Unprecedented Prosperity.

Immediately following World War I the United States experienced a postwar boom, but in 1920-1921 this brief economic surge was followed by the sharpest short-term recession in American history. Inflation remained under control despite an unemployment rate of 3-4 percent. Between 1922 and 1927 the economy grew at a rate of 7 percent per year. As the national industrial and manufacturing base produced more consumer goods, prosperity increasingly depended on consumption.

The Revival of Conservative Economics.

Politicians and business leaders of the 1920s resurrected the conservative economic philosophy that dominated the late nineteenth century. Government took a backseat while business drove the nation. Successful businessmen commanded enormous respect and deference, and their reputations as leaders outpaced those of politicians. President Calvin Coolidge sounded the theme for the decade in 1925, when he declared: "The business of America is business. The man who builds a factory...