Consumer Demand Spurs Economic Growth
The Economy begins to shift from goods to services
As the majority of Americans came to depend on cars for transportation, they demanded more and better roads. State and federal lawmakers responded by funding new highway construction programs. The most ambitious was a program authorized by Congress in 1956 to construct a nationwide interstate highway system. The goal of this system was to connect major cities around the country by a network of super highways. By 1960, about 10,000 miles of interstate highway had been constructed. Today, the system has about 45,000 miles of highway. The interstate highway system benefited the country in many ways. It made travel by road over long distances both faster and safer. It created economic opportunities for new industries that provided services, rather than manufacturing goods, such as gas stations, motels, and restaurants, which sprang up at interstate exits. By improving access to all parts of the country, the system gave people more choices as to where to live, work, shop, and vacation.
General MotorsThe biggest and best-known manufacturing company was the automaker General Motors. In 1955, GM became the first U.S. corporation to earn more than $1 billion a year. It accomplished this feat by producing and selling as many cars as all of its competitors produced combined.
An important factor in GM’s success was an improved relationship with its workers. In 1948, GM signed a historic agreement with the United Auto Workers union. The agreement guaranteed that GM workers would receive regular wage hikes tied to a cost-of-living index. A cost-of-living index measures differences in the price of goods and services over time. If inflation pushes prices up, the index measures by how much prices went up. Fortune magazine called the agreement “the treaty of Detroit.” It brought GM years of labor peace. Gas StationsBy the 1950s, the average American family had at least one car and that car was a large gas guzzling source of pride. The heyday of the full service gas station reached its peak in those post World War II years. Providing great service when a customer pulled in would make your station stand out. Customers would then come back. Many of these mom and pop stations would offer free postcards, key chains, toys and sodas for the kids, S&H Green stamps and of course maps. All this was to make your gas fill-up even more desirable and memorable.
As the number of gas stations grew so did competition. In 1947 Frank Urich had a different idea on how to get gas customers. He opened the first self-service gasoline station in Los Angeles. His slogan was,"Save 5 cents, serve yourself, why pay more?" The station featured rows of shiny new pumps and girls on roller skates who skated around to collect money. His place became very popular, especially among the men. Getting gas at full service stations took longer. At Frank's place you could get in and out in a flash. McDonald'sAs the economic boom continued, new service industries began to compete for the consumer’s dollar. One was the fast-food service industry. In 1954, a go-getter named Ray Kroc visited McDonald’s Famous Hamburgers in San Bernardino. He was amazed by what he saw. An hour before lunch, there was already a long line of customers waiting to be served. Kroc asked people in line what they liked about the restaurant. They replied that it was clean, fast, and cheap. In addition, the burgers tasted good, and it was not necessary to tip anyone. Kroc convinced the McDonald brothers to hire him as a franchising agent. A franchise is an agreement to operate a business that carries a company’s name and sells its products. The next year, he opened his own franchise restaurant in Des Plains, Illinois. Like the original, Kroc’s McDonald’s was wildly successful. It was especially attractive to families with young children who did not feel comfortable in more formal restaurants. Under Kroc’s leadership, hundreds of McDonald’s soon dotted the landscape. By 1963, the fast-food chain had sold more than 1 billion hamburgers. Holiday InnAnother new service industry, the motel chain, was inspired by a summer driving trip. In 1951, Kemmons Wilson, a homebuilder in Tennessee, took his family on a car trip to Washington, D.C. Day after day, he faced the problem of finding a decent place for his family to spend the night. Motels at that time were independent, mom-and-pop operations. Some were clean. Others were filthy. Some charged extra for children. Others did not. The only way to find out was to go from one motel to the next.
A frustrated Wilson finally turned to his wife and announced he was going into the motel business. She asked how many motels he planned to build. “Oh, about four hundred,” he answered. “That ought to cover the country.” His motels would be clean, affordable, easy to find, and family-friendly. “If I never do anything else worth remembering in my life,” he added, “children are going to stay free at my motels.” Wilson returned home and built his first Holiday Inn. After franchising his chain, the number of Holiday Inns grew rapidly. Other chains, such as Best Western and Howard Johnson’s, also began to expand. By the 1960s, the motel chain had become a fixture on America’s highways. |
The video above is an Imperial Oil Esso television commercial.
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