a roaring economy assignment quizlet

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• US & World Economies

1920s Economy

What Made the Twenties Roar

Economic Growth and Output

Stock market, timeline of events.

• Why Are the 1920s Known as the "Roaring Twenties"?

What Else Happened?

Frequently asked questions (faqs).

The Balance / Bailey Mariner

The 1920s is the decade when America's economy grew 42%. Mass production spread new consumer goods into every household. The modern auto and airline industries were born. The U.S. victory in World War I gave the country its first experience of being a global power. Soldiers returning home from Europe brought with them a new perspective, energy, and skills. Everyone became an investor thanks to easy access to credit. That hidden weakness helped cause the Great Depression .

Key Takeaways

• The 1920s was a period of vigorous economic growth in the United States. That decade marked the beginning of the modern era as we know it.
• Rapid rise in prosperity induced sweeping changes in technology, society, and economy. The electricity boom revolutionized our way of life in areas such as transportation, communication, personal beauty, housekeeping, entertainment, and many more.
• 1920s prosperity also gave rise to new ideas and ways of thought. Voting and independence were new rights and concepts accorded to women. Financial innovations allowed exuberant investment in the stock market, which supported rapid growth for many companies and the labor sector. But that same exuberance led to asset bubbles and an overheated economy . That eventually burst in 1929, signaling the Great Depression of the 1930s.

The economy grew 42% during the 1920s, and the United States produced almost half the world's output because World War I devastated large parts of Europe. New construction almost doubled, from $6.7 billion in 1920 to $12 billion in 1926. Aside from the economic recession of 1920 and 1921, when by some estimates unemployment rose to 11.7%, for the most part, unemployment in the 1920s never rose above the natural rate of around 4%.  

Per-capita GDP rose from $6,460 to $8,016 per person, but this prosperity was not distributed evenly. In 1922, the top 1% of the population received 13.4% of total income. By 1929, it earned 14.5%.  

The United States transformed from a  traditional  to a  free market economy . Between 1920 and 1929, farming declined from 13% of the economy to 10.3%, and the portion of the population living on farms fell from 30.1% to 25.2%. At the same time, new inventions sent the manufacturing of consumer goods soaring. According to a presentation by the California State University, Northridge,  real gross domestic product  was as follows:

• 1920: $687.7 billion
• 1921: $671.9 billion
• 1922: $709.3 billion
• 1923: $802.6 billion
• 1924: $827.4 billion
• 1925: $846.8 billion
• 1926: $902.1 billion
• 1927: $910.8 billion
• 1928: $921.3 billion
• 1929: $977.0 billion

After dropping by more than 32% in 1920, the Dow Jones Industrial Average jumped from a value of 63.9 points in August 1921 to a high of more than 381 points before the market crashed in October 1929.

One reason for the boom was because of financial innovations. Stockbrokers began allowing customers to buy stocks " on margin ." Investors only needed to put down 10-20% of the price of a stock and brokers would lend them the remaining 80-90%. Buying on margin enabled investors to purchase more stock than they could previously afford and, subsequently, realize higher gains if the stock price went up. This same innovation became a weakness when stock prices fell during the  1929 stock market crash .

Only one-third of the nation's 24,000 banks belonged to the Federal Reserve System . Non-members relied on each other to hold reserves. That was a significant weakness. It meant they were vulnerable to the bank runs that occurred in the 1930s. 

Another weakness was that banks held fictitious reserves. Checks were counted as reserves before they cleared. As a result, these checks were double-counted by the sending bank and the receiving bank.

1920: A recession began in January. The highest marginal tax rate was 73% for those earning more than $1 million. Almost 70% of federal revenue came from income taxes.  

1921: Warren Harding became president. The recession ended in July without any intervention. Congress increased the corporate tax rate from 10% to 12.5%. The Emergency Immigration Act restricted the number of immigrants to 3% of the 1910 U.S. population.

1922: Harding reduced the top income tax rate from 73% to 58%.  

