‘Big Box’ stores This term refers to large retail establishments and chains that seek to capture a certain segment of the economy by selling large volumes at very low margins of profit. Due to their market dominance, they are often also referred to as ‘category killers’ for their ability to overwhelm all forms of competition.
Black Thursday The day of 24 October, 1929 is often referred to as ‘Black Thursday’ because this is when the US stock market began its crash and the country started its slide into the Great Depression – dragging much of the global economy down with it.
Bolshevik Revolution Also known as the Great October Socialist Revolution, this event in October 1917, featured the overthrow by the Bolsheviks (one wing of Russian Social-Democratic Workers’ Party) of the moderate elements who had ruled Russia in the months since the ousting of the Tsarist monarchy in February 1917.
Collectivization With the end of the New Economic Policy in 1928, Joseph Stalin, leader of the Soviet Union, ordered the collectivization of peasant agricultural lands into state-run and managed farms. Despite popular discontent and poor agricultural performance, collectivized farms were a common component of statist economic policy around the world during much of the 20th century.
Dow Jones Industrial Index Often known simply as ‘the Dow’, this index offers continuously updated information regarding the value of a set of 30 benchmark stocks. The Dow is one of the most closely watched indicators of the health of the American and global economy.
‘Mom & Pop’ stores This is an often nostalgic reference to the sort of small, family-owned retail and grocery establishments that were often driven out of business by larger chains and ‘Big Box’ stores in the course of the 20th century.
New Economic Policy In 1921, the Soviet administration adopted an economic system of mixed private and public ownership in the New Economic Policy. The system allowed the private ownership of small companies and farms, while maintaining state control over large industrial and financial concerns.
Statism The belief that the state should have control of economic and/or social policies.
Wall Street Located in Lower Manhattan in New York City, Wall Street is the home to the New York Stock Exchange, the world’s largest stock exchange. The term ‘Wall Street’ is also used as a generic reference for American investment and financial institutions.
Henry Ford’s Model T was the first mass-produced American automobile engineered and manufactured by the Ford Motor Company in Detroit, Michigan. Made between 1908 and 1927, its moving assembly-line style of production used standard interchangeable parts and greatly reduced costs of production and maintenance, for the first time putting automobile ownership within reach of the average person. Model T production widened the impact of the industrial era, altered labour conditions for millions and shaped popular culture around the world. More than 15 million Model Ts were eventually manufactured and sold worldwide. Popularly called the Tin Lizzie, the original Model T had no roof. Its wheels were wooden and its body was forged from a lightweight steel alloy. The car was operated using three foot-pedals and a lever on the driver’s side. The lever on the steering wheel controlled the throttle – maximum speed was 45 mph. At the peak of efficiency, each automobile took one hour and 33 minutes to produce. The Model T’s affordability imprinted a new cultural era with greater mobility and spurred government investment in the world’s factories and highways. By the mid-1920s, half the cars in the world were Model Ts.
The automobile became a symbol of economic prosperity: ‘A chicken in every pot and a car in every garage’ was Herbert Hoover’s 1928 Presidential campaign slogan.
Ever since the Model T, the world has been living on wheels. The Ford Motor Company was among the first successful multinational corporations. Versions of the Model T were produced on every continent, with factories in twelve countries. Without this popular automobile, there would have been no Route 66, no suburbia, no drive-in movies and no fast-food chains. As with almost any invention, there were also negative consequences, including the global dependence on fossil fuel.
KARL FRIEDRICH BENZ
1844–1929
German inventor of the automobile, the Benz Patent Motorwagen (1886)
HENRY FORD
1863–1947
American industrialist founder of the Ford Motor Company
Candice Goucher
Henry Ford famously said customers could have the Model T in ‘any colour so long as it is black’, but in fact in 1908-14 the Model T was produced in grey, green, blue and red.
Following the Bolshevik Revolution, Lenin’s new Soviet government implemented the New Economic Policy (NEP), which sought to balance state control over large economic concerns against peasant control of agricultural surpluses and the pursuit of profits by small businesses. With Lenin’s death and Stalin’s assumption of power in 1927, the limited freedoms of the NEP were dropped and the first Five Year Plan was announced. Through collectivization and state direction, the Plan called for industrial output to more than double in five years and for agricultural output to increase by 50 per cent. Under the Plan the number of Soviet citizens employed in industry more than doubled, and industrial output surged, though it fell short of targets. Agricultural output, however, dropped drastically. In response, Stalin used the food shortage as a weapon against agricultural workers, whom he believed had sabotaged production. In Ukraine alone, between two and five million peasants starved to death in the 1930s. News of the famine was suppressed. Given its apparent success, which helped turn the Soviet Union into a world power, the Five Year Plan became a popular tool for rapid development elsewhere in the world, in states as diverse as China, Argentina, India and Ghana.
