How Did The Policies Affect The Economy Of The 1920s

The 1920's were a time of great economic growth and the policies of the presidents helped the business leaders expand the economy. The policies they set were very popular at the time, but later to come, it is proved that their lack of fore sight and unwillingness to stay involved internationally led America into the worst economic downturn, the Great Depression.

Worn out from fighting a world war and disappointed by the failure of Wilson’s plans to create a new world order, the Americans looked for stability. Support for Republicans grew since Republicans promised a “return to normalcy.” Republicans ceased to promise progressive reforms and instead aimed to settle into traditional patterns of government. In 1920, after eight years under a

Harding crushed the election of 1920 on the promise of a “return to normalcy," which meant a return to big business. In addition to its pro-business stance, Harding’s administration was known primarily for its corruption, exposed fully after Harding’s death in office in 1923. Many officials were forced from office, and some narrowly escaped prison time. The most prominent scandal, the Teapot Dome scandal, involved Secretary of the Interior Albert B. Fall secretly leasing government oil reserves to two businessmen and accepting about $400,000 in return. Harding’s vice president, Calvin Coolidge, became president upon Harding’s death in 1923 and was then elected himself in 1924. In contrast to Harding, Coolidge ran a relatively scandal-free White House. Very pro-business, Coolidge opposed government regulation of, or interference with, the economy. The Mellon Plan was a package of economic legislation advocated by the staunch capitalist Andrew Mellon (1855–1937), who served as the United States Secretary of the Treasury under Republican Presidents Harding (1921–1923), Coolidge (1923–1929) and Hoover (1929–1933). The Mellon Plan was economic legislation passed by Congress in 1924 reducing taxes on the wealthy and businesses, advocating high tariffs and cuts in government spending and corporate

Panic set in, and on October 24, Black Thursday, a record 12,894,650 shares were traded. Investment companies and leading bankers attempted to stabilize the market by buying up great blocks of stock, producing a moderate rally on Friday. On Monday, however, the storm broke anew, and the market went into free fall. Black Monday was followed by Black Tuesday (October 29), in which stock prices collapsed completely and 16,410,030 shares were traded on the New York Stock Exchange in a single day. Billions of dollars were lost, wiping out thousands of investors, and stock tickers ran hours behind because the machinery could not handle the tremendous volume of trading. After October 29, 1929, stock prices had nowhere to go but up, so there was considerable recovery during succeeding weeks. Overall, however, prices continued to drop as the United States slumped into the Great Depression, and by 1932 stocks were worth only about 20 percent of their value in the summer of 1929. The stock market crash of 1929 was not the sole cause of the Great Depression, but it did act to accelerate the global economic collapse of which it was also a symptom. By 1933, nearly half of America’s banks had failed, and unemployment was approaching 15 million people, or 30 percent of the