Reply #2 to tabonsell remarks

“It was major cuts to government spending in 1919-20 that brought on the crash of 1920-21 and the consumers using money accumulated during the war that ended the recession. Taxes were cut later on in the 1920’s and each cut preceded another recession.”
These remarks by tabonsell challenged what I wrote about the 1920’s economic prosperity created by the Republicans. I have no idea where tabonsell got his information. As a retired history professor, I cannot find support for his position in any publication. For example, his remark that consumers were responsible for the end of the recession because of their savings from the war years is ludicrous. There is no data to back it up. Personal income taxes were raised during the war years (War Revenue Act) which meant that there were limited savings. Economic historians and economists who studied this 1920 recession don’t agree on why it ended. Many economists believe it was an “economic correction;”  however, they disagree on what caused the “economic correction” and ended the recession.  No economist or economic historian has even suggested that it was caused by consumers using their savings.
According to the sources I cited in my previous response, tax cuts were not the reason for the other 1920’s recessions. The 1924 recession was researched by economists McMillin and Parker (1994) who concluded it was a mild recession caused by oil price stocks. The 1927 recession was caused by two factors: oil stock prices and Ford shutting down all of his factories for six months to changeover from the Model T to the Model A. The Model T made up nearly 40% of the cars sold in the United States. When Ford shut down his factories, his suppliers around the nation were also impacted. Tax cuts had nothing to do with it.

About camden41

Retired public school administrator Retired history professor: Taught Western Civilization, American Civil War, United States History, Economic History, Ancient & Medieval Foundations, American History Since 1945
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