Monday, February 23, 2015
The Great Depression and the American Automobile Industry: An Introduction
In late October 1929, the Prosperity Decade of the 1920s came to an abrupt end. Stock prices collapsed, banks failed, businesses closed their doors, unemployment lines grew, and some committed suicide. There have been many explanations of why the Great Depression took place, including analyses that point to excessive stock speculation, depressed agricultural prices, and adverse monetary policy. Certainly the automobile industry figured into this prominently event. James Flink, in his Automobile Age, squarely places the automobile at the heart of the reasons for the downturn. Flink writes, “mass motorization played a key role in creating the most important necessary conditions underlying the Depression. The steep decline in aggregate spending evident by the late 1920s then, can be shown to have resulted from the economic dislocations that were an essential ingredient of the automobile boom, and from the inevitable drying up of that boom.”1 Said another way, the industry had over-expanded, the market had become saturated, and, as it contracted, this leading sector pulled the economy downwards.
The impact of the Depression on automobile production can be gleaned from Table 5, which shows General Motors annual production figures:
Table 5. General Motors Unit Sales By Divisions