In 1928, the Soviet Union launched its first ‘Five Year Plan’ and, for decades after, such plans were hallmarks of state-directed drives for development and prosperity.
The first Soviet Five Year Plan aimed to use centralized planning and careful allocation of resources rapidly to transform the USSR from peasant agricultural economy to modern industrial power. This effort featured the collectivization of agriculture and the creation of massive mining and manufacturing centres.
VLADIMIR ILYCH LENIN
1870–1924
First Premier of the Soviet Union
JOSEPH STALIN
1878–1953
Second Premier of the Soviet Union
Jonathan T. Reynolds
The Twenties. War was over, the economy booming. But it would not – could not – last. The first signs of trouble came in spring 1929. Several big industries saw production and sales slow; unemployment rates were already increasing. Meanwhile, the American public was eager to speculate, taking out bank loans to play the stock market. The Dow Jones Industrial Average reached its peak on 3 September. The market wavered until 24 October – Black Thursday – then began to fall, creating panic. Bankers attempted to stabilize the market, and President Hoover tried to reassure Americans. On Friday, it looked like things might improve, but on Monday, more trouble. By Tuesday, 29 October, the market crashed. The United States and the world fell into depression, shaking public faith in capitalism. President Hoover believed in rugged individualism – the idea that people should succeed on their own with little interference from the government; ergo, he was slow to interfere. Eventually, he imposed higher taxes on imports to protect US farmers and businesses. He also lowered taxes. He instigated the building of the Colorado Dam to provide jobs and provided billions of dollars of aid. But still nothing jump-started the economy – until Franklin D. Roosevelt took office with promises of a New Deal.
In autumn 1929, America’s ‘Roaring Twenties’ came to an end as a stock market crash dragged the US into a global depression.
On Black Thursday, the banks decided to pour money into the market in an attempt to save it. Their chosen representative, Richard Whitney, placed a huge bid on US Steel and several smaller bids on reliable stocks, a tactic that had worked in an earlier financial crash, in 1907. It slowed the decline … until Monday. Financial giants like the Rockefellers purchased huge amounts of stocks in an attempt to sway the public, but the panic and pandemonium proved unstoppable.
HERBERT HOOVER
1874–1964
American engineer and humanitarian; 31st president of the United States (1929–33)
RICHARD WHITNEY
1888–1974
American financier; President of the New York Stock Exchange (1930–5)
Kristin Hornsby
The Great Depression struck – investments collapsed, jobs disappeared and a hungry people despaired.
After years working in retail stores A&P, Mutual Grocery and Kroger, Michael J. Cullen developed the idea of selling larger volumes at lower prices. He proposed the scheme to the owner of Kroger, but his letter went unanswered. He leased a large automotive garage in Queens, NY, and in 1930 he opened the first ‘King Kullen’. His supermarket built upon previous innovations, such as Piggly Wiggly’s ‘self-service’ shopping, but added the innovation of significantly lower prices and a huge level of choice. The store was an immediate hit, attracting customers from miles away, thanks to its car-friendly design. By launching in the early years of the Great Depression, Cullen capitalized on the need for cheaper foodstuffs. By 1936 Cullen had sixteen additional stores, devastating other grocery operators. Cullen embraced his chain’s reputation as the World’s Greatest Price Wrecker; unable to compete, most ‘Mom & Pop’ establishments went out of business. Existing chains, such as A&P (the Atlantic and Pacific Teas Co.) and Kroger, were able to adapt by adding larger stores that copied King Kullen’s recipe for greater volume and profits. The process set in motion a commercial arms race of growing size and volume with lower prices that has continued to the present day.
Promising to ‘Pile it High, Sell it Low’, entrepeneur Michael J. Cullen transformed how the world buys its groceries.
In the early 20th century, grocery stores tended to be small and to serve a neighbourhood. Many specialized, selling baked goods, or fruits and vegetables, or meat. Shopping meant visits to several locations and prices were high because operators needed to earn a living on relatively low volumes of sales. By launching a large establishment with a wide variety of foods and ample free parking, Michael Cullen invented the supermarket.
