ADVANCED PLACEMENT AMERICAN HISTORY
The Business of America
*The decade after World War I was a period of great prosperity for most of America (although for farmers it was a period of bad fortune, as food prices fell shortly after World War I ended).
was the basis of this growth, particularly because of the
innovations of Henry Ford. Although he did not
invent the automobile, he did develop a new way to produce
*Mass production was not a new idea, but Ford developed it to its logical end: the assembly line. Manufacturing was broken down into its simplest steps, and every person on the assembly line performed one out of 84 single steps—each installing a single part of a new car. To keep things simple, his Model T cars were available in any colour, as long as it was black (a cheap, durable, and fast-drying colour).
*Ford was able to do this because he hired experts in scientific management, based on the ideas of Frederick Taylor’s time and motion studies. These studied how quickly a worker could perform his job and found ways to make their actions even more efficient. Some workers say this as insulting and dehumanising, but it worked.
*Mass production allowed cars to be made so quickly (one car every 90 minutes by 1910) and so cheaply that cars went from being toys for the rich (
*Ford also more than doubled his workers’ wages (from $2.35 to $5.00 a day), eventually reduced their working day to 8 hours, and in 1936 began giving his workers both Saturday and Sunday off, creating the idea of the weekend. With more money and more time to drive around, his workers bought his cars.
*This meant people needed gasoline. Americans searched for oil deposits, and found them throughout the southwest. The nation spread out, too. Motor hotels (or motels), roadside diners, gas stations, and roadside tourist attractions spread across the country. People began to use railroads and streetcars less, and people moved away from city centres to suburbs.
*In Tennessee, farmers who were accustomed to taking their goods to market in wagons resisted attempts to pay for the construction of paved roads until Governor Austin Peay proposed paying for all highways with a tax on gasoline. Ever since,
*People did not just buy more cars, but more of many things, as mass consumption became even more massive. Advertising became more widespread and more creative.
*Advertising became so influential that in 1925, Bruce Barton published The Man Nobody Knows: A Discovery of the Real Jesus, Jesus as the "founder of modern business" whose self-confident leadership modeled the best of executive skill with his apostle and disciples as junior executives and a sort of traveling sales force, and whose parables reflected the essentials of effective advertising. Sincere and reverent throughout, Barton retold the Gospel accounts of Jesus's life and preaching as a modern man's guidebook to honest wealth and business success.*Furthermore, people were often able to buy things on instalment plans, making a down payment and then monthly payments on the things they wanted (but once would have had to save for months or years to buy). This allowed manufacturing to boom and workers’ wages to rise (thus making them feel confident enough to take on more debt).
*In 1879, Frank W. Woolworth opened his first five and dime store, in which every product cost 5¢ or 10¢. This allowed customers to look over products themselves and know what everything cost without a trained sales force to assist them, so that shopping was not only affordable, but convenient. Woolworth stores were soon found across the United States and around the world, and when Woolworth built a skyscraper to be his corporate headquarters in 1913, it was the tallest building in New York City and the world, a record it held until 1930.
*Piggly Wiggly, America's first true self-service grocery store, was founded in Memphis, Tennessee in 1916 by Clarence Saunders. In other grocery stores of that time, shoppers presented their orders to clerks who then gathered the goods from the store shelves. Saunders developed a way for shoppers to serve themselves. There were shopping baskets, open shelves, and no clerks to shop for the customer. Even grocery shopping used the ideas of unskilled labour for a type of mass production and certainly mass consumption. The increasing ownership of cars also allowed people to take more groceries home so that they began to buy more food in each trip to the store (but make fewer trips).
old businesses grew and new businesses were created,
people invested more in the stock market, even people with
relatively modest incomes and little experience in
investment. Many of them made fortunes, but it was a
gamble, as stocks could fall as well as rise in
value. The risks (and rewards) were made greater by
the system of buying stocks on margin. This allowed
investors to put down part of the price of a stock
(perhaps as little as 10%), and pay off the rest of it as
the stock rose in value. However, if the stock fell,
the investor still had to pay the full value of the stock
at the time he bought it. This had the potential to
ruin investors (particularly those that depended on just
one or a few stocks), but for most of the 1920s, so many
stocks rose that it seemed a great system, and by 1929,
about 4 million Americans (almost 4%) owned stock.
*As businesses boomed, so did the need for office space, and a new wave of skyscrapers were built in the early 1900s. In 1931, the
*This economic boom was strongly supported by the US Government. When Warren G. Harding was elected in 1920 with a promise of a return to normalcy he also returned American government to a period before it supported the numerous reforms of the Progressive Age.
*Harding appointed Andrew Mellon, a rich banker, Secretary of the Treasury. Mellon cut taxes, but also cut government spending significantly, and as the economy grew (partly, perhaps, because his tax cuts gave businesses more money to invest and consumers more money to spend) so did the government’s income.
*Hoover and Mellon reduced government regulation of business, and also helped American businesses by raising the tariff, making foreign goods more expensive and making American goods more competitive—but causing foreign countries to raise their tariffs on American goods, making it harder to export American products. Although
appointed former Supreme Court justice Charles Evans
Hughes as Secretary of State and the Great Humanitarian,
Herbert Hoover, as Secretary of Commerce. Not all of his cabinet appointments
would be as distinguished, however.
*Harding was friendly, popular, likeable, and not very smart. He did not like the hard work of being president, and allowed his Cabinet and other advisors to do most of the work for him. Unfortunately, many of them were deeply corrupt. Many of them spent fortunes in taxpayer money on things made by their own businesses or those of their friends.
*The most infamous of these scandals came when the Secretary of the Interior, Albert Fall, took control of the navy’s emergency oil reserves in Elk Hills, California and Teapot Dome, Wyoming. He leased the oil to businessmen in exchange for bribes. Eventually this was discovered and Fall went to jail. An aide of the Attorney General committed suicide after destroying government papers and an assistant to the director of the Veterans’ Bureau committed suicide after helping his boss skim money off their accounts and run illegal drug and alcohol smuggling businesses (at a time when all alcohol was illegal) and the director himself went to jail.
*Harding did not personally profit from any of this, but he did not stop it. When Harding died in office, no autopsy was performed, and there were rumours that he was poisoned (perhaps even by his wife).
*Harding was replaced by Calvin Coolidge, who was quiet, careful, and honest. He had such a reputation for quietude that he was known as ‘Silent Cal.’ He also supported big business: he said the Business of America is Business, and that ‘the man who builds a factory builds a temple, and the man who works there, worships there.’ He continued to keep taxes and government spending low, and the tariff high, and during his six years as president (he was elected to a term of his own in 1924),
*There were problems, though.
*Coolidge was followed by Herbert Hoover, who had been in Harding and Coolidge’s cabinets and was still known as the Great Humanitarian for his war relief efforts during and after the Great War.