Economic Prosperity Friday November 15, 2013 Main Idea: The United States experienced stunning economic growth during the 1920s

Andrew Mellon and Economic Prosperity Secretary of the Treasury under Harding, Coolidge, and Hoover – Chief architect of economic policy in the 1920s – Policies encouraged growth and led to a stock market boom – Three goals: balance the budget, reduce govt debt, cut taxes

The Mellon Program Govt spending cut from 6.4 billion to 3 billion in 7 years Debt Reduction – Refinanced WWI debt to lower the interest – Persuaded the Fed to lower its interest rates as well – Increased tax revenue from the nation’s economic boom – Debt reduced by 7 billion from

Mellon Program Cont. Reduced taxes – High taxes reduced the money available for private investment and prevented business expansion – High tax rates reduced the amount of money the govt collected – Supply-side economics - lower taxes = more govt revenue Businesses and consumers spend and invest extra money causing the economy to grow Americans earn more money Govt collects more taxes at a lower tax rate Tax Rate before Mellon: 4-73% Tax Rate in 1928: %

Hoover’s Cooperative Individualism Secretary of Commerce Hoover balanced govt regulation with cooperative individualism – Encouraged manufacturers and distributors to form their own trade associations which would share information with the federal govt – Goal: reduce costs and promote economic efficiency Expanded Bureau of Foreign and Domestic Commerce – Find new markets and business opportunities for American companies Established – Bureau of Aviation – Federal Radio Commission

Foreign Policy Isolationism - Americans wanted to be left alone to pursue prosperity US was too powerful and economically interconnected with other nations to retreat into isolationism US promoted peace through agreements with individual countries rather than through the League

Dawes Plan Allies owed US 10 billion at the end of WWI US needed Europe to be economically stable to buy US exports and repay war debts 1924 Charles G Dawes (banker/diplomat) made a treaty with France, Britain, and Germany – American banks would make loans to the Germans that would enable them to meet their reparations payments – Britain and France would accept less in reparations and pay more on war debts – Thus, Europe became more indebted to American banks

Kellogg-Briand Pact Pact between 14 nations outlawing war – Signed August 27, 1928 – 62 nations signed eventually

Today’s Activity Using the notes on your table (or pp ), answer the following questions in your notebook: – List inventions used during the 1920s – How did Henry Ford affect auto production? – How did automobiles affect life? – What roles did Glenn Curtiss and Charles Lindbergh play in aviation? – Why did companies advertise in the 1920s? REMEMBER TO BE WORKING ON YOUR REVIEW FOR 11/22/13