BOOMING ECONOMY

Andrew Branca, Maccoy Kerrigan, Nicholas Bellardini

Common Terms

A recession is a time for a country in which there is an economic dip, and this usually happens after a war. This specific recession happened directly after WWI. However, it did not take long to get out of it, fueling the booming economic growth. The economy grew so much, in fact, that it became one of the richest in the world at the time. The GNP, a gross national product, went up to the $100 billion mark, skyrocketing. GNP is basically the value of the products produced in one year. As the economy continued to grow, we wanted to go further. We took time into the study of productivity, called scientific management. This study was of productivity, how efficient a worker could be on duty. There are two major factors; the time it takes to produce it, and the basic quality of the good.These two things are also major factors in the boosting of America’s economy.

Automobile Age

In the 1920’s there were three major automobile companies; Ford, GM, and Chrysler.

The Ford Model T was the revolutionary automobile. It was cheap, costing about $300, could drive virtually anywhere, and revolutionized both the car industry and many other industries. It had a very large impact on the car industry because it created competition for lower prices and also its competition created a yearly model of cars. Also, the founder of Ford, Henry Ford, created the assembly line, which made building a car - or anything for that matter - much quicker and easier.

An assembly line is a way so workers only have one specific job that they repeat. If you have enough workers, you can have each one assemble a car as it goes down the production line.

The larger automobile industry created a larger demand for rubber, steel, and glass - things that all cars need. 20% of all America’s steel went to automobile industry, 80% of all rubber, 75% of all glass, and 65% of all leather (History Learning site). Along with these industries, more highways and roads had to be built for these automobiles to go places.


Workers Relations

Many companies wanted to keep their workers safe on work property. They also wanted to have their workers trust the CEO’s. There was reason to this, of course. The bosses didn’t want any workers to join independent unions. An independent union is when workers join and complain about the working conditions. Unions could sometimes lead to the factory shutting down or the boss getting fired. If the workers are happy and they know they have safe working conditions, they are not likely to join a union.

Worker’s relations also include Welfare Capitalism. This means that the workers would be provided basic privileges under work, such as safety, health, and accident insurance. These things were given to the workers in order to prevent Unions from forming, which would be bad for business. It made workers stay with the business.


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Buying on Margin

Buying on margin was a way to buy stocks. It’s a spin off of installment buying, which is paying off over a period of time. Buying on margin involved a 10% down payment, and then you could sell it when the prices rose (paying off the entire price of the stock). This worked until the stock prices rose greater than the companies themselves. It doesn’t make sense for a part of a company to be worth more than the company itself.


Consumer Goods

as the economy became better, many people’s standard of living grew in terms of technology. As new technology became available, and production increased efficiency, goods became naturally cheaper and more abundant. This change brought about drastic changes in the American standard of living. Some goods that were produced and sold to the average family were washing machines, refrigerators, vacuum, furniture, and cars. The most notable are radios, cars, and manufactured clothing. This brought about the change that is “installment purchases”.

Consumer goods were a big part in making new things popular such as the phonograph, they were first invented in 1877 and by 1920 already 7 million had been sold. Another big product was the radio but they were difficult to make, the consumer had to wrap a Quaker Oats box with wire then tune it by touching a mineral crystal with a cat whisker and headphones were used for listening. But in 1922 Westinghouse created the first pre-assembled radio for entertainment as well as communication. Probably the biggest step forward in technology was the telephone. The telephone had a microphone and a speaker in a hand-held receiver but still we were far from perfecting it because all out of town calls required an operator for assistance and you had to wait until a line was open to use the telephone, and sometimes the wait was very long.


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Installment Buying

Installment buying is when a company grew their markets to increase production volumes and reduced the cost of items making them more affordable and easier to sell. A big target for companies were stay at home wives because the first products they were selling were appliances such as the vacuum, blender, toaster and coffee machine, they advertised them as as ways to make free time for housewives and ease the work for them. The other way it was done was by making products with cheaper materials like processed foods were a big hit when making products from cheaper materials, it also made for easier cooking which saved time in food preparation. Since most of the advertisements were targeted to women, most of the advertisements featured women such as a Ford Tudor ad where a woman sat in it watching a boy play with a dog. as well as CHIPSO where Mrs. S explained how she saved $18 every month by using CHIPSO.

Boom of Stock Exchange

The Boom was based on selling goods to people but we were running out of customers, and we could not keep up with the demand. it was also based on credit, ads pressured people to buy more and more for example Henry Ford said “every american home should have one [car]”. Then he changed it to “every american home should have 2” this showed how desperate companies were to make profit. The reason the stock market boomed was because prices of shares went up people though the boom would last so they kept buying, and buying, some people even borrowed money to get in on the gamble hoping to pay only 10% of their value back. the only problem is that many people did not know the risks and lost it all. Shares were so bad that they were being bought on street corners and many people invested their life savings in the stock market. Some companies didn't make anything, they just bought and sold shares.