Question

List three policies that helped sustain economic prosperity in the U.S. after WWI?

Answer 1

Answer:

Three policies that helped to sustain economic prosperity in the USA after WWI were: 1) increased taxation, 2) becoming a creditor to other nations, and 3) mobilizing federal agencies to help provide the infrastructure for industries that produced munitions and supplies for the war effort.

Explanation:

Increased taxation: The US government used a combination of raising taxes and selling Liberty Bonds in order to finance the war effort. Tax rates remained higher than they were before the war because there were expenditures like paying interest on the Liberty Bonds and providing benefits for those who had served in the war. To sell the bonds the government arranged big rallies and enlisted famous personalities like Charlie Chaplin to help sell the bonds.

Becoming a creditor to other nations: Before WWI began, London was the center of the world economy as all the major capital markets did their business there. The Bank of England was the most important institution in the financial world at that time. After WWI that financial power shifted to New York City, and the American Federal Reserve grew as a result as well. US foreign investments almost doubled from 5 billion to 9.7 billion after the war (Rockoff, 2008).

Mobilizing federal agencies: Another important legacy of the war effort after WWI in the United States are federal agencies like the War Industries Board and the Food Administration that were able to mobilize resources and people at a large scale in order to supply the troops and to help shortages in Europe. This led to changes in how people thought about the role of the federal government in growing the economy and helping to regulate it.