Federal Reserve Board Policy from 1920 to 1939 and its Effects

The 1920s was a decade of flappers, speakeasies, gangsters and unprecedented economic prosperity. The industrial revolution made it possible for the vast majority of Americans to enjoy the newest technologies and comforts (Ocean 3). The standard of living rose dramatically and thousands struck it rich playing the stock market (Nobel 1). Nevertheless, this time of economic affluence was short lived, for the Great Depression loomed on the horizon. To keep the economy booming the Federal Reserve Board made attempts to regulate the economy. The FRB had good intentions but it did not understand how to effectively control the economy through it’s many new policies. During the 1920s, the policies of easy money and lowered gold standards, led to the Great Depression and the policies of tight money, and high reserve requirements deepened America’s already desperate economic situation in the 1930s.

During the 1920s the FRB used easy money and lowered gold standards to try and stimulate the economy. Before examining the effects these policies had it is important to understand what each of them is. Easy money is the policy of printing excessive amounts of new currency while

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