The Roaring 20’s: 1921-1929

Following WWI, the political landscape changed significantly. In 1921, President Harding was elected promising “a return to normalcy.” The inflation associated with the war fell dramatically, with prices actually falling in 1920 and 1921 in conjunction with a brief, yet sharp recession. Under the leadership of Treasury Secretary Andrew Mellon, tariffs were increased. However, high wartime taxes were reduced, including a reduction in the top rates from 73% to 24% leading to vigorous economic growth and government surpluses which were used to retire about a third of the national debt between 1920 and 1930. In addition, Secretary of Commerce Herbert Hoover worked to introduce reforms by regulating many business practices. Also noteworthy was the rapid growth of the automobile industry, which stimulated other industries such as energy, glass and road-building. These, in turn, strengthened tourism as consumers with vehicles enjoyed shopping further from their homes. Both small and large cities prospered as millions migrated from the country, leading to sharp increases in construction for offices, factories and homes powered by the emerging electric power industry and connected by new telephones.

With the exception of agriculture, which never recovered from the wartime bubble in land prices, the 1920’s enjoyed one of the best economies in U.S. history. The CEPPI Index recorded seven consecutive years of Excellent performance for the period of 1923-1929.