Republicans in the 1920s

Republicans in the 1920s cut taxes and increased tariffs.
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The Republican Party dominated American politics during the 1920s, with a firm grip on Congress and the presidency. Although a recession followed World War I, the American economy enjoyed several years of prosperity from 1923 until the stock market crash in late 1929. The prosperity of the 1920s was caused in part by the adoption of new technologies and improved mass-production methods. The Republicans attempted to promote economic growth with lower taxes and higher tariffs.

1 Tax Cuts

During the 1920s, the Republican-controlled Congress and Treasury Secretary Andrew Mellon reformed the tax code by lowering income tax rates and abolishing the excess profits tax. According to Joseph J. Thorndike, director of the Tax History Project at Tax Analysts, “In general, Democrats supported a narrower, steeper income tax, while Mellon and his GOP colleagues sought a broader, flatter levy.” Mellon’s income tax cuts brought down the rates for all income levels. Two Republican presidents of the 1920s, Warren Harding (1921-23) and Calvin Coolidge (1923-1929) supported Mellon’s more lassiez-faire free-market approach to government. Coolidge famously declared, “The chief business of the American people is business.”

2 High Tariffs

In its 1920 platform, the Republican Party declared its devotion to “protective principles,” arguing that it was their duty to ensure the “preservation of the home market for American labor, agriculture and industry.” The Republicans of the 1920s passed two major pieces of legislation that erected international trade barriers. The Fordney-McCumber Tariff of 1922 and the Hawley-Smoot Tariff of 1930 under President Hoover were protectionist measures against foreign competition. They gave U.S. manufacturing companies trading advantages over foreign companies. The Hawley-Smoot Tariff, spurred by the beginning of the Great Depression, caused other major manufacturing countries to enact retaliatory tariffs and resulted in a disastrous decline in overall global trade.

3 Prohibition

Republicans joined with Southern Democrats to support prohibition legislation in the United States. President Herbert Hoover (1929-32) was an outspoken Republican supporter of prohibition, saying in 1925 that it was helping the American economy by “putting more money in the family pocketbook.” Kenneth Rose, in his book “American Women and the Repeal of Prohibition,” notes that prohibition was part of the Republican Party’s national policy in the 1920s.

4 Veterans Bureau

Hundreds of thousands of American soldiers were injured during World War I. President Warren G. Harding, the first Republican president of the 1920s, organized the Veterans Bureau to help these veterans get medical treatment and obtain training to enter the workforce. The Veterans Bureau was a major federal project that cost one-fifth of the entire expenditures of the government in fiscal year 1923. The bureau employed 30,000 people working at 88 hospitals, at a cost of $467 million for the year.

Brian Gabriel has been a writer and blogger since 2009, contributing to various online publications. He earned his Bachelor of Arts in history from Whitworth University.