Causes of the boom years in the 1920s

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Causes of the boom years

Employers were working fewer hours however were being paid more. This therefore meant industrial goods produced were also increasing. American’s had more time for leisure and more money so electrical labour-saving devices were being introduced becoming affordable by many people. Motor cars eased travel to and from work as well as for leisure pursuits. It was the golden age for cinema and sport attracted vast crowds.

Reasons for prosperity: government policies

Calvin Coolidge stated ‘the chief business of the American people is business.’ This was his government policy to let business operate as far as possible, free of regulation. Andrew Mellon and him believed wealth filtered down naturally to all classes and to ensure increased living standards for all was to allow the rich to continue make money to invest in industrial development which therefore meant more job opportunities, more wage earners, more consumption etc. this policy was laissez-faire but the government intervened to support business in 4 ways:

High tariffs: 

Fordney-McCumber Act 1922  raised tariffs to cover difference between domestic and foreign production costs

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Cheaper to buy goods from USA than abroad

Tariff level  foreign goods more expensive than USA even though produced cheaper in USA

Foreign trade reduced = domestic demand for goods high

Tax reductions:

Government reduced federal taxes – 1924, 1926 and 1928 (benefited wealthy)

Mellon  handed out tax reductions

Coolidge  operated on surplus

Aim  reduced national debt, federal tax cuts = meant little to poor as not able to pay taxes

Fewer regulations:

Federal Trade Commission  unable and unwilling to operate effectively causing businesses unhindered

Foreign policies:

Coolidge  avoided involvement in foreign affairs due to budget cutting an recognition that ...

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