MICHAEL J. CULLEN
1884–1936
Entrepreneur and inventor of the American supermarket
GEORGE LUDLUM HARTFORD
1864–1957
Chairman and treasurer of A&P who oversaw the shift from small groceries to supermarkets
JOHN EDWARD COHEN
1898–1979
Founder of the Tesco supermarket chain
Jonathan T. Reynolds
The first King Kullen, at 171st St and Jamaica Ave in Queens, New York, opened on 4 August 1930. Sales were cash only, and there was no delivery.
John Maynard Keynes was born to a prominent English family. As a child he impressed his teachers with his intuitive grasp of mathematics and frustrated them with his intellectual independence. He attended Eton College and established himself as one of that prestigious institution’s top students. In 1902 he was accepted to King’s College, Cambridge University, where he excelled in economics and distinguished himself as a speaker and debater.
In 1906 Keynes took a position with the Revenue, Statistics and Commerce section of the British Civil Service India Office. Though he resigned his position in 1908, his time in the India Office was clearly influential, reflected in his first book Indian Currency and Finance (1913). Over the next years he undertook a number of professional activities, ranging from lecturing part-time at Cambridge to publishing articles in influential magazines and serving as editor for the scholarly Economics Journal.
With the outbreak of the First World War, Keynes was enlisted by the British Treasury Department to help set economic policy during the war. By 1917 he had been given responsibility for negotiating key financial elements of the allied war effort. After the end of hostilities, Keynes was outspoken in his condemnation of the heavy reparations levied on Germany, eventually authoring The Economic Consequences of the Peace (1919). In the same year he was the Treasury’s financial representative at the Paris Peace Conference in Versailles.
During the late 1920s, as Europe slid into economic depression, Keynes began to challenge the British government’s laissez-faire economics and argued for such radical notions as lowering of interest rates and using government spending to stimulate economies. These ideas greatly influenced Roosevelt’s New Deal policies in the US and eventually became the basis of Keynes’ General Theory of Employment, Interest and Money (1936) – widely held to be the most influential economics text of the 20th century.
With the rise of fascism, Keynes called for a stand against Italian and German aggression. When war broke out in 1939, he returned to his role as a British negotiator. He made repeated visits to the US, the most significant of which was his attendance of the Bretton Woods talks, a gathering in July 1944 of representatives of the Second World War allies to determine international monetary policy for the post war years. The strenuous nature of the negotiations, however, took a toll on his health. He suffered a series of heart attacks during the period from 1944 to 1946, eventually succumbing on 21 April 1946.
Jonathan T. Reynolds
Born in Cambridge, England
1897
Awarded a scholarship to Eton College
1902
Enrols at King’s College, Cambridge. Becomes active in the College Debating Society and later serves as its president
1906
Begins work at the India Office of the Civil Service in London
1913
Publishes his first book, Indian Currency and Finance
1914–18
Works for the British Treasury
1919
His second work, The Economic Consequences of the Peace, is published
1924
Becomes First Bursar of King’s College, Cambridge
1925
Marries Russian ballerina Lydia Lopokova
1929
Becomes a Fellow of the British Academy
1936
His magnum opus, The General Theory of Employment, Interest and Money, is published
1937
Becomes director of the British Eugenics Society
1939–45
Serves as a British representative to the US in negotiating financial support for Britain’s war effort (a role he also performed in the First World War)
21 April 1946
Dies in Sussex, England
Amid the Great Depression, in 1932 Democrat Franklin Roosevelt won the US presidency. He immediately instituted a sweeping domestic agenda termed the New Deal. During the first 100 days of his administration he signed into law a staggering amount of legislation to aid the country’s economic recovery. This legislation created numerous federal agencies to regulate the economy and provide jobs for the large numbers of unemployed people in the United States. For example, the Civilian Conservation Corps put people to work conserving and developing America’s natural resources, particularly its national parks. The Civil Works Administration employed millions in improving infrastructure. Beyond providing immediate relief for the unemployed, Roosevelt wanted to give people economic security. The Social Security Act of 1935 helped meet this goal by establishing a federal pension system for the elderly and providing unemployment insurance and aid to families with dependent children. The act marked the rise of the welfare state in the United States. Ultimately, the New Deal did not pull the US out of the Depression, but it helped alleviate the suffering of millions of people and drive down the unemployment rate. Additionally, the federal government assumed greater responsibility for the economy and the well-being of Americans.
The New Deal was a series of domestic initiatives taken by President Franklin Roosevelt in the 1930s to address the effects of the Great Depression.
