Today’s Goals
Organize information about the government’s pro-business economic policies in the 1920’s
Put PowerPoint slides in order
Takes not on graphic organizer based on those slides

Evaluate if you think the economic policies of the 1920’s were wise
Write a 5 to 7 sentence paragraph response to a prompt

Go to assigned groups (Put desks together so EVERYONE can work together)
Sort PowerPoint slides into 3 categories (one pile per category)
Put slides in each category in order
Label category sheets for each pile
Everyone take notes on graphic organizer
Individually respond to prompt

The Government’s Role in the 1920’s Economy

Calvin Coolidge becomes President
June 1923, President Warren Harding dies
Vice President Calvin Coolidge takes over; also Republican
Calvin Coolidge actively promotes a pro-business economic policy
Wants government to get out of the way of business

Andrew Mellon
Enormously wealthy and successful businessman
Only John D. Rockefeller and Henry Ford paid more income taxes than Mellon
Was Secretary of the Treasury (dept. in charge of $) from 1921-1932
Designed Coolidge’s economic policy of “supply-side economics”

Mellon’s Goals
Mellon’s three goals:
Balance the government budget (make sure the government is not spending more than it collects in taxes)
Reduce the amount of debt the government owes
Reduce taxes (supply side
economics)

Balancing the Budget / Reducing the Government’s Debt
1921- Mellon convinced Congress to create the General Accounting Office to keep track of government spending
The government reduced spending from $6.4 billion (1921) to
$3 billion (1928)

Supply-Side Economics
Idea of Supply-side Economics
Lower taxes
If taxes were lower, people would invest more of their money in businesses causing the economy to grow
Known as Trickle Down effect: money “trickles” from top to bottom: 1) the wealthy invest in businesses
2) the economy does better,
3) more people can get jobs; everybody is better off

Congress Goes Along With Mellon’s Supply Side Economics
Congress agreed with Mellon and cut taxes;
income on highest income-earners gradually decreased from 73% (1922) to 24% (1929); taxes greatly reduced for middle and working classes also

Republicans Today Support Reducing Government Debt and Supply-Side Economics

Republican candidate for President Mitt Romney
“Instead of lowering taxes, Obama raised them. He borrowed trillions of dollars, and he made it clear that he doesn’t like business people very much.”