In the 1920s, many Americans had disposable
income to spend. What were they spending it on? Where were these products coming from?
Throughout the early 1900s, Henry Ford developed and refined the assembly line method. Ford’s
automobile factories could produce vehicles more efficiently and cheaper than ever before.
Using the assembly line method, workers would perform one task on each automobile and then
it would move down the line to the next worker who would complete a different task. With
this method, Ford could roll a car off of 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 laborers were no longer needed to assemble finished products. Instead,
it was only necessary to train an unskilled laborer how to do one simple task. Suddenly,
factories were churning out countless numbers of products that were once deemed luxury items.
Now that these products could be produced 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 all of their money on essential items such as
food, housing, and clothing. These workers began to emerge as what is now thought of
as “middle-class”. This new middle-class discovered that it was free to spend their disposable
income on many of the new 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 the 1920s, more than one million refrigerators were being produced each year. Also, more
than ten million radios had been sold by 1929! With the influx of new products to buy, something
else emerged as well. Companies began mass-marketing their products and competing with rival companies
for the business of consumers. Advertisements became increasingly common throughout the
decade. Radio proved to be an excellent method for advertisers to communicate with large
numbers of people at the same time. Each advertisement was used to convince the
listener that they absolutely needed the latest gadget or healthcare product. Advertisements
proved very effective too. For example, sales of Listerine sky-rocketed from $100,000 a
year in 1921 to more than $4 million a year by 1927!
Unfortunately, even though the new middle-class had more disposable income than ever before,
some products were still too expensive for many people to buy. This was especially true
of automobiles and other 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 the purchase price would be paid off over the course of the next
several months, or even years. This led to millions of Americans facing large and unnecessary
debts at the conclusion of the decade.