Dnl-SES / Economic and Social Changes
Video Transcript by IES
“In the 1920´s, many Americans had disposable income to spend. What were they spending it on? Where were these products coming from?
Throughout the year 1900, Henry Ford developped and refined the assembly line methods. Ford’s automobile factories can produce vehicules more efficiently and cheaper than before. Using the assembly line methods, workers would perform one task on each automobile and then would move down the line to the next worker who would complete a different task. With this method, Ford can roll a car off the assembly line every ten seconds.
This type of mass production allowed the average price of an automobile to drop from $850 to $250.
Ford’s methods were quickly adopted by other industries. Skilled labourer was no longer needed to assemble finished products. Instead, it was only necessary to train an unskilled labourer how to do one simple task.
Suddenly, factories were turning out countless numbers of products that once deemed as luxury products. Now these products can be used in such large quantities they became affordable to the average person.
More factory jobs meant more workers as well. Not only were more people being employed but they were also receiving good wages. The average worker’s wage rose by 20% during the 1920s. With more people working for higher wages, they no longer needed to spend on all their money on essential items such as food, housing and clothing.
These worker began to emerge as what now is tought of as middle class. This new middle class discovers that it’s free to spend their disposable income on many of the luxury items that were being produced. Many of these items were becoming available and useful because of the increased use of electricity. Things like refrigerators, vacuum cleaners, washing machines and radios were all becoming staples of the average home.
The new mass production methods made these products inexpensive because they could be produced quickly. For example, by the end of 1920s, more than one million refrigerators were being produced each year. Also more than 10 million radios had been sold by 1920.
With the new influx of products to buy something else emerged as well. Companies began mass marketing their products and competing with their rivals for the business of consumers. Advertisement became increasingly common throughout the decade. Radio proved to be an excellent method for advertisers to communicate with large number of people at the same time. Each advertisement was used to convince a listener that they absolutely needed the latest gadget or healthcare product. Advertisement proved very effective too. For example, sales of Listerine skyrocketed from $100,000 a year in 1921 to more than $4 million by 1927.
Unfortunately, even though the new middle class had more disposable income than ever before, some products were still too expensive to buy. This was especially true of automobile and high priced items. Therefore, a new method of purchasing was created. It became known as buying on installment or credit. A down payment would be made on the item and the rest of purchase price would be paid off over the course of next several month or even years. This led to millions of Americans facing large and unnecessary debt at the conclusion of the decade.”
Look at figure 5 and see for yourself
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