Republican Government Policy 1920's

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  • Republican Government policy
    • Laissez Faire
      • Federal Trade Commission was the body which regulated businesses, however with few regulations and staff to enforce them, they become less willing and more unable to operate efficiently
      • Government was less invovled with economic planning thus allowing a FREE MARKET
        • FREE MARKET is a system when the economy is left to run it's self with limited government intervention
      • No regulation usually meant that profits were higher
      • BUT There was nothing to prevent low wages, child labor or long working hours
    • Taxation
      • This was an attempt at returning to normalcy from before the war
      • Taxes were lowered from the highest being 65% in 1920 to 25%in 1929
        • MELLON by 1929 had handed out $3.5 billion worth in tax cuts
        • Still allowed government to reduce national dept as they were running on a surplus due to no govt spending
      • These cuts meant nothing to those who were too poor to pay tax anyway
        • Only benefited the rich
    • Isolationism
      • American's were put off foreign conflict after the conflict with Mexico and WW1
        • Disputes abuot America's business rights in Mexico were settled through diplomacy
      • The USA made trade agreements with Japan rather than China( which would have boosted China's economy )
        • These trade agreements helped fund the Manchurian railway
          • This decision and the policy of isolationism reflected the US's priorities - trade over the morally correct thing to do
    • High Tariffs
        • Made tariffs higher on foreign goods to almost guarantee a domestic market
        • More people were buying American goods rather than foreign ones
          • This increased American business's profits as they had less competition
      • BUT foreign countries put tariffs American goods so it was hard for farmers to export their produce


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