American prosperity in 1920
During the 1920's the rise of economic expansion created booming business profits and increased the standard of living for most Americans. From 1922 to 1929 the national income in the United States went from $60.7 billion annually to $87.2 billion. That was a 40 percent increase in those eight years. With the help of labor saving machines in nearly every factory and on every farm, the producers were able to turn out more goods at a faster rate and without spending as much money.
American prosperity in the 1920's was largely due to the growth of the automobile industry. Although it played a very large part in the rising of the economy, there were other contributors that made America more prosperous as well. The automobile industry was, however, where the consumption of one product was more evident in helping the economy than any other. The annual automobile production rose from two million cars in 1920 to 5.5 million in 1929. By the late 1920's, for every five people that lived in America, there was a car for them to ride in. Ironically, this meant that every person in America could be in a car somewhere all at the same time. There were two main reasons that caused the rise of popularity of cars. The first reason was the cost of a car was steadily declining from the mid 1920's. For example, at this time period any well paid working family could afford to purchase a car. The cost of the well-known Model T from Ford, at this time, was only $290. The other reason that cars became so popular was because you could now purchase them on credit. In the year 1925, 75% of the cars that were bought, were bought on installment plans.
The automobile industry had a huge impact on American life economically. It prompted growth for other industries as well. Three industries that were very appreciative of the growth were the rubber, steel, and petroleum industries. With the production of cars it meant that