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Postwar Prosperity and Its Price

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Postwar Prosperity and Its Price Objective: Describe how the American economy changed in the 1920s and the effects these changes had on American life – PowerPoint PPT presentation

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Title: Postwar Prosperity and Its Price


1
Postwar Prosperity and Its Price
  • Objective
  • Describe how the American economy changed in the
    1920s and the effects these changes had on
    American life

2
J. P. Morgan's role in the economy was denounced
as overpowering in this hostile political cartoon
3
Summary for the Decade
  • Republican Warren G. Harding wins presidency
    based on return to normalcy
  • Increased production
  • Boom in consumer goods
  • Uneven distribution of wealth
  • Ends with worst economic depression in American
    history
  • Transforms American business, careers, and
    lifestyle

4
The Second Industrial Revolution
  • Technological innovations make it possible to
    increase industrial output without expanding the
    labor force.
  • Electricity allows new more efficient machinery
    to replace older steam powered machines.
  • 1929, 70 of U.S. factories are electrified.

5
The Second Industrial Revolution
  • Producer-durable goods (19th century)
  • Mass-produced
  • Machine tools
  • RRs
  • Iron
  • Steel
  • Consumer-durable goods
  • Mass-produced

Automobiles Canning
Radios Chemicals
Washing machines Synthetics
Telephones plastics
6
The Second Industrial Revolution
  • More efficient management
  • Greater mechanization
  • Intensive product research
  • Ingenious sales and advertising methods
  • doubled U.S. industrial production

7
The Modern Corporation
  • In with the new
  • Alfred P. Sloan of GM
  • Owen D. Young of RCA
  • Salaried execs, plant managers, and engineers
    make policy without a controlling interest in the
    companies they work for.
  • Stress scientific management and behavioral
    psychology to make more productive, stable and
    profitable workplaces.

8
The Modern Corporation
  • Out with the old
  • John D. Rockefeller in oil
  • Andrew Carnegie in steel
  • Owned their companies
  • Managed their companies

9
The Modern Corporation
  • Three key areas
  • Integration of production distribution
  • Product diversification
  • Expansion of industrial research

10
The Modern Corporation
  • DuPont
  • Goes from specializing in explosives
  • Diversity in rayon, paints, dyes, and celluloid
    products
  • GE Westinghouse
  • From lighting and power equipment
  • After WWI, household appliances such as radios,
    washing machines, and refrigerators.

11
The Modern Corporation
  • Oligopoly (Ol-i-gop-o-ly)
  • Control of a market by a few large producers
  • This meant that Americans were increasingly
    members of a national consumer community, buying
    the same brands all over the country, as opposed
    to locally produced goods.
  • 200 companies own ½ nations corporate wealth
  • 100 corporations earn ½ of the total revenue from
    sales of goods
  • The Great Atlantic and Pacific Tea Co. (AP)
    10 of all retail food sales in U.S.
  • Name brand goods at discount prices

12
Monopoly to Capitalism
  • Oligopoly is the middle ground between monopoly
    and capitalism. An oligopoly is a small group of
    businesses, two or more, that control the market
    for a certain product or service.
  • This gives these businesses huge influence over
    price
  • companies in oligopolies establish exclusive
    dealerships, have agreements to get lower prices
    from suppliers, and lower prices with the
    intention of keeping new companies out.
  • oligopoly examples are abundant in our economic
    system today.

13
Modern Examples
  • Four music companies control 80 of the market -
    Universal Music Group, Sony Music Entertainment,
    Warner Music Group and EMI Group
  • Six major book publishers - Random House,
    Pearson, Hachette, HarperCollins, Simon
    Schuster and Holtzbrinck
  • Four breakfast cereal manufacturers - Kellogg,
    General Mills, Post and Quaker
  • Two major producers in the beer industry -
    Anheuser-Busch and MillerCoors
  • Two major providers in the healthcare insurance
    market - Anthem and Kaiser Permanente
  • Phone and cable companies
  • TV
  • Film
  • Cars

14
Welfare Capitalism
  • Challenged the power and appeal of trade unions
    and collective bargaining.
  • Created new programs designed to improve worker
    well-being and morale.
  • Stock options
  • Insurance policies for accidents, illness, old
    age, and death
  • Improved safety and provided medical services
  • Establish sports and recreation programs

15
Welfare Capitalism
  • Encouraged company loyalty and discouraged job
    related complaints
  • Could not solve chronic problems facing
    industrial workers
  • Seasonal unemployment
  • Low wages
  • Long hours
  • Unhealthy factory conditions

16
Welfare Capitalism
  • The American Plan launched by large corporations
    against unions.
  • Associated unionism with foreign and un-American
    ideas.
  • Open shops were also anti-union.
  • No employee is forced to join a union.
  • If one exists, nonmembers would get the same
    wages and rights as union members.
  • No advantage to being in the union

17
Welfare Capitalism
  • U.S. Steel and International Harvester set up
    company unions
  • Symbolic employee representation at management
    meetings versus the more confrontational
    collective bargaining.
  • Sharp decline in union membership.
  • 5 million in 1920
  • 3.5 million in 1926
  • Government reverts to pro-business attitude of
    pre-WWI.

