The United States entered the 1920's in a strong economic position. The economies of her European rivals had been severely disrupted by the First World War and the United States had been able to capture markets which had previously been supplied by countries like Britain, France and Germany.
Companies in the United States also made full use of the system called "mass production". Between 1919 and 1929 output per worker increased by 43%. This increase enabled America to produce items that were cheaper than those manufactured by her European competitors. This enabled employers to pay higher wages. By 1926 the average daily wage of a Ford worker was $10 and the Model T sold for only $350.
The United States also pioneered techniques in persuading people to buy the latest products. The development of commercial radio meant that companies could communicate information about their goods to a mass audience. In order to encourage people to purchase expensive goods like motor cars, refrigerators and washing machines, the system of hire-purchase was introduced which allowed customers to pay for these goods by installments.
The American economy appeared to be in such a healthy state that during the 1928 Presidential Election. Herbert Hoover easily defeated Al Smith, the Democratic Party candidate (21,427,123 votes to 15,015,464) in the election. An editorial in the New York Times in January, 1929, quoted President Hoover as saying: "It has been twelve months of unprecedented advance, of wonderful prosperity. If there is any way of judging the future by the past, this New Year will be one of felicitation and hopefulness."
I think our people have long realized the advantages of large business operations in improving and cheapening the cost of manufacture and distribution…. The more goods produced, the more share there is to distribute.
The average industrial wage rose from 1919's $1,158 to $1,304 in 1927, a solid if unspectacular gain, during a period of mainly stable prices... The twenties brought an average increase in income of about 35%. But the biggest gain went to the people earning more than $3,000 a year.... The number of millionaires had risen from 7,000 in 1914 to about 35,000 in 1928.
In America the daily life of the majority is conceived on a scale that is reserved for the privileged classes anywhere else... The use of the telephone, for instance, is very widespread. In 1925 there were 15 subscribers for every 100 inhabitants as compared with 2 in Europe, and some 49,000,000 conversations per day.... Wireless is rapidly winning a similar position for itself, for even in 1924 the farmers alone possessed over 550,000 radios.... Statistics for 1925 show that... the United States owned 81 per cent of all the automobiles in existence, or one for every 5.6 people, as compared with one for every 49 and 54 in Great Britain and France.
We in America are nearer to the financial triumph over poverty than ever before in the history of our land. The poor house is vanishing from among us. Under these impulses, and the Republican protective system our industrial output has increased as never before and our wages have grown steadily in buying power. Our workers, with their average weekly wages, can today buy two and even three times more bread and butter than any other earner in Europe.
(Source 7) Selected share prices from the Wall Street Journal
3rd March, 1928 ($)
3rd August, 1928 ($)
American Telephone & Telegraph 77 181 Anaconda Copper 54 162 Westinghouse Electric Corporation 91 313 Electric Bond & Share 89 203
In the wake of the five-dollar day - which overnight more than doubled Ford worker's pay - scores of newspaper and magazine writers swarmed to Highland Park (the new Ford Factory).... Gaping at the smooth-flowing assembly lines, the writers used such adjectives as "miraculous", "phenomenal", "revolutionary", and "world-shaking" in attempting to describe the process. Syndicated stories on how "Ford cars grow up by magic methods" appeared in hundreds of newspapers throughout the nation.
Questions for Students
Question 1: How far does the information supplied in sources 3 and 5 support the claims made by Herbert Hoover in source 2.
Question 2: Henry Ford described the process of mass production as "the operation sub-divided so that each man and each machine do only one thing. The thing is to keep everything in motion and take the work to the man and not the man to the work." How does this description help to explain the phrase in source 8 that "Ford cars grow up by magic methods?"
Question 3: What methods does source 4 use to persuade people to buy Ford cars?
Question 4: Why did some people believe that the economic advantage which the United States had over Europe (source 5), was likely to be "short-lived"?
5. Select one of these sources which may be identified as a primary source of history and one which may be identified as a secondary source. Give reasons for your decisions.
A commentary on these questions can be found here.