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America experienced a significant economic boom in the 1920s following a brief recession after World War I. The nation’s Gross National Product soared from $70 billion in 1922 to $100 billion by 1929, fueled by rapid industrial growth and technological advancements, notably in electricity and mass production methods. Installment buying changed consumer practices, while the automobile industry thrived, impacting numerous other sectors. However, not all benefited; many farmers faced hardship, leading to a stark contrast in wealth distribution, with 75% of families living below the poverty line by 1929.
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A Booming Economy 24.3
Growth in the 1920’s • For about two years after the war America experienced an economic downturn or a recession • The economy then began a steady growth that lasted most of the decade • In 1922 the nation’s Growth National Product (the total value of all goods and services produced) 70 billion and by 1929 it was 100 billion • Technology made rapid industrial growth possible, and electricity powered American industry
Scientific Management/Worker Relations • The hiring of experts to research how good could be produced more quickly • By adopting new methods found by the experts companies began increasing productivity (The amount of work each worker could do) • Many companies also encouraged workers to buy stock in the company • This was known as welfare capitalism and linked workers more closely to the companies they worked for
The Consumer Economy • Installment buying was introduced during this time • Consumers could now buy products by promising to pay small, regular, amounts over a period of time • The installment method boosted consumer spending
The Automobile Age • Henry Ford was a pioneer in the manufacture of affordable automobiles with his Model T, which was built using assembly line methods • Henry Ford then released the Model A in a range of colors to compete with GM • This is where the practice of introducing new car models each year came from
The Car’s Effects on Other Industries • New Roads • Highways • Gas stations • Rest stops • Tourism • Steel • Rubber • Glass • Oil
Those Left Behind • Farmers had an especially difficult time; during the war the government had purchased wheat, corn, and other products and the farmers had prospered from higher prices • When the war ended farmers had to compete with European farm prices again and not as much food was needed; unable to pay debts many farmers lost their farms • By 1929 75% of families had incomes below the poverty line