1923: Vice President Calvin Coolidge became president after Harding died from a heart attack while on a speaking tour in San Francisco. His motto was "The business of America is business." The Supreme Court revoked the minimum wage for women in Washington, D.C. A recession began in May. The stock market began a six-year bull run.

1924: The recession ended in July. The Revenue Act of 1924 lowered the top rate to 46%, according to the Tax Foundation.

1925: Top tax rate lowered to 25%. The corporate tax rate increased to 13%. Secretary of Commerce Herbert Hoover warns Coolidge about stock market speculation. Most countries returned to the gold standard. More than 25% of families owned a car.

1926: A mild recession began in October. The corporate tax rate increased to 13.5%. Robert Goddard invented the liquid propulsion rocket, creating a U.S. advantage in defense. More than 2 million farmers moved to the cities, but only 1 million city folk moved to rural areas.  

1927:  The recession ended in November after the Fed lowered the discount rate from 4% to 3.5% in September. Charles Lindbergh flew solo from New York to Paris on May 20-21.

1928: Stock prices rose 39%. To stop speculation, the Fed raised the discount rate from 3.5% to 5%. It also sold securities to banks as part of its open market operations. That removed cash from their reserves. Other countries responded by raising rates, even though they were still rebuilding from World War I. 

1929: Herbert Hoover became president. He lowered the top income tax rate to 24% and the top corporate tax rate to 12%. The Great Depression began in August, as the economy started shrinking. In September, the stock market reached its peak. The stock market crashed on Oct. 24. During those same months, the Graf Zeppelin completed the first around-the-world flight.

Why Are the 1920s Known as the "Roaring Twenties"?

U.S. prosperity soared as the manufacturing of consumer goods increased. Washing machines, vacuum cleaners, and refrigerators became everyday household items. By 1934, 60% percent of households owned radios. By 1922, 60 radio stations broadcast everything from news to music to weather reports. Most of them used expanded credit offered by a booming banking industry. 

The airline industry literally took off. In 1925, the Kelly Act authorized the Post Office to contract out airmail delivery. In 1926, the Air Commerce Act authorized commercial airlines. From 1926 to 1929, the number of people flying in planes increased from 6,000 to 173,000. World War I had hastened the development of the airplane. Many returning veterans were pilots eager to show off their flying skills with nationwide "barnstorming." 

The auto industry also greatly expanded due to Henry Ford's mastery of the assembly line. A Model T only cost $300. Also, more families could buy on credit. By the end of the decade, 23 million cars were registered. For the first time, women got behind the wheel.

The expansion of the auto industry created an economic benefit for all. Governments spent billions of dollars to build new roads, bridges, and traffic lights. Gas stations, motels, and restaurants sprang up to service drivers who now covered longer distances. The insurance industry added expensive protection for the vehicles and their owners. Banks also profited by lending to new car owners.

On January 16, 1920, the Volstead Act prohibited the sale, manufacture, or transport of any alcoholic beverages. That led to an underground economy dominated by gangsters like Chicago's Al Capone.

On August 18, 1920, women won the right to vote in America. That's when the states ratified the 19th Amendment to the Constitution. That empowerment trickled down to many levels of society. So-called flappers cut their hair, dressed in less constrictive clothing, and became financially independent.

What investment decisions destabilized the economy during the 1920s?

Investors used margin to buy stocks with borrowed money. When stock prices fell, brokerages had to sell more stocks to meet margin requirements, and this exacerbated the selling pressure.

How did the overproduction of goods in the 1920s affect consumer prices and the economy?

Consumer prices remained relatively steady throughout the 1920s, aside from some sharp decreases during the recession of 1920 and 1921.

U.S. Census Bureau. " Bicentennial Edition: Historical Statistics of the United States, Colonial Times to 1970 ," Page 232.

Gene Smiley. “ The U.S. Economy in the 1920s .”

