The Politics of Normalcy US Policy: 1920-1932

A Republican Era Begins Harding’s Fiscal Policy Harding was committed to the free enterprise system Characterized by private ownership of property, including land & resources Relies on competition for profits & the forces of supply & demand to determine what goods & services should be produced & at what price

A Republican Era Begins The Postwar Recession Ends Harding worked with Congress to cut taxes and control spending Repealed taxes meant to fund WWI Reduced spending by $1 billion Used the surplus to pay down the national debt Harding’s policies brought renewed prosperity to the US Prices plunged, allowing people to afford more Unemployment dropped from 12% (1920) to 2% (1923)

A Republican Era Begins The Teapot Dome Scandal Harding’s cabinet, the “Ohio Gang,” brought scandal to the White House Harding gave Albert Fall control over national oil reserves Fall leased those reserves to 2 companies that had paid him $360,000 in bribes Fall resigned when the scandal went public Harding stood by Fall until own death in 1923

A Republican Era Begins Coolidge Promotes Business As president, Coolidge worked to cut taxes & control spending Pushed for reductions in corporate, income, & inheritance taxes Cut the White House budget Under Coolidge, the nation continued to prosper

A Republican Era Begins Hoover Promises to End Poverty Like Harding & Coolidge, Hoover believed in promoting business Wanted industry leaders to work to together to improve economic efficiency Hoped that as businesses flourished, poverty would disappear

The Republican Boom Years The US Economy Booms Under the economic policies of Republican presidents, the postwar recession faded away Productivity increased dramatically Unemployment dropped Wages rose to double what they had been before the war

The Republican Boom Years The Age of Mass Production The automobile industry led this new age of productivity By 1929, at least half of all American families owned a car Made possible by Henry Ford’s moving assembly line which allowed him to increase wages & cut prices

The Republican Boom Years New Industries Arise The growth of the automobile industry fueled new industries as well The steel, rubber, & oil industries expanded Highway construction boomed Restaurants & hotels sprang up along roads Service industries, such as gas stations & repair shops, were created

The Republican Boom Years Businesses Get Bigger During the 1920s, businesses grew due to a wave of consolidation Harding, Coolidge, & Hoover ignored anti-trust laws Allowed businesses to merge Led to the rise of the Big 3 automakers in the US Created chain stores in the grocery industry, etc.

The Republican Boom Years Stock Investment Grows During the 1920s, stock ownership spread to the middle class The Dow Jones Industrial Average doubled between May 1928 & September 1929