1920's Economic Changes

Throughout history, economics have changed drastically. The Roaring 20’s and Great Depression defined our country, The United States, and impacted everyone differently. The Roaring 20’s, otherwise known as the Age of Intolerance, was an age of social and political change. It was only the beginning of many inventions that sent American into the modern age. America was very prosperous during the 1920’s, but Europe was still feeling the devastation from World War I and fell into an economic decline. America was considered the world’s banker, and Europe was defaulting on their loans and participating less in consumption of American goods. This was the beginning of the Great Depression that soon spread. During The Great Depression, a period that
WWI had just ended and Americans nationwide were looking forward to peace and security, remaining hopeful for the future. President Wilson was in office from the years 1913 to 1921. Receipts for spending were drastically different from the beginning of his term to the end. In 1913, receipts, which are taxes brought into the United States Treasury, were at $714 million and continuously rose over the years, ending at $6,649 million in 1920. Outlays, an expense, began at $715 million in 1913 and ended at an astounding $6,358 million. This meant that there was a 789% increase in spending from 1913 to 1920. Prior to The Great Depression, the United States government had no fiscal policy in place. J. Bradford De Long (1998) explains, “The government did not attempt to tune its deficit or surplus to achieve the goal of full employment or low inflation. This is not to say that the federal budget was typically in balance.” (p. 67). During wartime, the federal government would borrow extremely large sums of money, leaving post-war (prior to World War II) ending with total federal debt equaling only a fraction of a year’s national product. Fiscal policy prior to The Great Depression was to just borrow what was available. Due to having no fiscal policy, unemployment was 11.7% and inflation was at 17%. Aside from that, the United States Revenue Act of 1913, otherwise known as the Tariff Act was signed into law by President
The Roaring Twenties and the Great Depression had many different policies, enabling them to prosper and later, die down. Using unemployment and inflation as our guide, we see that during the Roaring Twenties, unemployment began at a rate of 11.7% and rose to a maximum of 4.8% in 1929. Throughout 1929-1939, unemployment was already at an economically disastrous rate of 24.9%, only to end at 17% in 1939. It is very apparent that the policies, both monetary and fiscal, of the years 1919-1929 were much more effective than the policies of the years 1929-1939. With no fiscal policy in place, the Roaring Twenties seemed to have been thriving and by having a “tight” monetary policy, the economy appeared to be a lot more beneficial and