U.S. Census Bureau. " Bicentennial Edition: Historical Statistics of the United States, Colonial Times to 1970 ," Page 618.

U.S. Census Bureau. " Bicentennial Edition: Historical Statistics of the United States, Colonial Times to 1970 ," Page 126.

U.S. Census Bureau. " Bicentennial Edition: Historical Statistics of the United States, Colonial Times to 1970 ," Page 302.

U.S. Census Bureau. " Bicentennial Edition: Historical Statistics of the United States, Colonial Times to 1970 ," Page 457.

California State University, Northridge. “ Modern Economy 1919-1930 .”

Federal Depository Insurance Corporation. " Historical Timeline: The 1920's ."

Gary Richardson. “ Banking Crises and the Federal Reserve as a Lender of Last Resort During the Great Depression ,” NBER Reporter 2013, No.3 . Page 7.

Tax Policy Center. “ Historical Highest Marginal Income Tax Rates .”

Gene Smiley and Richard H. Keehn. “ Federal Personal Income Tax Policy in the 1920s ,” The Journal of Economic History Vol. 55, No. 2 . Page 285.

PBS. “ A Selected Wall Street Chronology .”

Tax Foundation. “ U.S. Federal Individual Income Tax Rates History, 1862-2013 (Nominal and Inflation-Adjusted Brackets) .”

1920-30.com. “ Farming Exodus. Factors Leading Farmers to Move to the City in 1927 .”

A. C. Miller. " Responsibility for Federal Reserve Policies: 1927-1929 ," American Economic Review, Vol. 25, No. 3 . Page 446.

Federal Bank of San Francisco. “ Monetary Policy and the Great Crash of 1929: A Bursting Bubble or Collapsing Fundamentals? ”

CATO Institute. “ 1920s Income Tax Cuts Sparked Economic Growth and Raised Federal Revenues .”

Carole E. Scott. “ The History of the Radio Industry in the United States to 1940 .”

U.S. Centennial of Flight. “ The Pioneering Years: Commercial Aviation 1920-1930 .”

U.S. Census Bureau. " Bicentennial Edition: Historical Statistics of the United States, Colonial Times to 1970 ," Page 716.

National Archives. “ America’s Historical Documents .”

Introduction

Chapter outline.

Following the hardships of the immediate postwar era, the United States embarked upon one of the most prosperous decades in history. Mass production, especially of the automobile, increased mobility and fostered new industries. Unemployment plummeted as businesses grew to meet this increased demand. Cities continued to grow and, according to the 1920 census, a majority of the population lived in urban areas of twenty-five hundred or more residents.

Jazz music, movies, speakeasies, and new dances dominated the urban evening scene. Recent immigrants from southern and eastern Europe, many of them Catholic, now participated in the political system. This challenged rural Protestant fundamentalism, even as quota laws sought to limit new immigration patterns. The Ku Klux Klan rose to greater power, as they protested not only the changing role of African Americans but also the growing population of immigrant, Catholic, and Jewish Americans.

This mixture of social, political, economic, and cultural change and conflict gave the decade the nickname the “Roaring Twenties” or the “Jazz Age.” The above illustration ( Figure 24.1 ), which graced the cover of F. Scott Fitzgerald’s Tales of the Jazz Age , embodies the popular view of the 1920s as a nonstop party, replete with dancing, music, flappers, and illegal drinking.

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• Authors: P. Scott Corbett, Volker Janssen, John M. Lund, Todd Pfannestiel, Sylvie Waskiewicz, Paul Vickery
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Roaring Twenties

In the Roaring Twenties, a surging economy created an era of mass consumerism, as Jazz-Age flappers flouted Prohibition laws and the Harlem Renaissance redefined arts and culture.

The Roaring Twenties

The Roaring Twenties were a Jazz Age burst of prosperity and freedom for flappers and others during the Prohibition era, until the economy crashed in 1929.

