3_Republican presidents and the economic boom of the 1920s

President Warren Harding (1921–1923)

Key idea:

Promised a ‘return to normalcy’, meaning a return to traditional American values after WWI.

Economic policies and impact:

Tackled the post-war depression (1920–21) with pro-business measures.

• Tax cuts (1921):

  • Treasury Secretary Andrew Mellon persuaded Congress to cut income tax for both higher and lower earners.

  • Led to rising wages, profits, and productivity, starting economic recovery.

• Reduced government intervention:

  • Removed wartime regulations on business.

  • Cut government spending from 6.5% to 3.5%.

• Investment in infrastructure:

  • Federal Highway Act (1921) invested $160 million in highways.

  • Created jobs in the road-building industry.

• Protection of US industry:

  • Fordney–McCumber Tariff Act (1922) made foreign goods more expensive.

  • Protected American businesses from competition.

Overall significance:

Harding’s policies are seen by many economists as laying the foundations of the 1920s economic boom.

President Calvin Coolidge (1923–1929)

Key idea:

Famous quote: “The chief business of the American people is business.”

Promoted consumerism, personal wealth, and business growth.

Economic policies and impact:

Continued Harding’s pro-business policies, supporting the economic boom.

• Tax cuts:

  • Revenue Act (1924) reduced income tax for two million more Americans.

  • Further tax cuts in 1926 and 1928.

  • By 1928, only the wealthiest 2% of Americans paid income tax.

• Strong belief in laissez-faire:

  • Government should not interfere in business or agriculture.

  • In 1926, Coolidge vetoed a farm board that would have bought surplus crops from farmers.

• Impact on agriculture:

  • Farmers had struggled since the end of WWI, but Coolidge refused government help.

  • Argued agriculture must operate as an independent business.

  • Supported modernisation, which later caused overproduction and contributed to economic problems in the 1930s.

Overall significance:

Coolidge’s policies strengthened the boom, but his refusal to help farmers deepened rural problems and stored up weaknesses for the future.

President Herbert Hoover (1929–1933)

Key idea:

• Famous quote: “A chicken in every pot, and a car in every garage.”

• Suggested commitment to shared prosperity for all Americans.

Economic beliefs and context:

• Supported laissez-faire, calling it ‘rugged individualism’.

• Believed Americans should look after themselves without relying on government help.

• His policies came at a poor time, as economic growth had been slowing since 1927.

• Farmers were already suffering from falling prices and low incomes.

Response to economic crisis:

• During the Great Depression, Hoover made limited attempts to help farmers and banks, but did not abandon laissez-faire principles.

• Introduced the Smoot–Hawley Tariff (1930), further increasing tariffs on foreign goods.

• The tariff reduced international trade and worsened economic problems.

Outcome:

• Criticised as a ‘do-nothing’ president for failing to take strong action.

• Lost the 1932 presidential election.

Overall significance:

Hoover’s policies were too limited for a crisis, and his commitment to laissez-faire deepened the impact of the Depression.

Comparison Table: