Coolidge believed that private business -- not the federal government -- should lead the country to greater wealth and happiness. He continued President Harding's policy of supporting American business both inside the United States and in other countries. The government under President Coolidge continued high taxes on imports in an effort to help American companies.
Many Americans shared Coolidge's ideas about small government and big business. In the early nineteen twenties, many of them were living better than ever before.
At that time, companies were growing larger. The prices of their stocks rose higher and higher. There were lots of jobs. And the wages of many workers increased. Americans agreed with their president that there was little need for government spending and government programs, when private industry seemed so strong.
The American economy grew in the nineteen twenties for several reasons. The world war had destroyed many factories and businesses in Europe. The United States did not suffer the same destruction. It was still a young country. It had great natural resources, trained workers, and a huge market within its own borders. When peace came, Americans found their economy stronger than any other in the world.
Changes in the American market also helped economic growth. "Installment buying" became popular. In this system, people could buy a product and pay for it over a period of several weeks or months.
The total cost was higher, because they had to pay interest. But the system made it possible for more people to buy more goods. It also made the idea of borrowing money more acceptable to many Americans.
The growing importance of the New York stock markets also helped economic growth in the nineteen twenties. Millions of Americans bought shares of stock in companies that seemed to grow bigger every month.
Such investment almost became a national game. People would buy shares of stock, then sell them when the stock rose in value. There were many stories of poor people who became rich overnight by buying the right stocks.