Women’s Independence Multiple factors—political, cultural and technological—led to the rise of the flappers. During World War I, women entered the workforce in large numbers, receiving higher wages that many working women were not inclined to give up during peacetime. In August 1920, women’s independence took another step forward with the passage of the 19th Amendment, […]

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The Teapot Dome Scandal of the 1920s shocked Americans by revealing an unprecedented level of greed and corruption within the federal government.

Tulsa Race Massacre

Tulsa’s Black Wall Street In much of the country, the years following World War I saw a spike in racial tensions, including the resurgence of the white supremacist group the Ku Klux Klan, numerous lynchings and other acts of racially motivated violence, as well as efforts by African Americans to prevent such attacks on their […]

Warren Harding’s presidency was rocked by scandal, including one that didn’t come to light until after he left office.

Prohibition Raid

Police raid a garage in Chicago that contained five hundred and thirty-seven barrels of alcoholic beverage, $30,000 worth of illegal drink.

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Did you know it wasn’t illegal to drink during Prohibition? Get the whole story behind the “noble experiment.”

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The Multiple Scandals of President Warren G. Harding

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How Prohibition Put the ‘Organized’ in Organized Crime

Kingpins like Al Capone were able to rake in up to $100 million each year thanks to the overwhelming business opportunity of illegal booze.

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HIS 211 - U.S. History: Reconstruction to the Present - Textbook

• Introduction
• Restoring the Union
• Congress and the Remaking of the South, 1865–1866
• Radical Reconstruction, 1867–1872
• The Collapse of Reconstruction
• Video: Reconstruction and 1876
• Primary Source Reading: Atlanta Compromise Speech
• Primary Source Reading: Souls of Black Folk
• Primary Source Reading: Black Codes
• Assignment: Reactions to Jim Crow
• The Meaning of Black Freedom
• Senator Thaddeus Stevens addresses 39th Congress
• Testimony of Elias Hill Recounting a Nighttime Visit from the Ku Klux Klan
• Booker T. Washington, Up From Slavery
• Chapter III. Of Mr. Booker T. Washington and Others
• Inventors of the Age
• From Invention to Industrial Growth
• Video: The Industrial Economy
• Building Industrial America on the Backs of Labor
• A New American Consumer Culture
• Primary Source Reading: The Gospel of Wealth
• Assignment: The Gospel of Wealth
• Testimony of Thomas O’Donell, Fall River Mule-Spinner
• What Does the Working Man Want?
• The Principles of Scientific Management
• Urbanization and Its Challenges
• The African American “Great Migration” and New European Immigration
• Relief from the Chaos of Urban Life
• Video: Growth, Cities, and Immigration
• Change Reflected in Thought and Writing
• Primary Source Reading: How the Other Half Lives
• Assignment: How the Other Half Lives
• Political Corruption in Postbellum America
• The Key Political Issues: Patronage, Tariffs, and Gold
• Farmers Revolt in the Populist Era
• Social and Labor Unrest in the 1890s
• Video: Gilded Age Politics
• Assignment: Social Darwinism
• Introduction to the Progressive Movement
• The Origins of the Progressive Spirit in America
• Video: The Progressive Era
• Progressivism at the Grassroots Level
• New Voices for Women and African Americans
• Video: Women’s Suffrage
• Progressivism in the White House
• Video: Progressive Presidents
• Primary Source Reading: The Jungle
• Assignment: The Jungle
• The Shame of the Cities
• Plunkitt of Tammany Hall
• The Modern City and the Municipal Franchise for Women
• Turner, Mahan, and the Roots of Empire
• The Spanish-American War and Overseas Empire
• Economic Imperialism in East Asia
• Roosevelt’s “Big Stick” Foreign Policy
• Taft’s “Dollar Diplomacy”
• Video: American Imperialism
• Assignment: The Turner Thesis
• Primary Source Reading: White Man’s Burden
• Assignment: White Man’s Burden
• THE STRENUOUS LIFE
• To the Philippine People
• Transcript of Theodore Roosevelt’s Corollary to the Monroe Doctrine (1905)
• American Isolationism and the European Origins of War
• The United States Prepares for War
• A New Home Front
• From War to Peace
• Video: America in World War I
• Demobilization and Its Difficult Aftermath
• Assignment: WWI Propaganda
• Transcript of Joint Address to Congress Leading to a Declaration of War Against Germany, 1917
• Supreme Power is in the People
• Transcript of President Woodrow Wilson’s 14 Points
• Prosperity and the Production of Popular Entertainment
• Transformation and Backlash
• A New Generation

