Progressive reforms

Antitrust regulations and the creation of the Antitrust regulations and the creation of the Federal Trade Commission of 1914 limited Federal Trade Commission of 1914 limited corporations ability to merge togethercorporations ability to merge together

Progressive income tax implemented in Progressive income tax implemented in 1913 – the tax was 1% for income over 1913 – the tax was 1% for income over $3,000 (the average worker made $580 a $3,000 (the average worker made $580 a year in 1900)year in 1900)

Income tax today – individual

$0-$8,350 – $0-$8,350 – 10%10% $8,350-$33,950 -- $8,350-$33,950 -- 15%15% $33,950-$82,250--$33,950-$82,250-- 25%25% $82,250-$171,550--$82,250-$171,550-- 28%28% $171,550-$372,950--$171,550-$372,950-- 33%33% $372,950+$372,950+ 35%35% Median individual income: $30,881Median individual income: $30,881 The top 5% (above $145,00) pays 60% of the income taxes The top 5% (above $145,00) pays 60% of the income taxes

in the USin the US Bottom 50% (below $30,881) pays about 3%Bottom 50% (below $30,881) pays about 3%

The Republican Influence

Following the Democratic presidency of Wilson, The Following the Democratic presidency of Wilson, The Republican party shifted towards economic Republican party shifted towards economic libertarianism and reversed progressive taxation libertarianism and reversed progressive taxation began under Wilsonbegan under Wilson

Rejecting the social reforms of the Progressive Era, Rejecting the social reforms of the Progressive Era, the first two Republican Presidents of the 1920s–the first two Republican Presidents of the 1920s–Harding and Coolidge–put their faith in big business Harding and Coolidge–put their faith in big business and less in government, both at home and abroadand less in government, both at home and abroad

Harding and the Tea Pot Dome

• In 1920 Harding’s promise of a “return to normalcy” hit a responsive chord among Americans. Many observers saw his landslide election over Democrat James A. Cox as a rejection of Wilson’s internationalism as well as high-minded Progressive reforms and higher taxes on the wealthy.

• Harding relied on the advice of a talented group of officials named to the cabinet and a group of old friends from Ohio. Some of these friends used their positions to line their pockets with money. One advisor ended in jail, two resigned in disgrace, and two more killed themselves

Harding dies, plagued by scandal

Of the many scandalous situations that occurred during Harding’s administration, the Teapot Dome became the most famous. Harding’s Secretary of the Interior, Albert Fell, leased government oil fields to wealthy friends in exchange for bribes.

• Investigations into the scandals left Harding depressed. He fell ill and died, bringing Vice President Calvin Coolidge to the presidency.

Silent Cal

With his upright Yankee background and unquestioned reputation for honesty, Coolidge soon erased the damage the Harding scandals had caused the Republican administration.

• Coolidge carried out Harding’s pro-business programs and reversed progressive taxes brought on by Wilson.

The courts

Coolidge appointed Supreme Court justices Coolidge appointed Supreme Court justices who strictly interpreted the commerce who strictly interpreted the commerce clause (which says Congress can regulate clause (which says Congress can regulate trade “among the several states) to mean trade “among the several states) to mean that Congress could not regulate local that Congress could not regulate local economic conditionseconomic conditions

Regulatory agencies

Coolidge appointed pro-business people to Coolidge appointed pro-business people to regulatory bodies that overlooked antitrust regulatory bodies that overlooked antitrust regulationsregulations

Andrew Mellon, secretary of the treasury under Harding, Coolidge, and Hoover, almost completely overturned the progressive tax policies of the Wilson years. He cut government spending and reduced taxes on corporations and on people with high incomes.

Herbert Hoover

• Hoover, the secretary of commerce under both Harding and Coolidge, became famous as director of the Belgian Relief Committee

• Hoover also supported a number of reforms–eight-hour workdays in major industries, improved nutrition for children, conservation of natural resources, and control of coastline oil pollution

• Hoover believed above all in volunteer effort and free enterprise, hoping that business would show a new spirit of public service.

Republican Foreign Policy

In the 1920s the government encouraged United States firms to dramatically expand their international business, thus extending influence over other nations.

Charles G. Dawes, a wealthy Chicago banker, negotiated loans from private American banks so Germany could pay its reparations. The so-called Dawes Plan helped to avoid war and allowed the Allies to use German reparations to repay some of their debts to the United States

How to avoid war

• To stay clear of Europe’s power struggles, the United States embarked on a twofold policy: (1) To reduce the weapons of war, the United States held the Washington Conference–the first successful disarmament conference in modern history. (2) To disentangle itself from future conflicts, the United States joined other nations in signing the Kellogg-Briand Pact, which outlawed war.