Free «American Capitalism: The Rise of the Auto Industry» Essay

The creation and development of the US auto industry led to economic boom in manufacturing. Auto industry had a great impact on American economy because it created a great number of jobs and employed millions of people around the country. During 1930-1940s, sellers played a major part in informing consumers, not only through the manufactures' massive advertising, but also the retailers' displays and demonstrations, the detailed explanations and advice by a knowledgeable salesperson, and visits to groups of consumers and individual households in order to show off the new appliance (Fishback and North 87). Increased production led to increased taxation on the state level. These functions were the province of specialized dealers or of particular departments of larger stores. Such activities bulked even larger in the selling efforts that introduced automobiles and major appliances-the refrigerators and washing machines that were sold more and more widely during the '30s. Installment plans and other methods of deferred payments became an important part of the shopping process, and again these were introduced by specialized dealers and the larger stores. But as each appliance and new product became an accepted part of the consumption pattern, and replacement sales came to be common, the retail functions of persuading and selling first-time owners slackened off (Beecroft 22). The development of mass production and assembly lines by Henry Ford changed the nature of manufacturing and created new possibilities for the American economy to prosper.

The auto industry became profitable because of new demands and needs of potential customer groups. Development of new transportation facilities and low cost of an auto created a demand for automobiles. Further, the dramatic shifts in income and in goods and services available have been accompanied by equally striking changes in the shopping process. The increase in income and in available alternatives did not do away with the consumer's problem -- if anything, it has become more complicated. And the merchandising revolution has not removed any of the activities necessary for getting goods from producers to consumers-the order must still be given, payment must be made, transfer completed, and unhappy choices rectified; if anything, the proliferation of ways to carry out the shopping process has further complicated the problem of consumer choice (Venezia, 63).

The auto industry changed lives of American for good giving them new life opportunities and possibilities to travel for a long distance (Fishback and North 87). Consequently, services must be rationed out by high prices: the mean and median incomes of physicians are the highest for any occupational group; dentists and lawyers come second. The second development in retailing that has increased the consumer's accessibility to competing sellers encompasses changes in location and hours of operation (Venezia, 31). Many changes in consumer habits have had their origin in the increasing use of automobiles; this process culminated in the development of shopping centers, which succeeded by extending the techniques of large parking lots and a location away from "downtown" that had been first introduced by the supermarkets. On the other hand, consumers have become more mobile and local firms in all kinds of business feel the competition of sellers at greater distances. Some services, such as public utilities, depend on the economies of scale. The single large firm, which is technically superior in this field to many smaller competitors, is granted a local monopoly under government regulation of prices and output. American industry is engaged in turning out close substitutes within a general class of consumption choice: automobiles come from four large domestic firms and a number of smaller foreign manufacturers, but the range of models, optional features, and colors makes thousands of alternatives available; products come from an industry that has few producers.