The Booming 1920s

Wilson, distracted by the war, then laid low by his stroke, had mishandled almost every postwar issue. The booming economy began to collapse in mid-1920. The Republican candidates for president and vice president, Warren G. Harding and Calvin Coolidge, easily defeated their Democratic opponents, James M. Cox and Franklin D. Roosevelt.

Following ratification of the 19th Amendment to the Constitution, women voted in a presidential election for the first time.

For the educated and well-to-do, the 1920s was the era of the "Lost Generation," symbolized by writers like Ernest Hemingway, who left the United States for voluntary exile in Paris. It was also the "flapper era" of frivolity and excess in which young people could reject the constraints and traditions of their elders. Here, flappers posing for the camera at a 1920s-era party.
(Hulton Archive/Getty Images)

The first two years of Harding's administration saw a continuance of the economic recession that had begun under Wilson. By 1923, however, prosperity was back. For the next six years the country enjoyed the strongest economy in its history, at least in urban areas. Governmental economic policy during the 1920s was eminently conservative. It was based upon the belief that if government fostered private business, benefits would radiate out to most of the rest of the population.

Accordingly, the Republicans tried to create the most favorable conditions for U.S. industry. The Fordney-McCumber Tariff of 1922 and the Hawley-Smoot Tariff of 1930 brought American trade barriers to new heights, guaranteeing U.S. manufacturers in one field after another a monopoly of the domestic market, but blocking a healthy trade with Europe that would have reinvigorated the international economy. Occurring at the beginning of the Great Depression, Hawley-Smoot triggered retaliation from other manufacturing nations and contributed greatly to a collapsing cycle of world trade that intensified world economic misery.

The federal government also started a program of tax cuts, reflecting Treasury Secretary Andrew Mellon's belief that high taxes on individual incomes and corporations discouraged investment in new industrial enterprises. Congress, in laws passed between 1921 and 1929, responded favorably to his proposals.

"The chief business of the American people is business," declared Calvin Coolidge, the Vermont-born vice president who succeeded to the presidency in 1923 after Harding's death, and was elected in his own right in 1924. Coolidge hewed to the conservative economic policies of the Republican Party, but he was a much abler administrator than the hapless Harding, whose administration was mired in charges of corruption in the months before his death.

Throughout the 1920s, private business received substantial encouragement, including construction loans, profitable mail-carrying contracts, and other indirect subsidies. The Transportation Act of 1920, for example, had already restored to private management the nation's railways, which had been under government control during the war. The Merchant Marine, which had been owned and largely operated by the government, was sold to private operators.

Republican policies in agriculture, however, faced mounting criticism, for farmers shared least in the prosperity of the 1920s. The period since 1900 had been one of rising farm prices. The unprecedented wartime demand for U.S. farm products had provided a strong stimulus to expansion. But by the close of 1920, with the abrupt end of wartime demand, the commercial agriculture of staple crops such as wheat and corn fell into sharp decline. Many factors accounted for the depression in American agriculture, but foremost was the loss of foreign markets. This was partly in reaction to American tariff policy, but also because excess farm production was a worldwide phenomenon. When the Great Depression struck in the 1930s, it devastated an already fragile farm economy.

The distress of agriculture aside, the Twenties brought the best life ever to most Americans. It was the decade in which the ordinary family purchased its first automobile, obtained refrigerators and vacuum cleaners, listened to the radio for entertainment, and went regularly to motion pictures. Prosperity was real and broadly distributed. The Republicans profited politically, as a result, by claiming credit for it.