1.2 Government Intervention (1920s)

Question 1

Tariffs on foreign goods

Answer 1

• Fordney-McCumber Act 1922, charges were added to cheap foreign goods so that they would cost at least the same as American made equivalent goods
  -This meant that consumers would more likely purchase American goods if foreign goods prices went up and therefore would increase the money circulating in the economy

Question 2

Tax Reductions

Answer 2

-Andrew Mellon cut federal taxes on corporations by $3.5 billion.
-Cuts in government spending still left a surplus of $600+ million per year from 1925 to reduce national debt
-This meant that businesses would have less taxes to pay which in turn lead them to have more profit

Question 3

‘De-funding’ the Federal Trade Commission

Answer 3

-The FTC was one victim of government spending cuts.
-Less able to investigate business behaviour and launch prosecutions for things like price fixing
-This meant that less businesses were being caught with illegal behaviour they made, so they weren’t being shut down

Question 4

No ‘foreign entanglements’

Answer 4

-The USA refused to join any alliances, avoided any conflicts and used diplomacy to solve any disputes
-This made countries like Germany, the USSR and Japan more friendly towards America than countries like the UK or France
-This meant that they could expand more easily into foreign markets

Question 5

The “American Plan”

Answer 5

-A slogan for reducing union power
-Many employers like Henry Ford made workers sign no-strike and no-union agreements
-By 1929, union membership had reduced by 1 million.
-Between 1921-23, the Supreme Court made four anti-union decisions
-This meant that there could be no striking