The Republican’s free-market approach to economics was a double edged sword. The almost zealous refusal of Harding, Coolidge, and Hoover, and their Congress to intervene in the affairs of business undoubtedly provided innovators and entrepreneurs such as Henry Ford with the legal and regulatory ‘space’ necessary to expand and adapt throughout the decade at a hitherto unknown rate, and allowing the already favourable conditions fostered by victory in World War One and technological innovation to become entrenched. At the same time, however, such policies, by definition, failed to ensure that such expansion occurred in a sustainable or socially-beneficial manner, making eventual and sudden decline inevitability. This considered, therefore, republicanism can only be credited with the boom to a limited extent, simply building on an already favourable conditions whilst, given its unwillingness to manage such opportunities in a sustainable manner, their culpability for the severity and abruptness of the subsequent collapse must be considered far greater.

It was the War, rather than Republicanism, which initiated the economic boom of the 1920s. The destruction of much of the European powers’ agricultural and industrial capacity presented huge demand for American products, allowing many industries to reach maximum output, and encouraging widespread expansion. Combined with the introduction of techniques such as the assembly line and a plethora of consumer products such as domestic appliances and cars, a boom became unavoidable, the only question of economic policy being how it should be managed, if at all. With foreign demand for traditional industries such as grain and oil fuelling domestic spending on new consumer products such as cars and radios, technology met with geo-political fortuity to create an economic boom in which Republican policy seems to have played a relatively small part.

On the other hand, that these circumstances converted into continuous growth over this period suggests that Republican economic policy must have had a role to play. After all, the marked rise in disposable income could easily have been dampened by a consequent rise in taxes, whilst the emergence of new industries such as Ford’s might have been heavily restricted by an excess in government regulation in working practices and competition. That the Republicans under Harding, Coolidge, and, to a lesser degree, Hoover, did precisely the opposite would suggest that their economic policy, whilst not the instigator of the boom, played no small part in allowing it to continue unabated. As a result, republican policy was significant in that it provided the environment of freedom within which an economic opportunity was able to take hold and establish itself to an unlimited degree.

The price of an unlimited explosion, however, was the utter lack of recourse it allowed should it end as quickly as it began. The Republican’s fear of intervention prevented all from being done to ensure that quick and sudden profits permeated throughout American society in order to create longer-term prosperity across the country as a whole. Even given a 28% increase in GNP between 1921 and 29, 1/3 of this was held by just 5% of the total population, suggesting that economic expansion was far less pervasive than one might expect. Whilst not excusatory to the existence of the boom itself, the presence of such inequality does demonstrate the failure to translate a surge in demand and its subsequent profits into concrete improvements to the nation’s infrastructure or the prospects of a large percentage of the population as a whole. In doing so, the potential for further growth was limited, as, confined to only part of society, consumer demand was bound to become saturated. Whilst taxation which might have been enacted to correct this inequality may also have restricted the scale of the boom, it is equally true that it would also have limited the scale of the subsequent collapse by increasing spending amongst groups such as blacks, rural workers and urban poor, which were otherwise excluded from the boom. The unwillingness of the republicans to do this, therefore protected them from any negative effects of taxation or other intervention, but at the same time exposed them, and the nation, to the full brunt of the decline. As a result, the clear inequalities in American society fostered under Republican leadership were responsible for both the intensity of the boom, but also the inevitability of its sudden end.

The short-termist nature of the boom encouraged by Republican policies is also strongly apparent in its dependence on both consumer demand and confidence in the form of credit. Much of the demand for the new products at the heart of the boom depended on the willingness of consumers to buy in anticipation of their ability to pay later through the range of hire-purchase and credit schemes which developed throughout the decade. This was taken to the extreme through the development of ‘buying on the margin’ with which repayment of credit was almost entirely dependent on the continued increase in the value of shares bought with it. Such schemes resulted in a massive collective reliance on the economy’s continued good-fortune, as well as in a culture of indebtedness within which the collapse of a single debtor could have a negative knock-on effect throughout the entire economy. Whilst the precarious nature of such arrangements cannot be directly blamed upon specific Republican policy, it is a continuation of a theme consistent with features of the boom in which they were more directly involved, such as a failure to prevent the over-extension of the banking system and closer regulation of interest rates, and thus would appear to be another area in which the policies of Harding, Coolidge and Hoover simultaneously ensured the intensity and short-lived nature of the 1920s boom.

However, perhaps the most compelling argument in their defence is the lack of precedent. Never before had such growth been seen as even possible, nor the depression which was to follow. In such light, it is perhaps unfair to judge Republican policies too harshly for their inability to anticipate the hitherto unknown. It is also clear that Republicanism was not responsible for initiating the ‘Roaring 20s’, but rather for adopting a policy of non-intervention which allowed the boom to proceed almost entirely unimpeded. As a result, Republican responsibility must be judged in terms not of what they did, but what they did not. In doing very little to regulate nor intervene in the boom from 1921-29, successive Republican administrations were, to the greatest extent, responsible for ensuring that what occurred was not a long-term trend of steady, social economic growth, but a short-lived boom. Furthermore, rather than making efforts to convert this into growth which permeated throughout, bringing even longer-term benefits to American society as a whole, these policies were content to sit back and allow America to become a gambling den on a majestic scale, almost entirely dependent on the fickle nature of human confidence and reliant on an impossibly limitless demand for new products which soon reached saturation point. As a result, Republican policies must be seen to a great extent responsible for shaping the nature of the economic boom, if not instigating it, and in doing do, directly responsible for the inevitable bust which followed.