From an economic standpoint, the Republican return to normalcy was effective for a few people in the United States. Many laborers still faced layoffs during the Roaring Twenties, and the decade was a disaster for the US farm economy which was plagued by overproduction and a market loss caused by Europeans returning to their farms from the front. High tariffs protected American industrialists but hurt global trade. Lower taxes and a lack of oversight over the stock exchange brought wealth to people who had already possessed it.

The lack of regulation was one of the factors that led to the Depression. Allowing banks to buy stocks on margin led to the closure of many in the period after 1929 and caused a loss of confidence in the American financial system as a whole. Insider trading was quite common and those who called Wall Street rigged were unjustly called unpatriotic. Overheating the stock exchange also led to an influx of gold from Europe and Asia, thus ensuring that a financial panic in the United States would soon become global. A lack of regulation was not the primary cause of the depression but it was one of the leading factors. While it is easy to blame Harding and Coolidge for this, remember that many politicians believed that it was not the role of government to get involved in business.

“Normalcy” was a term coined by President Warren G. Harding during his presidential campaign. Republicans decided to play on isolationist wishes and anti-foreign feelings of most Americans following World War I by making this concept central to Harding’s presidential campaign. “A Return to Normalcy” had three components;

1)      An isolationist foreign policy (meaning the U.S. would not interact with other nations beyond trade)

2)      A renewing of Nativism (pro-American, anti-foreigner feelings. This was especially targeted towards Germans and Catholics)

3)      A rejection of progressive ideas (moving away from government activism)

These ideas really resonated with Americans, and Harding won the 1920 election handily. Normalcy during the Harding years was a economic success. Unemployment was reduced by 10% , government spending was cut, and peace was solidified between Germany , Japan and the U.S. These policies, along with bills creating more oversight into the Federal Budget, reversed the postwar recession and got the American economy back on track.

The negative side of Normalcy during the Harding administration was mostly social. Nativist attitudes resulted in negative consequences, especially for Catholics and Germans, who saw government pressure close schools, rename roads and harass citizens. Harding’s immigration bill reduced the number of immigrants coming to the U.S. substantially. Although Harding himself could hardly be called a racist, the Ku Klux Klan did see resurgence during this time, in part thanks to nativist attitudes.

During the Coolidge administration Normalcy came into full flower. Coolidge quipped, “The business of the American people is business” and this was no understatement. The Roaring 20’s saw huge upticks in the American economy as taxes and spending were further reduced and the economy bounded upwards. However, there was little to no government oversight. Coolidge saw the Federal Trade Commission and the Interstate Commerce Commission as barriers to business, and reduced their powers of oversight during his administration. Many historians see this as sowing the seeds for the eventual economic collapse that was the Great Depression. Without oversight, speculation in the stock market was able to run rampant, and poor Herbert Hoover was left holding the bag.

In summation, you are right in saying that Coolidge and Hardings "normalcy" policies were directly responsible for the impending crash despite short-term economic gains and profits for companies.