Republican Economic Policy in the 1920s

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The legacy of the First world war

  • The USA was the biggest creditor to other nation during the war. 
  • between 14 and 16 $2.3 billion in loan were made to the Allies 
  • They become the most dominant industrial power in the word
  • They were able to mobilise male and female worker of all races. 
  • War lead to the development of stronger bureaucracy, so the government should  implement it wishes.
  • Ecomice rival in Europe had suffered badly due to the war. 
  • for example, German suffered Hyperinflation in 1923
  • The US began to capture this market supplied by this nation. 
  • strengthening  their economy and weakening their economies further
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Republican economic policy, 1920-32

  • The there policy should be defined as a Laissez Faire. The economy was largely left to run it itself. 
  • The Frist republican president was Warren Harding, he was viewed as being not particularly good with Corruption rife within his administration. 
  • Calvin Coolidge was a very quiet man who concentrated on administration rather than intervention. 
  • They both come from small towns and had little experience of national politics. 
  • Coolidge was succeeded by Herbert Hoover believed recovery the wall street crash depended on aiding big business. 
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President Warren G. Harding (1920-1923

  • Elected on the platform of a return to "normalcy". 
  • He was popular but ill qualified to be president. 
  • He relied heavily on group of corrupt cronies know as the "Ohio Gang"
  • Cut government Spending through measures such as the Budget and Accounting act (1921)
  • in 1920 government spending was $500m but by 1922 this had fallen to $3373m 
  • Introduced the Sheppard-Towner Maternity aid act(1921) providing finance aid to pregnant women. Some see this a base for some new deal programme under FDR. 
  • Harding often demonstrated favouritism toward the wealthy. 
  • The Emergency Tafrid Act 1921 reduced taxes on the wealthy and corporation. 
  • The Fordney- McCumber tariff act 1922 made imported good more experience helping America Thrive. 
  • Evdecinvce of corruption  in the Administration emerged in what become know as the Teapot Dome scale. 
  • This damaged the reputation of Administration further after it poor handling of strikes the year before. 
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President Calvin Coolidge (1923-28)

  • He Assumed the presidency and would retain the position in 1924
  • He was a firm believer in Laissez-faire policies. 
  • Some have criticised him for his low work rate, as well as his reluctance to address important social & economic issues.
  • ØHe was not afraid to court publicity & grew increasingly popular, especially with ‘Middle America’. ØThe public generally regarded him as calm & unflappable. He gave off an aura of confidence which persuaded many Americans that prosperity was secured for the long-term.
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Andrew W. Mellon, Secretary of the Treasury (1921-

  • Could be seen as a key figure in shaping America economic policy in the 1920s and early 30s
  • He believed  if the economy grew, wealth would filter down natural down to all class. 
  • He favoured high tariffs on imported goods, as well as low taxes. 
  • He was a strong support of big business. 
  • high traffic led to a huge budget surplus, so allowed him to reduce taxation level on a regular basis.  
  • low taxes helped to stimulate consumer spending during the 20s
  • Ofen credited with bringing the prosperity of the 20s
  • his policies can be seen as a cause of Both the Great Depression and the Wall street crash. 
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