Reconstructing the Economy

The war had weakened European economies and allowed rivals—Japan, India, the United States, Australia, and Canada—to flourish. At the same time, the war had forced European manufacturing to become more efficient and had expanded the demand for automotive and air transport, electrical products, and synthetic goods. The prewar pattern of mergers and cartels continued after 1918, giving rise to gigantic food-processing firms such as Nestlé in Switzerland and petroleum enterprises such as Royal Dutch Shell. By the late 1920s, Europe was enjoying renewed economic prosperity.

The United States had become the trendsetter in economic modernization: by 1929, Ford Motor Company’s Detroit assembly line was producing a Ford automobile every ten seconds. Increased productivity, founder Henry Ford (1863–1947) pointed out, resulted in a lower cost of living and thus increased workers’ purchasing power. American efficiency expert Frederick Taylor (1856–1915) had developed methods to streamline workers’ tasks for maximum productivity. Industrialists who adopted Taylor’s methods were also influenced by European psychologists who emphasized the mental aspects of productivity and thus the need to balance work and leisure activities. In theory, increased productivity not only produced prosperity for all but also united workers and management, avoiding Russian-style worker revolution. For many workers, however, the emphasis on efficiency seemed inhumane; in some businesses restrictions were so severe that workers were allowed to use the bathroom only on a fixed schedule.

The managerial sector in industry had expanded during the war and continued to do so thereafter. Workers’ knowledge became devalued, with managers alone seen as creative and innovative. Managers reorganized work procedures and classified workers’ skills. They categorized jobs held by women as requiring less skill—whether they did or not—and therefore deserving of lower wages. With male workers’ jobs increasingly threatened by labor-saving machinery, unions usually agreed that women should receive lower wages to keep them from competing with men for scarce high-paying jobs. Like the managerial sector, a complex union bureaucracy had ballooned during World War I to help monitor labor’s part in the war. Unions could mobilize masses of people, as evidenced by their actions against coups in Weimar Germany and by the general strike in Great Britain in 1926.