18
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19
The Auto Age
20
The Auto Age
  • No other single development could match the
    impact of the automobile on the way that
    Americans worked, lived, and played.

1925 Model T Ford
21
The Auto Age
  • Henry Fords continuous assembly line could
    drastically reduce the number of worker hours
    required to produce a car.
  • One vehicle in 1913 13 hours
  • 1914 90 minutes
  • 1925 1 every 10 seconds
  • Finest example of a consumer durable.

22
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23
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24
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25
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26
The Auto Age
  • Ford introduces 5.00 for an 8-hour day in 1914.
  • Double the daily wage and a shorter workday
  • Ford realizes that workers are consumers and the
    new wage will boost sales.
  • Also, reduces employee turnover and increases
    efficiency.

27
The Auto Age
  • 2/3 of Fords labor force are southern and
    eastern European.
  • Employs 5,000 African American workers, more than
    another corporation.
  • Mass-production and economies of scale (the more
    of a product you produce the cheaper each unit of
    this product becomes) make his automobiles
    affordable at ½ the price of his competitors.

28
The Auto Age
  • General Motors (GM) develops a new and effective
    marketing strategy
  • Cadillac most expensive car
  • Chevrolet least expensive and targeted the
    working-class and lower-middle-class buyers
  • Match production with demand through market
    research and sales forecasting become widely
    copied

29
The Auto Age
  • Ripple effect
  • Steel, rubber, glass, petroleum products
  • Good roads, bridges, tunnels, traffic lights
  • Housing boom to new suburbs
  • Showrooms, gas stations, and repair shops
  • Roadside motels, billboards, diners
  • Rapid growth and development of California and
    Florida

30
The Auto Age
  • Explored the world outside their small
    communities
  • Made leisure activities a regular part of
    everyday life.
  • Dating practices change

31
Cities Suburbs
  • Census of 1920 showed for 1st time in U.S.
    history that more Americans lived in urban areas
    than in rural areas.
  • Increase in of big cities
  • 1910 60
  • 1920 68
  • 1930 92
  • NYC grows 20 to almost 7 million
  • Detroit doubles to 2 million

32
Cities Suburbs
  • Business opportunity
  • Good jobs
  • Cultural richness
  • Personal freedom
  • Ethnic communities
  • Great Migration continues

33
Cities Suburbs
  • Vertical growth
  • Steel-skeleton construction technology
    skyscrapers
  • NYCs Empire State Building
  • Completed 1931
  • Worlds tallest
  • 25,000 residential and commercial tenants
  • 102 stories high

34
Cities Suburbs
  • Horizontal growth
  • Lots of cheap land, no zoning ordinances, along
    with the car pushed out from downtown.
  • Decentralized, low-density cities, that sprawl
    for miles in every direction and are totally
    dependent on the car and roads for any sense of
    community.
  • Houston, LA, Miami, and San Diego

35
Cities Suburbs
  • Suburbs double
  • Car
  • Undeveloped land surrounding cities
  • valuable real estate
  • Automobile suburbs differ from earlier suburbs
  • Not built along mass transit routes
  • Larger lot sizes lower residential density
  • Commuting jobs attracted to move out of cities

36
Exceptions Agriculture, Ailing Industries
  • Uneven distribution of wealth
  • With the end of WWI and European recovery, U.S.
    farmers suffer from surpluses
  • Farmers heavily in debt and facing downward
    spiraling prices
  • Income on farms in 1929 was 223, compared with
    870 for nonfarm workers
  • Quit farming for mill or factory jobs

37
Exceptions Agriculture, Ailing Industries
  • McNary-Haugen Farm Relief bill
  • Government purchases farm surplus and wait for
    prices to increase or sell on world market.
  • President Coolidge vetoes as unnecessary
    government interference in the economy.
  • Federal government relief for farmers doesnt
    arrive until the New Deal of the 1930s.

38
Exceptions Agriculture, Ailing Industries
  • Coal is replaced by oil and natural gas.
  • Railroads are replaced by cars and trucks.
  • Textiles have shrinking demand and too many
    factories.
  • Fashion used less material
  • Cotton had competition from new fabrics like
    rayon
  • Mills move South to hire nonunion workers

39
Consumers Have Less Money to Spend
  • Rising Prices
  • Stagnant wages
  • Uneven distribution of wealth
  • Overbuying on credit

40
Living on Credit
  • Many during the 20s were living beyond their
    means
  • Credit buy now, pay later
  • Monthly payments with added interest charges
  • Easy credit creates large consumer debt
  • Faced with debt, consumers stop spending

41
Uneven Distribution of Income
29
5
65
1
42
1929
43
  • A chart showing the disparity in income
    distribution in the United States.1718 Wealth
    inequality and income inequality have been
    central concerns among OWS protesters.192021
    CBO data shows that in 1980, the top 1 earned
    9.1 of all income, while in 2006 they earned
    18.8 of all income.22

44
  • The share of income going to higher-income
    households rose, while it fell for others. CBO
    has examined the trends in the distribution of
    income for all households between 1979 and 2007.
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