AMERICA IN THE 1920's

The powerful economy might of America from 1920 to oct.1929 is frequently overlooked or simply submerged by the more exciting topics such  and the gangsters, the Jazz Age with its crazies, the kkk etc. However, the strength of America was generated and driven by its vast economic power.

In this decade, America became the wealthiest country in the world with no obvious rival. Yet by 1930 she had hit a depression that was to have world-wide consequences. But in the good times everybody seemed to have a reasonably well paid job and everybody seemed to have a lot of spare cash to spend. 

One of the reasons for this was the introduction of hire-purchase whereby you put a deposit on an item that you wanted and paid installments on that item, with interest, so that you paid back more than the price for the item but did not have to make one payment in one go. Hire-purchase was easy to get and people got into debt without any real planning for the future. In the 1920’sit just seemed to be the case that if you wanted something then you got it.

But simply buying something had a major economic impact. Somebody had to make what was bought. This was the era before robot technology and most work was labour intensive i.e. people did the work. The person who made that product would get paid and he (as it usually was in the 1920’s) would not save all that money. He, too, would spend some of it and someone somewhere else would have to make that and so he would get paid. And so the cycle continued. This was the money flow belief of John Maynard Keynes. If people were spending, then people had to be employed to make things. They get paid, spent their money and so the cycle continued.

A good example was the motor car industry. The 3 big producers were Ford, Chrysler and General Motors. 

A boom in the car industry came from Ford’s with the legendary Ford Model -T. 

This was a car for the people. It was cheap; mass production had dropped its price to just $295 in 1928. The same car had cost $1200 in 1909. By 1928, just about 20% of all Americans had cars. The impact of Ford meant that others had to produce their own cheap car to compete. The benefits went to the consumer. Hire-purchase made cars such as these very affordable. But there were major spin-offs from this one industry as 20% of all American steel went to the car industry; 80% of all rubber; 75% of all plate glass and 65% of all leather. 7 billion gallons of petrol were used each year and, of course, motels, garages, restaurants etc. all sprung up and all these outlets employed people and these people got paid. 

To cope with the new cars new roads were built which employed a lot of people. But not everybody was happy with cars. Critics referred to cars as "prostitution on wheels" as young couples courted in them and gangsters started to use the more powerful models as getaway cars after robberies. But cars were definitely here to stay.