…this downturn begins in the second quarter of 1920. By the third quarter of 1921 (six quarters into the cycle), factory employment levels have fallen to 71.1 percent of what they were in the first quarter of 1920. Beyond that point, employment begins to rise, by the fourth quarter of 1922, returning to 85.6 percent of its first quarter 1920 level. The annual national unemployment rates for 1920, 1921, and 1922 are 4.0, 11.9, and 7.6 percent respectively. By 1923, full recovery has been achieved and the overall unemployment rate averages 3.2 percent.[4]
In fact, Gallaway and Vedder report that manufacturing in the United States also surged significantly. Using the first quarter of 1920 as the baseline equal to 100, manufacturing productivity leaped to 150.3 by the second half of 1921 and price levels stabilized.[5] Coolidge explains that “within a year the country had adopted [tax reductions and savings], which brought an era of plenty,”[6] and “radicalism which tinged our political and economic life from soon after 1900 to the World War period was passed.”[7] In reflection of the recovery in 1922 the Wall Street Journal wrote on New Year’s Day that, “From practically all angles, 1922 can be recorded as the renaissance of prosperity.”[8]
[1] Calvin Coolidge, 2004 (originally published in 1929), The Autobiography of Calvin Coolidge,” (Honolulu, HI: University Press of the Pacific), p. 153.
[2] Llewellyn H. Rockwell, Jr., May 20, 2015, “How Government Inaction Ended the Depression of 1921,” Mises Institute, (Auburn, AL: Ludwig von Mises Institute), [http://mises.org/print/34322].
[3] White House Office of Management and Budget, 2013, Fiscal Year 2014 Historical Tables: Budget of the U.S. Government, (U.S. Government Printing Office, Washington, D.C.), Table 1.1: Summary of Receipts, Outlays, and Surpluses or Deficits, 1789-2018, p. 23, [http://www.gpo.gov/fdsys/pkg/BUDGET-2014-TAB/pdf/BUDGET-2014-TAB.pdf]. Harding and Coolidge had surpluses from 1920 through 1930.
[4] Lowell Gallaway and Richard K. Vedder, 1987, “Wages, Prices, and Employment: Von Mises and the Progressives,” The Review of Austrian Economics, Vol. 1, No. 1, p. 43, [http://mises.org/journals/rae/pdf/RAE1_1_4.pdf].
[5] Lowell Gallaway and Richard K. Vedder, 1987, “Wages, Prices, and Employment: Von Mises and the Progressives,” The Review of Austrian Economics, Vol. 1, No. 1, p. 43-44, [http://mises.org/journals/rae/pdf/RAE1_1_4.pdf].
[6] Calvin Coolidge, 2004 (originally published in 1929), The Autobiography of Calvin Coolidge,” (Honolulu, HI: University Press of the Pacific), p. 153.
[7] Calvin Coolidge, 2004 (originally published in 1929), The Autobiography of Calvin Coolidge,” (Honolulu, HI: University Press of the Pacific), p. 158.
[8] James Grant, 2014, The Forgotten Depression, (New York, NY: Simon & Schuster), p. 200.
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