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.