Реферат: The Depression Essay Research Paper Depression of

profits rose 62% and dividends rose 65%.

The federal government also contributed to the growing gap between the rich and

middle-class. Calvin Coolidge’s administration (and the conservative-controlled

government) favored business, and as a result the wealthy who invested in these

businesses. An example of legislation to this purpose is the Revenue Act of 1926, signed

by President Coolidge on February 26, 1926, which reduced federal income and

inheritance taxes dramatically. Andrew Mellon, Coolidge’s Secretary of the Treasury, was

the main force behind these and other tax cuts throughout the 1920’s. In effect, he was

able to lower federal taxes such that a man with a million-dollar annual income had his

federal taxes reduced from $600,000 to $200,000. Even the Supreme Court played a role

in expanding the gap between the socioeconomic classes. In the 1923 case Adkins v.

Children’s Hospital, the Supreme Court ruled minimum-wage legislation unconstitutional.

The large and growing disparity of wealth between the well-to-do and the

middle-income citizens made the U.S. economy unstable. For an economy to function

properly, total demand must equal total supply. In an economy with such disparate

distribution of income it is not assured that demand will always equal supply. Essentially

what happened in the 1920’s was that there was an oversupply of goods. It was not that

the surplus products of industrialized society were not wanted, but rather that those whose

needs were not satiated could not afford more, whereas the wealthy were satiated by

spending only a small portion of their income. A 1932 article in Current History articulates

the problems of this maldistribution of wealth.

President Calvin Coolidge had said during the long prosperity of the 1920s that

“The business of America is business.” Despite the seeming business prosperity of the

1920s, however, there were serious economic weak spots, a chief one being a depression

in the agricultural sector. also depressed were such industries as coal mining, railroads,

and textiles. Throughout the 1920s, U. S. banks had failed–an average of 600 per year–as

had thousands of other business firms. By 1928 the construction boom was over. The

spectacular rise in prices on the stock market from 1924 to 1929 bore little relation to

actual economic conditions. In fact, the boom in the stock market and in real estate, along