Politics and Economics of the 1920s

            Even though officials can advocate for free markets, currently it is the role of the federal government to regulate and support economy to prevent its failure (O’Neal, 2009). Poor economic policies caused the financial crisis, recession, and led to the Great Depression. There is no doubt that the federal government of the 1920s failed to take proper measures leading to the stock market crash on 29 October 1929.  The presidency of Harding was accused of corruption by Charles Forbes and the then Attorney General. These incidents highlight the government’s reluctance to engage in disrupting activities.

Have any questions about the topic? Our Experts can answer any question you have. They are avaliable to you 24/7.
Ask now

The federal government failed to fight corruption and instead signed the Revenue Act of 1924, which aimed at lowering tax rates for the rich people (O’Neal, 2009, p. 57). The Revenue Act of 1924 had negative consequences on the economy as the government spending reduced and the government could not play an active role in regulating the economy. After the death of Harding and the beginning of Coolidge’s administration, the situation worsened as he favored free market economics instead of government interventions (O’Neal, 2009).  These policies limited the federal government power to regulate the economy, which further led to the Great Depression and Stock Market Crash of 1929.

Coolidge abstained from taking steps to improve the state’s economy opposing many power and dams projects, declining agricultural subsidies and refusing to intervene with the uncontrolled economic activities, which he believed to be normal for capitalism. This ignorance led to the speculations in stock marker, agricultural overproduction, decreasing international trade and growing inequality, which all were the warning signs of upcoming crisis.

Thus, the Great Depression could have been prevented if the government participated more efficiently in regulating the economy. It is the government’s duty to pass laws that distribute the economic gain fairly and promote further prosperity.



O’Neal, M. J. (2009). America in the 1920s. New York: Infobase Publishing.