Republican Ascendancy: Politics in the 1920s

• Video: The Roaring 20s
• Assignment: The Roaring Twenties
• The Stock Market Crash of 1929
• President Hoover’s Response
• The Depths of the Great Depression
• Video: The Great Depression
• Assessing the Hoover Years on the Eve of the New Deal
• Radio Address on Lincoln’s Birthday, February 12, 1931
• The Rise of Franklin Roosevelt
• The First New Deal
• The Second New Deal
• Video: The New Deal
• Assignment: Perspectives on the Great Depression and the New Deal
• Message to Congress on Unemployment Relief, March 21, 1933
• The Origins of War: Europe, Asia, and the United States
• Primary Source Reading: Nazi Party Platform
• Assignment: Why Nazis?
• The Home Front
• Victory in the European Theater
• The Pacific Theater and the Atomic Bomb
• Videos: World War II
• Message to Congress by President Roosevelt, December 8, 1941
• Annual Message to Congress on the State of the Union, January 6, 1941
• Rosie the Riveter
• The Challenges of Peacetime
• The Cold War
• Video: The Cold War
• Video: The Cold War in Asia
• The American Dream
• Popular Culture and Mass Media
• Foreign Relations of the United States, 1946. Eastern Europe, Soviet Union
• Truman Doctrine
• Findings and Declaration of Policy (The Marshall Plan)
• National Security Council-68
• Letter to Harry Truman, February 28, 1946
• Peace Without Conquest, April 7, 1945
• Proposed Course of Action re: Vietnam, 24 March 1965
• The African American Struggle for Civil Rights
• Video: Civil Rights and the 1950s
• Brown v. Board of Education, 347 U.S. 483
• The Kennedy Promise
• Lyndon Johnson and the Great Society
• The Civil Rights Movement Marches On
• Challenging the Status Quo
• Assignment: Black Panther Party Platform
• Primary Source Reading: The Black Panther Party Platform
• Identity Politics in a Fractured Society
• Video: The 1960s in America
• Coming Apart, Coming Together
• Video: The Rise of Conservatism
• Vietnam: The Downward Spiral
• Watergate: Nixon’s Domestic Nightmare
• Jimmy Carter in the Aftermath of the Storm
• Video: Ford, Carter, and the Economic Malaise
• Assignment: Midterm Paper #2
• The Reagan Revolution
• Video: The Reagan Revolution
• Assignment: American Conservatism
• Primary Source Reading: Ronald Reagan “A Time for Choosing”
• Political and Cultural Fusions
• Video: George HW Bush and the End of the Cold War
• A New World Order
• Bill Clinton and the New Economy
• Video: The Clinton Years, or the 1990s
• The War on Terror
• The Domestic Mission
• Video: Terrorism, War, and Bush
• New Century, Old Disputes
• Hope and Change
• Video: Obamanation: Crash Course US History #47

HIS 211 - U.S. History: Reconstruction to the Present

Adapted by Kris Burrell

Conditions of Use:

This work is licensed under a Creative Commons Attribution-NonCommercial 3.0 United States License .

Based on OpenStax U.S. History , Senior Contributing Authors: P. Scott Corbett, Volker Janssen, John M. Lund, Todd Pfannestiel, Sylvie Waskiewicz, and Paul Vickery, with additional noteworthy contributions by the Lumen Learning team.

