Almost the whole world believes that the 1930 depression was the greatest in the economic history of United States. President Roosevelt is considered to be a great leader who fought it and steered the economy out of it. Jim Powel an American historian has nullified this assumption. According to him the 1920 depression was the greatest in the history of United States. Most people are not aware of 1920 depression because President Warren G. Harding devised excellent economic policies that brought the United States Economy out of depression. Powell’s claim is augmented by the statistical data. The statistical data shows that price deflation during 1920-21 was somewhere between 13% – 18%, quite higher than the deflation of 1930s that is recorded as 11.5%. The GNP fell to 69.6 billion dollars in 1921 from 91.5 billion dollars of 1920. Unemployment nearly doubled in one year. President Harding had inherited a war trodden economy.
He that “less government in business” will work and it really did. He cut the federal expenditure and taxes simultaneously. The loose control of Govt. over the free economy served as an incentive for private sector and the GNP increased to 74.1 billion dollars in 1922 .The rate of unemployment came down to 6.7 %. GNP continued to increase year by year that’s why we refer the twenties as “the roaring twenties”. The 1920 depression lasted only two and a half years due to Harding’s policies.
Jim Powell has advocated that Obama should follow the economic model of Harding rather than FDR because the planned or controlled economies cannot grow as fast as the free economies.
