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
Calendar
Year
|
Buick/Marquette
|
Cadillac/LaSalle
|
Chevrolet
|
Oldsmobile/Viking
|
1926
|
267,991
|
27,340
|
692,417
|
57,862
|
1927
|
254,350
|
34,811
|
940,277
|
54,888
|
1928
|
218,779
|
41,172
|
1,118,993
|
86,235
|
1929
|
190,662
|
36,698
|
1,259,434
|
101,579
|
1930
|
121,816
|
22,559
|
825,287
|
49,886
|
1931
|
91,485
|
15,012
|
756,790
|
48,000
|
1932
|
45,356
|
9,153
|
383,892
|
21,933
|
1933
|
42,191
|
6,736
|
607,973
|
36,357
|
1934
|
78,327
|
11,468
|
835,812
|
80,911
|
1935
|
106,590
|
22,675
|
1,020,055
|
182,483
|
1936
|
179,279
|
28,741
|
1,228,816
|
186,324
|
1937
|
225,936
|
44,724
|
1,132,631
|
211,715
|
1938
|
175,369
|
28,297
|
655,771
|
94,225
|
1939
|
230,088
|
38,390
|
891,572
|
158,005
|
Source:
Alfred P. Sloan, My Years with General Motors (Garden City, NJ:
Doubleday & Company, 1964), 446-7.
Of
more than 1,000 automobile manufacturers that had been active between 1900 and
1930, only 19 were in business in 1931, selling about 40 models of cars.2
At the bottom rung were the cheap cars – Ford, Chevrolet, and Plymouth –
selling for about $600. One step up were makes that included Pontiac, Dodge,
Oldsmobile, Essex, Willys, DeSoto and Graham. The middle market segment was led
by Buick, followed by Chrysler, Nash, Studebaker, Hudson, Hupmobile, Oakland,
Willys-Knight, and REO. Upper-middle-class vehicles, which were priced between
$1,800 and $2,500, were sold in much smaller numbers. For example, it was
estimated that La Salle would add only 6,400 new registrations in 1931.
Other cars in this class included Marmon, Franklin, Cord and Peerless, with the
Jordan and Kissel already in receivership. Finally, Packard led the sales of
the very top-of-the-line marques, with Cadillac in second place, Lincoln in
third and Stutz and Duesenberg minor players. By the end of the decade of the
thirties, this list would be considerably pared down, as times were so hard
that the replacement cycle of the 1920s was significantly extended. For many,
their only option was a used car.
In
1931, Boss Kettering thought that the Depression was due to “boredom.” In his
opinion, not enough new products had entered the market. That insight was
ironic, perhaps, given that Kettering was the chief of a large research
laboratory that was a part one of the world’s most powerful firms, and that its
task was to develop the “new new” thing. There may well be truth, however, to
Kettering’s perceptions. According to James Flink, the drop in demand due to
over-production and market saturation was bad enough, but during the 1930s the
industry entered a phase of technological stagnation that led to few major
changes in the product or how it was made. In sum, the technologically dynamic
industry of the 1920s gave way to a conservative one with no real gains in
productivity. Flink claimed that:
By the late 1920s no manufacturing
innovation was in sight of comparable importance to the continuing strip mill
for rolling sheet steel or the continuous process technique for manufacturing
plate glass, much less anything that could have the impact on investment in new
plant and equipment that the moving assembly line had a decade earlier . . . Increasingly into the 1930s new investment
in the automobile and ancillary industries was stimulated more by the demands
of planned obsolescence and the dictates of style than by the basic innovations
in automotive and manufacturing technologies.3
Flink’s
argument centered on the premise that 1930s was a decade characterized by
continual refinement of the automobile as a technological system rather than
radical changes. One may challenge this assertion, however. In terms of engine
design, for example, Henry Ford’s flathead V-8, introduced in 1932, certainly
revolutionized automobile power plants of that era. And there were dramatic
changes at the top of the product ladder. Yet, only in a few rare cases did
these innovations trickle down to the cars of the common person, and their
cheap Fords, Chevrolets and Plymouths.
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