Available at: https://courses.lumenlearning.com/atd-hostos-ushistory

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LEARNING OBJECTIVES

By the end of this section, you will be able to:

• Discuss Warren G. Harding’s strengths and weaknesses as president
• Explain how Calvin Coolidge was able to defeat the Democratic Party
• Explain what Calvin Coolidge meant by “the business of America is business”

The election of 1920 saw the weakening of the Democratic Party. The death of Theodore Roosevelt and Woodrow Wilson’s ill health meant the passing of a generation of Progressive leaders. The waning of the Red Scare took with it the last vestiges of Progressive zeal, and Wilson’s support of the League of Nations turned Irish and German immigrants against the Democrats. Americans were tired of reform, tired of witch hunts, and were more than ready for a return to “normalcy.”

Above all, the 1920s signaled a return to a pro-business government—almost a return to the laissez-faire politics of the Gilded Age of the late nineteenth century. Calvin Coolidge’s statement that “the chief business of the American people is business,” often rendered as “the business of America is business” became the dominant attitude.

WARREN HARDING AND THE RETURN TO NORMALCY

In the election of 1920, professional Republicans were eager to nominate a man whom they could manage and control. Warren G. Harding, a senator from Ohio, represented just such a man. Before his nomination, Harding stated, “America’s present need is not heroics but healing; not nostrums but normalcy; not revolution but restoration.” Harding was genial and affable, but not everyone appreciated his speeches; Democratic presidential-hopeful William Gibbs McAdoo described Harding’s speeches as “an army of pompous phrases moving across the landscape in search of an idea.” H. L. Mencken, the great social critic of the 1920s, wrote of Harding’s speaking, “It drags itself out of the dark abysm of pish, and crawls insanely up to the top-most pinnacle of posh. It is rumble and bumble. It is flap and doodle. It is balder and dash.”

Harding was known for enjoying golf, alcohol, and poker (not necessarily in that order). Although his critics depicted him as weak, lazy, or incompetent, he was actually quite shrewd and politically astute. Together with his running mate, Calvin Coolidge, the governor of Massachusetts, they attracted the votes of many Americans who sought Harding’s promised  return to normalcy . In the election, Harding defeated Governor James Cox of Ohio by the greatest majority in the history of two-party politics: 61 percent of the popular vote.

Warren Harding

(a) poses on the campaign trail in 1920. His running mate, Calvin Coolidge

(b), would go on to become president in 1923, when Harding died suddenly while touring the United States.

Harding’s cabinet reflected his pro-business agenda. Herbert Hoover, a millionaire mechanical engineer and miner, became his Secretary of Commerce. Hoover had served as head of the relief effort for Belgium during World War I and helped to feed those in Russia and Germany after the war ended. He was a very effective administrator, seeking to limit inefficiency in the government and promoting partnerships between government and businesses. Harding’s Secretary of the Treasury, Andrew Mellon, was also a pro-business multimillionaire with a fortune built in banking and aluminum. Even more so than Hoover, Mellon entered public service with a strong sense that government should run as efficiently as any business, famously writing that “the Government is just a business, and can and should be run on business principles.”

Consistent with his principles of running government with business-like efficiency, Harding proposed and signed into law tax rate cuts as well as the country’s first formal budgeting process, which created a presidential budget director and required that the president submit an annual budget to Congress. These policies helped to reduce the debt that the United States had incurred during World War I. However, as Europe began to recover, U.S. exports to the continent dwindled. In an effort to protect U.S. agriculture and other businesses threatened by lower-priced imports, Harding pushed through the Emergency Tariff of 1921. This defensive tariff had the effect of increasing American purchasing power, although it also inflated the prices of many goods.

In the area of foreign policy, Harding worked to preserve the peace through international cooperation and the reduction of armaments around the world. Despite the refusal of the U.S. Senate to ratify the Treaty of Versailles, Harding was able to work with Germany and Austria to secure a formal peace. He convened a conference in Washington that brought world leaders together to agree on reducing the threat of future wars by reducing armaments. Out of these negotiations came a number of treaties designed to foster cooperation in the Far East, reduce the size of navies around the world, and establish guidelines for submarine usage. These agreements ultimately fell apart in the 1930s, as the world descended into war again. But, at the time, they were seen as a promising path to maintaining the peace.

