The third factor behind the boom was Republican Policies. From 1920 to 1932 all the US Presidents were Republican, and Republicans also ruled Congress. The Republicans believed that the government should not interfere more than necessary in the everyday lives of the people and of the businesses. They had a ‘laissez-faire’ attitude. They believed that the job of the President was to leave the businessmen alone – to do his job. That was where prosperity came from.
In 1920 Warren Harding won the election after committing himself to not interfering with the economy, even though he was a serial adulterer and one of the most corrupt incumbents of the Presidency. He also promised to keep the USA out of world policies and problems.
Andrew Mellon was Harding’s Secretary of the Treasury and was the second richest man in the USA due to his involvement in Gulf Oil. Mellon believed in tariffs (taxes on imports) to make those goods seem more expensive and therefore to make the American people buy American goods. He was committed to high tariffs and this was shown in 1922 when he introduced the Fordney McCumber Tariff (the highest ever imposed). Apart from destroying foreign competition, it also generated a huge budgetary surplus, which allowed taxes to be lowered.
Another Republican policy that helped to stimulate the boom of the 1920s was the lowering of taxes (as mentioned above). Due to the fact that taxes were lowered, the American people were going out and spending more of their money on consumer goods, which would then regenerate the American economy (this is why the Republicans reduced taxes). For Example, in 1920 there were 60 000 radios, by 1929 there were 10 000 000 radios. Also, in between 1919 and 1929, the number of cars on the road increased from 9 million to 26 million! This was due to the mass production techniques that Mellon had encouraged the motor industry to adopt of Ford’s Detroit Factory.
Before mass production, cars were very expensive to build. Because of this, only the very rich could own cars. They could chose where they wanted to live and could enjoy days out. After mass production, cars became much cheaper and many more people could afford them. Even though they were cheap, they could still be bought on instalment buying or hire purchase. The motorcar turned the automotive industry in to Americas biggest. Due to the mass production of cars, other industries involved with the cars were also prospering (petroleum, glass, paint and rubber).
Now that cars had come along, cities could now expand. People could live on the outskirts (which further boosted house building) and still easily commute to work. A good example of this is Grosse Point Park outside Chicago which grew by 700%. It also stimulated the growth of hundreds of other small businesses ranging from hot-dog stands and advertising billboards to petrol stations and holiday resorts. Because cars were now available, mail order catalogues were being created, as easy delivery was possible.
All this development was due to the mass production idea of Henry Ford which was then encouraged by the Republican Andrew Mellon.
So to summarise, Republican policies helped to stimulate the 1920s boom because tariffs were introduced which made foreign goods less desirable and therefore the people were more attracted to American products. Also, taxes were lowered, as the Republicans knew that the people would go out and spend their extra money on American goods that would then regenerate the economy. However, I believe that the greatest cause for the boom was the encouragement of mass production lines to the entire motor industry by Andrew Mellon, which was already being used in Henry Ford’s Detroit factory. This caused many more cars to be produced and many more to be bought. This led to a massive change of events and encouraged other industries such as petroleum to prosper as well. Cities grew larger because of this common transport link and this too, helped to boost the American economy in the Roaring 20s.
