Consumerism and Overproduction in the 1920’s

1. Consumerism and Overproduction in the 1920’s Madison Sides, Emily Gray, Tanner Brice

2. Consumerism • Consumerism- the theory that an increasing consumption of goods is economically desirable; an inclination toward the buying of consumer goods • American’s were very confident about the economy. Many people were purchasing big household items through installment buying, or buying on credit • The 1920s was a decade of increased consumer spending and economic growth fed by supply side economic policy. • 3 main factors contributed to consumerism • Mass Production of Goods • Advertising • Creation of Credit

3. Mass Production • Mass Production- the production of large quantities of a standardized article • Mass production made technology affordable to the middle class in the 1920’s • The automobile industry profited most from mass production. • The Ford Motor Company brought mass production to new heights. They lowered the cost of the Model T automobile to only about $300 • Electrification of factories lowered electricity prices which led to a higher production rateof goods. • Many factories saw a 30% increase in output just from changing over to electric motors. • The biggest impact of early mass production was in manufacturing everyday items, such as glass and canned food.

4. Ford Motor Company Henry Ford helped to create a middle class. Through mass production he made automobiles affordable, even for his workers. Mitsubishi Electric Manufactured approximately 10,000 electric fans. (1921-1923)

5. Advertisement • Radio advertising became the grandstand for mass marketing. Radios were expensive but they were viewed as a necessity by consumers. • Watching a movie was cheap and accessible and it was wildly popular due to advertisement on radios and movie posters. • Advertisements were the heart of the success of mass production and consumerism

6. Creation of Credit • Credit- the ability to obtain goods or services before payment, based on the trust that payment will be made in the future • Rapid expansion of credit in 1920s • Credit helps businesses boost their profit and sales • Increase in credit lead to the crash of the stock market • 3 C’s of Lending • Character: honesty, reliability • Capacity: stability of income • Capital: amount to borrow

7. Stock Market • Portrayed to be a reliable and smart investment for the future in the 1920s • A large number of people bought stock so the stock prices began to rise • Seen as a way for short term investment to become rich quick • Many people began to borrow money from stock brokers when some people didn’t have the money to pay the full price of the stocks • The major problem was created when the stock price dropped below the loan amount. Brokers asked the buyer to pay them back in full immediately. • When buyers were unable to do this the stock market began to fail

8. Overproduction • Overproduction- the excess of supplies and over demand of products being offered to the market. • There were two types of over production in the 1920’s • Manufacturing • Agricultural

9. Manufacturing Overproduction • Companies began using new machines so more products were able to be produced • Wages for U.S. workers remained the same despite the larger work load • This caused demand to become unable to keep up with supply • The prices of products were dropped due to the surplus • This created debt for companies.

10. Agricultural Overproduction • Famers are already in debt in the 1920’s which caused farmers to plant profitable cash crops like wheat • The overproduction of wheat caused the depletion of the planting soil's nutrients and a surplus that forced the value to decrease • The unsuitable soil lead to the increasing debt of farmers since the consumers were able to purchase wheat at a lower cost • The cost of wheat was so cheap, the indebted farmers could only afford to continue purchasing it and continue planting • This created an cycle of increasing cost and decreasing value

11. The Dust Bowl • Environmental disaster where several dust storms occurred causing damage to prairie lands • Affected most Southern Plains • Happened during the 1930s, or Dirty Thirties, especially in 1934 and 1936 • Poor agricultural practices and the drought caused the Dust Bowl • As the crops died from the drought, dust from the over plowed and over-grazed land started to blow • Caused the farmers to be in debt and affected the economy during the 1900s • Helped to lengthen the Great Depression

12. Problems caused by consumerism and overproduction • In the 1920s the people of America were confident that the Economic Boom would go on forever. • They spent money they didn’t have, borrowed more than they could pay back and bought lots of stocks and shares. • The caused a big problem. The factories were making too many goods. Poorly paid workers couldn’t afford to buy them and so the companies were in trouble. • To save money they sacked people which meant even fewer people could afford their products. • It was like a vicious circle and in 1929 it collapsed. • Millions of people lost their jobs and savings overnight due to this collapse that was a direct result of consumerism and overproduction of goods.

13. The End