Despite these developments, the Harding administration has gone down in history as one that was especially ridden with scandal. While Harding was personally honest, he surrounded himself with politicians who weren’t. Harding made the mistake of often turning to unscrupulous advisors or even his “Ohio Gang” of drinking and poker buddies for advice and guidance. And, as he himself recognized, this group tended to cause him grief. “I have no trouble with my enemies,” he once commented. “I can take care of my enemies in a fight. But my friends, my goddamned friends, they’re the ones who keep me walking the floor at nights!”

The scandals mounted quickly. From 1920 to 1923, Secretary of the Interior Albert B. Fall was involved in a scam that became known as the  Teapot Dome scandal . Fall had leased navy reserves in Teapot Dome, Wyoming, and two other sites in California to private oil companies without opening the bidding to other companies. In exchange, the companies gave him $300,000 in cash and bonds, as well as a herd of cattle for his ranch. Fall was convicted of accepting bribes from the oil companies; he was fined $100,000 and sentenced to a year in prison. It was the first time that a cabinet official had received such a sentence.

In 1923, Harding also learned that the head of the Veterans’ Bureau, Colonel Charles Forbes, had absconded with most of the $250 million set aside for extravagant bureau functions. Harding allowed Forbes to resign and leave the country; however, after the president died, Forbes returned and was tried, convicted, and sentenced to two years in Leavenworth prison.

Although the Harding presidency had a number of large successes and variety of dark scandals, it ended before the first term was up. In July 1923, while traveling in Seattle, the president suffered a heart attack. On August 2, in his weakened condition, he suffered a stroke and died in San Francisco, leaving the presidency to his vice president, Calvin Coolidge. As for Harding, few presidents were so deeply mourned by the populace. His kindly nature and ability to poke fun at himself endeared him to the public.

A MAN OF FEW WORDS

Coolidge ended the scandals, but did little beyond that. Walter Lippman wrote in 1926 that “Mr. Coolidge’s genius for inactivity is developed to a very high point. It is a grim, determined, alert inactivity, which keeps Mr. Coolidge occupied constantly.”

Coolidge had a strong belief in the Puritan work ethic: Work hard, save your money, keep your mouth shut and listen, and good things will happen to you. Known as “Silent Cal,” his clean image seemed capable of cleaning up scandals left by Harding. Republicans—and the nation—now had a president who combined a preference for normalcy with the respectability and honesty that was absent from the Harding administration.

Coolidge’s first term was devoted to eliminating the taint of scandal that Harding had brought to the White House. Domestically, Coolidge adhered to the creed: “The business of America is business.” He stood in awe of Andrew Mellon and followed his fiscal policies, which made him the only president to turn a legitimate profit in the White House. Coolidge believed the rich were worthy of their property and that poverty was the wage of sin. Most importantly, Coolidge believed that since only the rich best understood their own interests, the government should let businessmen handle their own affairs with as little federal intervention as possible. Coolidge was quoted as saying, “The man who builds a factory builds a temple. The man who works there worships there.”

Thus, silence and inactivity became the dominant characteristics of the Coolidge presidency. Coolidge’s legendary reserve was famous in Washington society. Contemporaries told a possibly apocryphal story of how, at a dinner party at the White House, a woman bet her friends that she could get Coolidge to say more than three words. He looked at her and said, “you lose.”

The 1924 election saw Coolidge win easily over the divided Democrats, who fought over their nomination. Southerners wanted to nominate pro-prohibition, pro-Klan, anti-immigrant candidate William G. McAdoo. The eastern establishment wanted Alfred E. Smith, a Catholic, urban, and anti-prohibition candidate. After many battles, they compromised on corporation lawyer John W. Davis. Midwesterner Robert M. La Follette, promoted by farmers, socialists, and labor unions, attempted to resurrect the Progressive Party. Coolidge easily beat both candidates.

