Skip to Main Content

Econ Focus

Economic History

Wheels of Change
The Automotive Industry's Sweeping Effects on the Fifth District
By Robert Lacy

By 1910, the automobile was well on its way to becoming an integral part of American life. Henry Ford's famous Model T was in full production at his new Highland Park plant in Detroit, and an era of increasingly affordable and reliable private transportation had begun. The dream of owning a car would become reality for most American families during the period 1910 to 1940. And automobile ownership would alter their lives in ways that could not have been imagined a generation earlier.

In predominantly rural areas, such as in much of Virginia, West Virginia, and the Carolinas in 1910, the automobile revolutionized travel, greatly reducing the isolation and sense of backwardness that often prevailed. A trip to town that may have taken an entire day by horse and wagon could now be accomplished in only a few hours.

For farmers, the early automobile was much more than a better means of transportation, though. It ushered in a new age of farm mechanization. Model T Fords, and similar cars of the era, were put to good use performing farm chores -- pulling plows and towing wagons. A few years after the Model T Ford automobile was introduced in 1908, the Model T truck appeared, an even more useful vehicle on the farm. And technological advances in automobile manufacturing spurred development of the farm tractor, which Ford began to mass produce in 1917. The automobile also changed the way farm products were brought to market. By the 1920s, motor vehicles laden with eggs, milk, or vegetables destined for the nearest market were common sites on rural roads. Transportation costs were lowered and prices of agricultural products in urban areas declined as a result. It was the beginning of the end for the railroad's dominance of transportation of farm products.

A Car on the Farm
Henry Ford grew up on a farm in Michigan and knew how desirable an automobile would be in rural areas. He was convinced that a huge market for automobiles would develop among farmers if he could build a sturdy car at a reasonable price. With the manufacture of the Model T Ford from 1908 to 1927, he did just that. As assembly line techniques were refined and economies of scale realized, the price of the Model T became ever more affordable. The price of the popular touring car model fell from $950 in 1909, the first full year of production, to $360 in 1916. And sales of Model Ts soared, from 12,292 in 1909 to more than half a million in 1916, making Ford the largest car manufacturer in the country. At the end of World War I, Ford manufactured half the cars sold in the United States.

Henry Ford's Model T was the right product at the right time for rural America. It was inexpensive, lightweight, and rugged enough to traverse the heavily rutted dirt roads of the country. And rural America was an enormous market: More than half the population lived in rural areas in 1910 and approximately one-third lived on farms. In some parts of the Fifth District, the percentage of the population living on farms was even higher -- 52 percent in Virginia and more than 60 percent in the Carolinas.

By 1920, one out of three U.S. farmers owned a car. But trucks and tractors were still scarce. A 1920 agricultural census indicates that only 2 percent of farms had a truck and only 4 percent had a tractor. In the absence of trucks and tractors, farmers made do with cars for hauling supplies or crops and for drawing farm implements. There were a variety of kits and attachments that made the Model T automobile more effective when pressed into farm service. Tractor-like wheels, for example, could be attached to boost traction in the field. The car could also be placed on jacks and the engine used as a power plant to turn machinery such as wood saws, cream separators, and cider presses.

While there was plenty of farming taking place in the South in 1920, most farmers in the region had neither car nor truck nor tractor. Only 16 percent of farms in Virginia and the Carolinas had an automobile in 1920, well below the U.S. average of 31 percent. In the Deep South, automobile ownership lagged far behind other sectors of the country -- fewer than 10 percent of farmers in Mississippi, Alabama, and Louisiana owned cars. Per capita income in the region was low, and even with declining automobile prices most farm families simply could not afford to buy one. In contrast, in several Midwest and Plains states more than 60 percent of farmers owned cars.

Better Roads in Rural America
The rapid rise in rural motorists from 1910 to 1930 brought another dramatic change to the rural landscape: vastly improved roads. At the outbreak of World War I in 1914, very few roads in the country were surfaced. The dirt roads that prevailed in rural areas were often potholed and deeply rutted by wagon wheels. In the summer, the roads were dusty; in the winter, they were muddy and all but impassable. Roads in many areas of the country were so poor that early motorists simply ceased driving in winter for fear of sinking hub-deep in mud. In 1921, the American Automobile Association advised motorists to avoid the entire state of Virginia if possible because of the deplorable road conditions. More than anything else, rural motorists wanted to get out of the mud and onto civilized, paved roads.

The clamor for better roads was long and loud. In the debates of the period, dirt roads became symbolic of poverty and backwardness, and considerable political pressure was exerted to surface and improve them. The "good roads" movement in the 1910s and 1920s stimulated the rebuilding and surfacing of old roads and the construction of thousands of miles of new ones, in urban as well as rural areas. Despite often-limited financial resources, particularly in the South, the swelling ranks of the motoring class were willing to pay for better roads and consistently supported bond referendums and higher taxes to finance their construction.

Statistics on the condition of rural roads provide evidence of the tremendous improvements realized between 1914 and 1930. In Virginia, there were 53,388 miles of rural roads in 1914, only 7 percent of which were surfaced. The percentage of surfaced roads in rural Virginia rose to 12 percent in 1921 and 21 percent in 1930. In North Carolina, progress was even faster. In part because of the efforts of Cameron Morrison, the "Good Roads Governor" from 1921 to 1925, the state committed millions of dollars to develop a modern system of highways. Twelve percent of rural roads in North Carolina were paved in 1914; by 1930, the figure had risen to 41 percent.