Roosevelt and his New Deal forged an impressive political coalition. This coalition brought together diverse groups in American society, including white southerners, African Americans, industrial labourers and farmers. With so many people committed to the New Deal agenda, the Democratic Party enjoyed a long period of political ascendancy that only came to an end in the late 1960s.
FRANKLIN D. ROOSEVELT
1882–1945
32nd President of the United States who led America through the Great Depression and the Second World War
FRANCES PERKINS
1880–1965
American civil servant, staunch New Dealer, the first woman to serve in a president’s cabinet and Roosevelt’s Secretary of Labor (1933–45)
Kristopher Teters
Franklin D. Roosevelt’s New Deal aimed to get Americans back to work in the face of the Great Depression.
The Akosombo Dam was built between 1961 and 1965 on the Volta River in the West African nation of Ghana. Constructed to deliver hydroelectric power, the dam led to the displacement of more than 80,000 Ghanaians. Its reservoir, Lake Volta, became the world’s largest human-made lake, covering about 8,052 square kilometres (3,283 square miles). Plans to dam the river existed as early as 1915, at the height of the colonial era. During the fight for African independence and subsequent struggles for economic sovereignty, big dams symbolized modernity – yet few delivered all they promised. The Volta valley inundation destroyed 700 villages and altered the region’s ecology. Funded by the World Bank and British and American governments, the hydroelectric power plant sold electricity to foreign aluminium companies; only about 20 per cent of the electricity eventually benefitted local people, who continued to endure rolling blackouts and power cuts. The Akosombo Dam helped Ghana to industrialize and today industry accounts for about one quarter of total GDP. The hydroelectric plant continues to supply an aluminium smelter at the city of Tema and excess power is sold to neighbouring countries. In 2007, the Sinohydro Corporation of China was contracted to build a second dam at Bui.
Ghana’s Volta Dam epitomizes persistent underdevelopment; its technological promises fell short by supplying electricity to foreign manufacturers, leaving locals in the dark.
Ghana’s first president, Kwame Nkrumah, wanted to use the dam project to build a modern industrial state. With local hydro-electric power, he hoped to turn 200 million tons of Ghanaian bauxite into aluminium. Instead, Nkrumah was forced to rely on costly loans and deals with multinational corporations to fund the project. Kaiser Aluminum processed imported bauxite using the dam’s cheap electricity; Nkrumah was overthrown in a coup engineered by the United States.
RED RUBBER SCANDAL IN THE BELGIAN CONGO
HENRY J. KAISER
1882–1967
American industrialist, consulting engineer on the Volta Dam Project and owner of Kaiser Aluminum
KWAME NKRUMAH
1909–72
Ghana’s first president and proponent of the Volta Dam Project
Candice Goucher
Despite displacing thousands of people and impacting negatively on the environment, the dam did not deliver for local people.
On the Jewish holy day of Yom Kippur in 1973, Egypt and Syria, supported by other Arab states, launched a coordinated attack on Israel. The unexpected strike initially drove back the defenders, but with significant US military aid, the Israelis eventually regained territory, with the war ending largely in a stalemate. In response, Arab petroleum exporters sought to punish the United States and other Western powers by announcing on 16 October a 70 per cent increase in the price of crude oil. Additional price increases, and reductions in the volume of exports, followed. As a result, the price of oil increased from roughly $3 per barrel to $12 per barrel in only six months. In some markets petroleum prices doubled. The world economy, already shaken by the United States dropping the gold standard and pulling out of the Bretton Woods agreement of 1944, was in turmoil. Stock markets crashed and industrial economies around the world stalled and fell into recession. The American car industry, which focused on large fuel-hungry vehicles, was forced to retool. Developing economies were also hard-hit, as the cost of imported fuel overwhelmed limited national budgets.
In 1973, the world was thrown into recession when Arab oil producers deployed what they called the ‘oil weapon’.
Following the Yom Kippur War of 6–26 October 1973, Arab oil producers launched an embargo of Western nations who had supported Israel during the conflict. Over the course of six months, the cost of oil jumped more than 400 per cent, resulting in much higher petroleum prices and fuel shortages around the world. Oil-producing countries, however, underwent an ‘oil boom’. Only in the 1980s did the wider world economy begin to recover.
Jonathan T. Reynolds
The sudden spike in oil prices had many effects, including introduction of a national speed limit of 55mph (89kmph) in the United States, to save fuel.
