1920s propaganda poster illustrating the booming economy and high wages of the American public.
The 1920s are a period of vigorous, vital economic growth. It marks the first truly modern decade and dramatic economic developments are found in those years. There is a rapid adoption of the automobile to the detriment of passenger rail travel. Though suburbs had been growing since the late nineteenth century their growth had been tied to rail or trolley access, and this was limited to the largest cities. The flexibility of car access changed this, and the growth of suburbs began to accelerate. The demands of trucks and cars led to a rapid growth in the construction of all-weather surfaced roads to facilitate their movement. The rapidly expanding electric utility networks led to new consumer appliances and new types of lighting and heating for homes and businesses. The introduction of the radio, radio stations, and commercial radio networks began to break up rural isolation, as did the expansion of local and long-distance telephone communications. Recreational activities such as traveling, going to movies, and professional sports became major businesses. The period saw major innovations in business organization and manufacturing technology. The Federal Reserve System first tested its powers and the United States moved to a dominant position in international trade and global business. These things make the 1920s a period of considerable importance.
Economic Boom: Causes of the economic boom in the 1920s
America's economy boomed in the early 20th century. The Republican presidents adopted a laissez-faire policy but not everyone benefited from the prosperity.
The Model T, automobile built by the Ford Motor Company from 1908 until 1927. Conceived by Henry Ford as practical, affordable transportation for the common man, it quickly became prized for its low cost, durability, versatility, and ease of maintenance.
The Business of America: The Economy in the 1920s
The story of the 1920s is in large part a story about money. After a few slow years at the start of the decade, money began to flow through many, though not all, people's hands. The flow continued right up until those fateful few days near the end of 1929, when it suddenly stopped.
1920s era political cartoon criticizing laissez-faire capitalism and big business practices.
U.S. History: Politics in the 1920s
With the end of World War I and the passage of the Eighteenth Amendment, Americans entered the distinctive 1920s — an era of Republican leadership, nationalistic and fundamentalist movements, and changing social conventions. Electing Republican presidents who favoured business expansion rather than regulation, the American public enjoyed apparently unlimited prosperity, while fear of radicals and foreigners combined to almost completely close off America to immigration and contributed to the resurgence of hate groups such as the Ku Klux Klan.
U.S. History: Domestic Economic Policy
Throughout the '20s, the government's pro‐business policies were reflected in tax cuts, a reduction in federal spending, and high tariffs. Under Secretary of the Treasury Mellon, who served all three Republican presidents, the maximum rate on personal income was significantly lowered, as were estate taxes and taxes on excess profits. Mellon's tax program directly benefited the rich based on the assumption that they would invest their money and stimulate the economy. The economy was also aided by the decrease in government expenditures; Mellon managed to balance the budget, and his programs helped to lower the national debt by nearly $10 billion between 1919 and 1929. The government also tried to shield domestic interests from foreign competition through the Fordney‐McCumber Tariff (1922) which increased rates, removed items from the free list, and raised duties on farm products. However, high tariffs had several unintended consequences. They made it more difficult for Europeans to pay their war debts to the United States, and farmers, while protected from foreign imports, found themselves paying more for their machinery.
Calvin Coolidge (born July 4, 1872, Plymouth, Vermont, U.S.—died January 5, 1933, Northampton, Massachusetts) was the 30th President of the United States (1923–29). The essence of the Coolidge presidency was its noninterference in and bolstering of American business and industry. Government regulatory agencies, such as the Federal Trade Commission, now were staffed by people who sought to assist business expansion rather than to police business practices.
