1. Chapter 21 Normalcy and Good Times
Section 3
The Policies of Prosperity

2. Promoting Prosperity
Andrew Mellon, sec. of treasury, reduced gov’t spending & cut the federal budget.
The federal debt was reduced by $7 billion b/w 1921 & 1929.

3. Promoting Prosperity
Mellon applied the idea of supply-side economics to reduce taxes.
This idea suggested that lower taxes would allow businesses and consumers to spend and invest their extra money, resulting in economic growth.
In the end the gov’t would collect more taxes at a lower rate.

4. Hoover’s Cooperative Individualism
Sec of Commerce Herbert Hoover attempted to balance gov’t regulation with cooperative individualism.
Manufacturers and distributors were asked to form their own trade associations and share information with the federal gov’t’s Bureau of Standards.

5. Trade and Arms Control
By the end of the 1920s, Allies owed the U.S. billions of $$$ in war debt.
Many Americans favored isolationism rather than involvement in international politics and issues.
We wanted to be left alone to our own prosperity, but we are too interconnected.

6. The Dawes Plan
The U.S. argued that the Allies gained territories and received reparations, or huge cash payments that Germany paid as punishment for starting the war.

7. The Dawes Plan
American diplomat & banker, negotiated a plan with France, Britain, and Germany by which American banks would make loans to Germany to meet the reparations payments.

8. The Dawes Plan
In return, France and Britain agreed to accept less reparations and pay more on their war debts.
Plan didn’t work, all countries went further into debt to the U.S.

9. The Washington Conference
Held in 1921 and invited countries to discuss the ongoing postwar naval arms race.
Charles Evan Hughes proposed a 10-year moratorium, or pause, on construction of new ships.

10. The Washington Conference
The conference, however, did nothing to limit land forces.
Three treaties came from the conf.
****Know the chart on p 649****
Japan was angry that the conference required Japan to keep a smaller navy than the U.S. or Britain.

11. Abolishing War
The Kellogg-Briand Pact was a treaty that outlawed the war.
Countries agreed to stop war and settle all disputes in a peaceful way.
Aug 27, 1928, the U.S. and 14 other nations signed it, and eventually 62 nations ratified it.

12. End of Chapter 21
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