THE ELECTION OF 1928

This cultural battle between the forces of reaction and rebellion appeared to culminate with the election of 1928, the height of Republican ascendancy. On August 2, 1927, Coolidge announced that he would not be participating in the 1928 election; “I choose not to run,” was his comment. Republicans promoted the heir apparent, Secretary of Commerce Herbert Hoover. The Democrats nominated Governor Alfred E. Smith of New York. Smith represented everything that small-town, rural America hated: He was Irish, Catholic, anti-prohibition, and a big-city politician. He was very flamboyant and outspoken, which also did not go over well with many Americans.

In this cartoon, Clifford Berryman lampoons Coolidge’s laid-back attitude as he chooses “not to run” in 1928.

Republican prosperity carried the day once again, and Hoover won easily with twenty-one million votes over Al Smith’s fifteen million. The stock market continued to rise, and prosperity was the watchword of the day. Many Americans who had not done so before invested in the market, believing that the prosperous times would continue.

As Hoover came into office, Americans had every reason to believe that prosperity would continue forever. In less than a year, however, the bubble would burst, and a harsh reality would take its place.

Section Summary

After World War I, Americans were ready for “a return to normalcy,” and Republican Warren Harding offered them just that. Under the guidance of his big-business backers, Harding’s policies supported businesses at home and isolation from foreign affairs. His administration was wracked by scandals, and after he died in 1923, Calvin Coolidge continued his policy legacy in much the same vein. Herbert Hoover, elected as Coolidge’s heir apparent, planned for more of the same until the stock market crash ended a decade of Republican ascendancy.

REVIEW QUESTION

• What was the economic outlook of the average American when Herbert Hoover took office in 1929?

ANSWER TO REVIEW QUESTION

• Most Americans believed that their prosperity would continue. The stock market continued to flourish, prompting many Americans—including those who had never done so before—to invest their savings and hope for the best.

CRITICAL THINKING QUESTIONS

• Explain how the 1920s was a decade of contradictions. What does the relationship between mass immigration and the rise of the Second Ku Klux Klan tell us about American attitudes? How might we reconcile the decade as the period of both the flapper and prohibition?
• What new opportunities did the 1920s provide for women and African Americans? What new limitations did this era impose?
• Discuss what the concept of “modernity” meant in the 1920s. How did art and innovation in the decade reflect the new mood of the postwar era?
• Explain how technology took American culture in new and different directions. What role did motion pictures and radio play in shaping cultural attitudes in the United States?
• Discuss how politics of the 1920s reflected the new postwar mood of the country. What did the Harding administration’s policies attempt to achieve, and how?

return to normalcy  the campaign promise made by Warren Harding in the presidential election of 1920

Teapot Dome scandal  the bribery scandal involving Secretary of the Interior Albert B. Fall in 1923

Attribution

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US History. Authored by : P. Scott Corbett, Volker Janssen, John M. Lund, Todd Pfannestiel, Paul Vickery, and Sylvie Waskiewicz. Provided by : OpenStax College. Located at : http://openstaxcollege.org/textbooks/us-history . License : CC BY: Attribution . License Terms : Download for free at http://cnx.org/content/col11740/latest/

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The Roaring 20’s: Crash Course US History #32

In which John Green teaches you about the United States in the 1920s. They were known as the roaring 20s, but not because there were lions running around everywhere. In the 1920s, America’s economy was booming, and all kinds of social changes were in progress. Hollywood, flappers, jazz, there was all kinds of stuff going on in the 20s. But as usual with Crash Course, things were about to take a turn for the worse. John will teach you about the  Charleston, the many Republican presidents of the 1920s, laissez-faire capitalism, jazz, consumer credit, the resurgent Klan, and all kinds of other stuff.