Tuesday, July 19, 2011

Riding It Out On The Great Financial Roller Coaster - The United States' Early Panics: Part 3 (b)

By 1921, Henry Ford was building a million cars a year. "Ford and his two chief rivals, General Motors and the Chrysler Corporation produced four-fifths of all automobiles in this country." Over a period of time there were 23 million cars on the highways.
The automobile, the real estate boom and the public utility business led this cycle of prosperity.

The auto manufacturers in an attempt to make their vehicles more affordable would provide the consumer a time-payment plan which could also be applied to radios, appliances and furniture. This encouraged and enabled the customer to buy products which they otherwise could not afford. As a result of the availability and growth of consumer credit, sales of goods and services increased. "Installment selling of retailed goods reached a total of $7,000,000,000 in 1929 making available more automobiles, furniture and radios than ever before." Homes were filled with all kinds of consumer goods and garages were filled with new cars.

The radio and the automobile were one of the major consumer products of the 1920s. For many families it was a luxury which they simply felt they could not afford. Without the radio, those who lived in the rural areas, namely farmers, were isolated from all communication from each other and from other parts of the country. As a result of this economic boom, higher wages were paid, higher profits were made, and the items that were considered luxuries before the war were commonly purchased. Now with the purchase of a radio, farm families from even the remotest corners of the country were brought into close daily contact with the rest of the nation. With just a twist of the dial, entertainment, sports, religion, latest news and music could be heard.

Americans were confident during Coolidge's second term in office, especially the middle class who experienced a sense of well-being. Their success was symbolized by material possessions. Consumer credit was making it easy for the American public to buy over time, even when they did not have the money. National advertising flourished in the twenties. These advertisers enticed people to live the abundant life, introducing newer products while encouraging dissatisfaction with useful but antiquated possessions. Their appeal was to evoke an irresistible urge of "Ooooooh... this I must have," so people would spend their money to increase comfort. As long as Americans could count on a steady income and easy credit, this sense of well-being would continue. By the end of the 1920s "nearly half of the American public had purchased automobiles, radios, and other consumer goods such as refrigerators and vacuum cleaners."

In the final part of this 4 part series, we'll examine how the boom of the Roaring Twenties culminated with the greatest financial meltdown of all time, The Great Depression.

Next: Part 4 (a)

To contact: miriammedina@earthlink.net

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