Landscape of Early Radio Economics
by Alex Cosper September 26, 2019

When radio receivers first went on sale as a mass product in the 1919-1922 period, it was an expensive item for most American consumers. Part of the pricing had to do with new technology that a lot of people didn't know what to with yet, but the sky was the limit. While radios could be purchased for as cheap as $60, the custom built sets in cabinets cost around $500, which at the time was more than a car. Keep in mind that the average middle class income of this era was about $3,250 per year, which lawyers earned $5,000 and congress members earned between $7,500 and $10,000. The average price of an American home was $6,000.

The radio was such a revolutionary product in 1920 that captured the public's imagination, it attracted sales for accessories such as battery to power the unit for $20 or a battery eliminator that connected directly with main power for $33. In order to hear broadcasts you needed either a horn speaker for $9 or a pair of headphones for $3. To get the best possible reception you could add an antenna to put on your roof for $3. The following are common prices for emerging household appliances during this period of prosperity for consumers:

Custom Radio Cabinet $500
Standard Radio Set $60
2-Bedroom Cottage (Self-Build) $1,200
Electric Refrigerator $285
Ford Model T Car $260
Victor Victrola Phonograph $150
Washing Machine $80
Electric Sewing Machine $80
Vacuum Cleaner $29
Oak Desk $28
Oak Dresser $17
Waffle Iron $9
Popcorn Maker $2
Toaster $2
Percolator Coffee Pot $1
Bread, 1 lb 12¢
Butter, 1 lb 70¢
Cheese, 1 lb 38¢
Chicken, 1 lb 48¢
Coffee, 1 lb 47¢
Eggs, 1 dozen 47¢
Flour, 1 lb
Oranges, 1 dozen 63¢
Potatoes, 1 lb
Round Steak, 1 lb 40¢
Sugar, 1 lb 20¢

How Consumers Borrowed Into New Economy

How were consumers able to afford the onslaught of new products in the 1920s? The rise of the oil industry ushered in many petroleum products, such as plastic. While the concept of credit went back thousands of years, the first credit cards appeared in the 1920s. They were issued by oil companies and department stores and were going only for purchasing products sold by the issuer. The idea of credit cards that can be used for universal purchasing did not arrive until the late 1950s.

Consumers were now able to buy many more items than in the past, as the America's roaring 20s economy grew over 40 percent prior to the crash of 1929. But much of the growth was due to borrowing and speculating. Although the 1920 and 1921 were recession year, as the decade unfolded average income jumped. It marked America's transition from a nation dominated by farmers to a nation moving toward factories.

In 1924 the stock market began experiencing rapid growth, which attracted mainstream Americans for the first time. Part of this new trend was due to brokers allowing individuals to buy stock on margin, meaning they could borrow money from brokers to invest. It led to many ordinary Americans becoming rich quickly. The growth of the stock market created public curiosity about stocks, as business shows on radio began to capitalize on reporting market action.

Early Radio Commercials

AT&T introduced the first radio commercial on August 29, 1922 on its New York City station WEAF. The sponsor was Hawthorne Court Apartments in Jackson Heights, buying 10 minutes of radio time for $50. This story was published by NPR in a 2012 article entitled "First Radio Commercial Hit Airwaves 90 Years Ago." During radio's early years it was still trying to figure out how it make money, so it went through an experimental phase. The main model for revenue for a station then was that if it were also a department store it could make money from selling radios.

When WEAF ran this first radio commercial the station's airwaves were open for anyone who wanted to buy time, kind of like a community phone booth. After RCA bought AT&T's early radio network and transformed it into NBC, WEAF became the flagship station for the network and set many new industry standards, including the early shaping of radio commercials.

Snapshot of a New Economy

By 1925 about a quarter of Americans families owned a car, while about 60 percent owned radios. Much of the modern economy, however, was built around the car. Highways began to spring up to connect cities across the United States, which led to government funding of new roads, bridges and traffic signs. This project heavily influenced the growth of gas stations, motels and restaurants along highways.

The 1920s became a decade of intense optimism, as one new invention after another redefined the emerging modern cultural landscape. The automobile and airline industries expanded exponentially, as early signs of drive-through culture was forming. Radio entered the car in 1931, which marked the beginning of yet another new era. Radio was a big player in popularizing this new culture, as advertising became the model for the radio industry.

This exciting new "free market" economy, however, came crashing down in October 1929, as many big investors quietly exited the market. The Dow Jones Industrial Average at that time was near 200, falling nearly in half over a two month period. GE stock fell from $400 to $200 per share, while other big names such as AT&T tumbled. One of the worst plunges was RCA, which had been the Apple of its day as far as a leader in consumer technology, falling from $500 to $26. President Hoover promised economic revival was just around the corner, but a widespread market recovery would take over a decade.

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