Government encouragement for business / laissez fair economics

Lesson 3

Who was the Republican President between 1913-1921? (3)

Woodrow Willson

He was the President during WWI

He had a dream of world democracy and the USA taking a lead in bringing peace and cooperation to international politics through the Leage of Nations

How did Congress feel about Universalitist politics? (2)

They were against it

They voted against the USA joining the League of Nations opting for Isolationalism

Who was the Republican President between 1921-1923? (3)

Warren Harding

Landslide victory at election for his “Return to Normalcy” campaign post WWI

His administration was riddled with scandal eg. oil companies paid off members of the government in order to be granted special treatment

Who was the President between 1923-1929? (3)

Calvin Coolidge

Was determined for European nations to pay back their war debts, as well as to support American business with high tariffs

His presidency was a time of very few regulations in business and low taxation

How much did Mellon cut taxes by? (2)

Reduced big business tax by $3.5 billion

Top rates cut from 73% to 22%

Who was the President between 1929-1933 (4)

Herbert Hoover

Elected in favour of Democrat Al Smith

His administration ignored the warnings of economists that a crash was coming - ill equipped to deal with the harsh Great Depression

Many felt he hadn’t done enough to deal with mass unemployment after 1930

Lack of regulation (3)

Coolidge advocated for minimal interference in the economy, which benefited big businesses

Issues such as child labour and working hours were left to be regulated by local authorities

He did little to curb the excess of businesses

What was a common work week in the 1930s? (2)

56 hour working week with wages of 18 cents an hour

This was not good enough for the average working american

Road building (2)

Republican government was willing to intervene in giving money to road buidling

Around $1 billion was spent every year building roads

Trickle down economic theory

The theory that giving more money to the rich would benefit everyone by creating jobs and economic growth to help everyone

How much did Mellon reduce big business tax by? (2)

$3.5 billion

Federal taxes were lowered significantly in 1924,1926 and 1928

Collection of foreign war debts (2)

Coolidge refused to forgive any European war debts even if they were struggling

For example, the failure of Germany to pay war reparations meant they had to further rely on the USA through the Dawes Plan (1923)

High tariffs (2)

Coolidge supported American businesses over foreign relations

The Fordney-McCumber tariff was very high for imported goods - made US goods cheaper

Impact of high tariffs (2)

Tariffs were on average 38.5% on dutiable products

5 years after the passing of the tarriffs, foreign partners put out retaliatory tariffs - hugely damaged farmers who relied on exports and limited foreign trade

Advantageous foreign markets

The goverment encouraged business investment abroad, particularly for raw materials

Examples of foreign markets (3)

Business corporations bought oil concessions in countries such as Canada, Venezuela and Iraq

The Firestone Corporation developed a rubber industry in Liberia

The United Fruit Company had a larger budget in Costa Rica that the government of that country

By 1929, how much of the country’s wealth did the largest 200 corporations possess?

20%

By the 1920s, what had JP Morgan become?

The world’s first billion dollar business

How did corporations dominate industry? (3)

By making cartels and holding companies

They could fix prices and drive prices up

For example Samuel Insull owned 111 companies - this was illegal but happened due to lack of government regulation