The Laissez-Faire Philosophy
Calvin Coolidge firmly believed government should stay out of business affairs. His famous quote “the business of America is business” defined his presidency. 📊 Coolidge deregulation policies removed crucial financial safeguards during the Roaring Twenties. His administration dismantled wartime economic controls established during World War I. Treasury Secretary Andrew Mellon championed tax cuts for wealthy investors and corporations.
Unchecked Financial Speculation
Banks engaged in risky investment practices without federal oversight. Margin buying allowed investors to purchase stocks with only 10% down payments. ⚠️ Stock prices soared beyond rational valuations throughout 1927 and 1928. Coolidge’s policies encouraged this dangerous speculation by removing regulatory barriers. Financial institutions operated with minimal capital requirements and oversight.
Warning Signs Ignored
Economic experts warned about unsustainable market growth patterns. Agricultural sectors struggled while urban markets boomed artificially. 💰 Coolidge deregulation policies prioritized short-term profits over long-term stability. Income inequality reached dangerous levels during this period. The administration dismissed concerns about speculative bubbles forming in key markets.
Impact:
The 1929 Market Collapse
Coolidge’s deregulation directly contributed to Black Tuesday’s devastating crash. 📉 Stock values plummeted by 89% between 1929 and 1932. Millions of Americans lost their life savings overnight. Banks failed across the nation due to risky investment practices. The speculation enabled by Coolidge deregulation policies destroyed countless families financially.
Economic Depression Consequences
Unemployment rose from 3% to 25% within three years. 🔥 Industrial production dropped by nearly half during the early 1930s. Farm foreclosures increased dramatically as agricultural prices collapsed. Small businesses closed in record numbers across America. The economic devastation lasted over a decade despite various recovery efforts.
Global Economic Ripple Effects
American economic collapse triggered worldwide depression conditions. 🌍 International trade declined by 30% as global markets interconnected. European nations faced banking crises linked to American financial failures. The policies demonstrated the dangers of excessive financial deregulation. Future administrations implemented stronger regulatory frameworks to prevent similar disasters.