The Importance Of Economics In The 1920's

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The 1920s were a decade of economic prosperity and turmoil. The employment rate was high, and the productivity rate was soaring due to new technological advancements. Globally, the United States was extending it's power across the world and establishing itself firmly in the global market. However, the nation was unconsciously also setting itself up for economic doom. Consumers who were fortified by the new availability of loans and lower payments from companies, were making purchases that cost many times their regular salary. This resulted in a doubling of installment debts throughout the country. Factories were producing more than they could actually afford from their low-cost employees. Due to originally successful high tariffs, the United …show more content…
They claimed they would actually clean up the current corrupted practices within the system. However, when the economy continued to fail, Hoover declared that the government would play a strict laissez-faire, or hands-off policy, stating that the government should not interfere with the economy. Instead he promoted the laissez-fair ideology to let the economy govern itself. He advised American citizens to practice self-reliance and work hard. Hoover was somewhat contradictory in his words and actions. He encouraged private charities to increase efforts to help the poor, but there was such a strong demand for aid that charities were unable to cope. In addition to his inaction, Hoover supported Glass-Steagall Banking Act which eased lending restrictions on banks and further promoted massive loans that were unable to be paid off. He later signed the Emergency Relief and Construction Act in 1932 which granted the Reconstruction Finance Corporation (RFC) funds to loan to businesses and states for relief efforts, with little success. In a global context, Hoover approved the Smooth-Hawley tariff, which pulled the average tariff rate for imported goods up nearly sixty percent. This was intended to protect American goods and businesses, but the main result was retaliation from foreign nations who ceased to buy American products. U.S. producers were desperate for any sales at all, and were severely hurt by this move. Political practices not only failed to aid American citizens during the recession, but actually added to the accumulating
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