The Growing Automobile Industry
In 1910, the output of the automobile manufacturing industry had already surpassed that of the wagon and carriage industry, and by the 1920s it was one of the largest industries in the country. Sales of passenger cars rose from 181,000 in 1910 to 4.5 million in 1929. And as automobile manufacturing expanded, so did automotive retail and services businesses, including automobile dealerships, service stations, garages and repair shops, and tire and automobile accessories stores.

The rapid expansion of the automobile industry created jobs throughout the country and played a large role in sustaining the economic prosperity of the 1920s. In 1929, at the peak of the decade's economic boom, there were more than 330,000 people employed at automobile dealerships in the country. Service stations employed 127,000 people and another 104,000 worked at garages and repair shops. And while the nation's manufacturing activity was centered in Michigan, there were automobile assembly plants located throughout the country, including the South.

Ford Motor Co. began production at its first assembly plant outside of Michigan in 1912, in Kansas City, Mo. By 1917, there were 29 regional Ford assembly plants in such far-flung cities as San Francisco, Dallas, Atlanta, and Philadelphia. By 1920 General Motors was operating branch assembly plants as well, producing Chevrolets in St. Louis, Tarrytown, N.Y., Oakland, Calif., and Fort Worth, Texas.

Both companies expanded their branch assembly networks in the 1920s and 1930s. The expanded branch assembly network placed production facilities ever closer to major population centers, thereby reducing the cost of transporting assembled automobiles. There were also labor cost savings from locating plants in areas with lower wages than Detroit.

The branch assembly plant strategies of Ford and General Motors brought assembly plants to North Carolina, Virginia, and Maryland between 1914 and 1935. Ford started assembling cars in Charlotte, N.C., during the World War I years and in Norfolk, Va., in 1925. General Motors opened a plant in Baltimore in 1935. While manufacturing operations in Charlotte ended in 1932, Ford and General Motors continue to produce vehicles in Norfolk and Baltimore, respectively.

Simple assembly operations began in Charlotte in 1914, with the installation of automobile bodies on chassis shipped from Detroit. In 1916, assembly operations were moved to a larger, four-story building on East Sixth Street in Charlotte where more extensive assembly operations were undertaken. As automobile production expanded, more space was needed and in 1924 Ford moved operations to a newly constructed plant on Statesville Avenue. The new plant was designed by Albert Kahn, an architect renown for innovative and functional industrial buildings, and built specifically for automobile assembly. In 1929, more than 40,000 vehicles were assembled at the Charlotte plant. But as the country entered the Depression, demand for automobiles dropped sharply, and by 1932 assembly operations in Charlotte had ceased.

Ford's Norfolk assembly plant was the company's largest East Coast plant when it opened on the Elizabeth River in April 1925 with 750 employees producing Model Ts. As a major port, Norfolk was an attractive site to Henry Ford because it offered the option of transporting assembled cars by ship as well as by rail. "Ford was obsessed with water transportation," says James Rubenstein, a professor at Miami University in Oxford, Ohio, and an expert on the geography of the automobile industry. "He hated the railroads and would select assembly plant locations near water wherever possible." George Hoffer, an economist at Virginia Commonwealth University, notes that while the presence of a port is not a major factor in selecting plant locations today, it was an advantage in the early years of the industry. "Roads were poorer, trucks [for transporting assembled cars] were smaller, and Ford was exporting a lot of cars outside of the country." First-year production at the Norfolk assembly plant totaled 29,519 cars. Output exceeded 50,000 cars in 1929, before dropping sharply in the early 1930s. And with the exception of the war years of the 1940s, the Norfolk plant has continued to produce vehicles ever since. Today, thousands of Ford F-series trucks, the top-selling vehicle in the country, roll off the Norfolk assembly line each month.

General Motor's Baltimore assembly plant opened in March 1935 to manufacture Chevrolet cars and trucks. Production totaled 31,512 vehicles in 1935 and climbed to almost 90,000 just a few years later. During World War II, civilian automobile production ceased, and the Baltimore plant was converted to a packaging plant, where spare parts were specially treated for rust and corrosion protection before being shipped overseas for the war effort. The Baltimore plant currently produces mid-sized General Motors vans.

Back to the Future
Today, cars and trucks are much more advanced than Henry Ford's Model T, and automakers face much stiffer competition from abroad. (Foreign companies over the last decade have increasingly located manufacturing facilities in the United States as well, frequently in the rural South. Within the Fifth District, BMW began manufacturing sports cars in Spartanburg County, S.C., in 1994, and Toyota opened an engine manufacturing plant in Buffalo, W.Va., in 1998.)

But some things haven't changed since the age of the Model T. We still love the independence and mobility offered by the automobile. And while we may complain about the traffic, as people have since the earliest days of the industry, or worry about pollution from automobile exhaust, we continue to choose automobiles over mass-transportation options. What's more, automobile manufacturing and sales continue to drive the economy. In 2000, total vehicle sales (new and used) represented a quarter of the country's retail sales. In short, the car is one of those few inventions that has literally revolutionized the way Americans live.

Subscribe to Econ Focus

Receive an email notification when Econ Focus is posted online.

Subscribe to Econ Focus

By submitting this form you agree to the Bank's Terms & Conditions and Privacy Notice.

Phone Icon Contact Us

David A. Price (804) 697-8018