Consumer Economy
•  After WW I wages rose more than 28%
•  Economy began to be reliant upon consumers
–  Increase in spending = increase in profits = increase
in wages = more spending
•  Shift from thrifty to spending
–  Higher wages
–  More advertising
–  New products
–  AVAILABILITY OF CREDIT
Credit
•  Prior to 1920s most
Americans paid in cash for
everything
•  To increase sales
businesses developed
installment plans
–  Customers make partial
payments over time until
cost of good is paid
•  Causes people to spend
beyond their means
New Advertising
•  New electronic products
–  Refrigerators, radios,
toasters, washing machines
•  Needed new, creative ways
to sell them
•  Focus shifted away from
quality and affordability to
how a product could
enhance one’s image
•  Also began using
celebrities
Productivity
•  Increase in consumer spending habits
required an increase in availability of
products
•  Gross National Product grew 6%/year
Ford’s Model T
•  First Model T in 1908
•  Ford wanted to make production of cars
streamlined so he could sell it affordably to
more consumers
•  Model T was very utilitarian
–  Few available options
–  Standard black color
–  $390
Assembly Line
•  Ford made the assembly line
more efficient
–  Allowed the product to move
while the worker stayed in place
–  Was able to produce a Model T
car every 24 seconds
•  By 1928 Ford produced more
than half the world’s supply of
cars
Those Not Prospering
•  Unskilled laborers remained poor
•  During WW I Americans farmers did well
supplying food to both Americans and
Europeans
•  After WW I Europeans no longer turned to
American farmers to supply goods
•  Price of goods dropped
–  Farmers could not repay loans taken out
during WW I to purchase farming equipment