The Business of America

• Main Idea: The prosperous 20’s led to a rise in the American standard of living.

• The US owned 40% of the world’s wealth• Many Americans got “used to excess” during

the 1920s.

American business changes American society

1. President’s Coolidge and Hoover promote business “the business of America is business”.

2. The Automotive industry is the backbone of American economy

- 80% of all cars registered in the world were in the USA.

- Henry Ford and the Assembly line. P. 494

• Between 1908-1927, Ford build 50% of the automobiles produced in the world, more than 15 million.

• Large numbers of identical cars made in identical way allowed for cheaper prices

• 1927, Model T - $290, Model A - $495• Part of Ford’s success was due to vertical

consolidation – he controlled the businesses that made up the phases of the product’s development

– Automobile changes the landscape of America• New Roads & Highways, garages (smaller lawns), traffic

signals• People can travel to work = Urban Sprawl = Suburbs

Grow• Allows rural people to travel = vacations• New businesses rise (gas stations, repair shops, public

garages, motels, tourist camps, and shopping centers)

• Ohio and Michigan become the leaders in the automotive industry

Airplane industry increases and expands

1. Now used for both mail and passenger service

- The first planes could hold up to 10 people

Electricity Expands

1. Factories used electricity to power machines (could have factories anywhere)

2. Electricity now in the suburbs and on farms3. Electrical appliances (radio, washing

machines, iron, vacuum cleaners now in homes

- Gives house wives more leisure time = changes in people’s lifestyles = shopping centers grow = first malls

New methods of advertising emerge

1. Use of ad’s to sell (images) – p. 4902. Brand names become widespread (Lucky,

Listerine)3. Radio’s reached huge audiences4. Mass Media5. Focus on consumers led to economic growth

A Consumer Economy

• Between 1914-1926 average wages increased 28%

• Number of millionaires doubled• Consumer Economy = An economy that

depends on a large amount of spending by consumers

• Increased spending = larger profits for business = increased wages which encourages even more spending

• Americans traditionally valued thrift, but increased spending in the 20s was sparked by;

• higher wages• clever advertisement • new products • lower costs• widespread availability of credit