2. Readjusting for a return to peacetime economics, the Depression of 1920-21 saw the struggle to incorporate millions of veterans back into the American economy
During wartime, national economies become highly tailored to the requirements of their respective states. Factories focus production on military priorities over commodities, whilst labor pools shrink driving up wages. Following the Armistice and the end of the First World War, the U.S. economy was still in the midst of an economic realignment when millions of soldiers returned from Europe. In 1920 alone, the American labor force increased by 1.6 million, or 4.1%, resulting in these repatriated troops suffering reduced wages due to an over-saturation. The administration of Woodrow Wilson was slow to respond to the emerging crisis, resulting in the election of Warren Harding in 1920 with future-President Herbert Hoover as Commerce Secretary.
Hoover sought to take control over the situation, instituting emergency tariffs on imported agricultural products to protect American farmers as well as factory goods. Hoover also encouraged, successfully, the reduction of income taxes to aide with economic recovery and redevelopment. Despite these effective measures, the deflationary recession lasted for almost two years, with unemployment peaking in 1921 at 11.7%. However, with the end of the recession the United States entered into a period of enormous economic prosperity: the Roaring Twenties, during which time the American economy steadily boomed.