Compare and contrast state and federal government policies and the economies of the 1920s and the 1930s. Be sure to discuss their effect on Missourians.
The economies of the United States and Missouri in the 1920’s as compared to the 1930’s seem to be opposite: One World War was followed by a “roaring” period of increasing economic production, consumption, and an improving standard of life. The next period started with a “crash,” produced markedly decreased economic production, consumption, and a deteriorating standard of life, and eventually ended with another World War. Federal and state government policies were also very different, but not diametrically opposed.
Although the 1920’s is perceived as a “hands off” time for government as compared to the 1930’s and the New Deal, there was government intervention into personal and economic spheres – the scope of U.S. governments increased before and during World War I, and never fully receded. One example of this intervention is Prohibition. Official ratification of the 18th Amendment established Prohibition in 1919, although 96 of 114 Missouri counties were “dry” before that time. Prohibition was highly controversial, especially for in Missouri: it was favored in the rural areas, where people largely did not want to drink, but Missouri’s German, Catholic, and urban citizens were forbidden by law to drink though they might want to. Prohibition caused political division even within parties – “dry” and “wet” candidates ran for offices for the same party, and according to the text, repealing Prohibition “so muddled politics that Missourians had a choice of two drys for Senate and two wets for governorship” in the election of 1928.
In spite of dissatisfaction over Prohibition, the 1920’s were largely a time of satisfaction for producers and consumers. New technology allowed productivity to rise, and the economic situation was largely characterized by “prosperity and growth” in the United States. In Missouri, however, the situation was more nuanced, since a large segment of Missouri’s population relied on agriculture for support. Farm productivity increased after WWI, and the market was unable to sustain high prices for goods with a vastly increasing supply and steady demand. Undoubtedly, Prohibition also affected farmers whose crops were previously used in alcohol production. Thus, Missouri farmers experienced hardship. Although Calvin Coolidge vetoed the McNary-Haugen farm subsidy bill on the national level, farmers in Missouri got some government support with help from the United States Agriculture Department and the state-sponsored University of Missouri’s College of Agriculture (there were also farm subsidies left over from WWI policy, but the extent to which Missourians were affected is unclear).Non-farmers in Missouri (and the rest of the U.S.) did enjoy a time of prosperity in the 1920’s, however. They enjoyed improved working conditions and shorter working hours – the Missouri government instituted a worker’s compensation law. Increased wages let them buy new goods, including automobiles and new appliances. Liberal lending policies by companies, like the “installment plan,” allowed even low-income families to “consume now and pay later.” More money led to increased interest in stock market speculation as well (causing the markets to rise to record levels), and many investors enjoyed an ever-increasing net-worth on paper. Missourians were taxed at a low rate during the early part of the 1920’s; the Hyde administration “resulted in a reduction of both corporate and income taxes,” so they often had money to spend.
Taxes rose somewhat for Missourians, but they only those seen as being for valuable purposes. Missourians campaigned for and got taxes that helped build roads, like the Centennial Good Roads Law in 1921 and gasoline taxes designed to support roads. Primary education funding languished until 1931, however – Governor Sam A. Baker attempted to make school funding a permanent item in the state budget, but failed. Secondary education also received little money from the state during the period.
The “good times” quickly came to an end with the beginning of the Great Depression. Here the relatively non-interventionist governmental policies that are attributed to the 1920’s really stood out. Seeing the Depression as a temporary interruption in the business cycle, the Hoover administration took little effort to alleviate economic distress (and the fledgling Federal Reserve also did not act). As stocks crashed, businesses bankrupted, and banks failed, Missourians and Americans suffered a loss of jobs and savings. Productivity fell, and economic output contracted sharply. Toward the end of his term, Hoover administration took steps to counteract the Depression, but his programs had little effect, and tended to be under-funded.
Promising a “new deal for the American people” was the slogan of President Franklin Roosevelt’s presidency. On the strength of this promise, Roosevelt and other Democrats carried Missouri’s elections by wide margin 1932. The idea behind this New Deal was for governments to intervene to relieve depression and use taxpayer money to fund government jobs or welfare programs. The interventions were not part of a great plan, but aimed at providing immediate relief. A number were denounced as unconstitutional, and some pursued perverse goals – the Agriculture Adjustment Act sought to raise prices farmers received for their crops (near-record lows), which had the effect of raising food prices for the poor and unemployed. One successful intervention was the “Bank Holiday,” which largely allowed Missouri banks to re-assert their financial solvency so they could re-open (Missourians had been plagued by bank failures throughout the Depression). One long-lasting program was Social Security, primarily a pension/ welfare system for the elderly and dependent. The Missouri government elected to work closely with New Deal policies, matching funds, and increasing relief efforts.
Many of the 1930’s New Deal the programs were “job creation” programs - the Civilian Conservation Corps, which put unemployed Missourians to work planting and improving forests, and the Works Progress Administration, which employed people to work on building public roads, parks, and funded service and literary projects. One program especially beneficial for Missourians was the Rural Electrification project, which installed electrical infrastructure – electricity lifted Missourians into modernity as much as automobiles and roads did.
The economic situations of the 1920’s and 1930’s are obviously quite opposite, and government policies in the 1920’s were certainly more limited than they were in the 1930’s. However, Prohibition and increased taxation for new services did represent an expanded government role in the 1920’s. 1930’s government policies were much more active (although the repeal of Prohibition in 1933 less so), once FDR was elected President, and represented a changing attitude for the hard times. Today’s policymakers and economists study carefully the conditions of these two decades – few consecutive decades have been so vastly different, and lessons can be learned from both the successes of the “Roaring ‘20’s” and the failures of the Great Depression.