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Federal Reserve is formed
In 1907 a series of bank runs causes a crisis. The Federal Reserve is formed with the Federal Reserve act 6 years later to prevent similar instances and to keep track of and regulate the economy. This allowed the government to monitor the economy and begin to use monetary policy to regulate it. -
Federal income tax reestablished
The sixteenth amendment is ratified in 1913, permitting congress to levy a federal income tax. Afterwards The Revenue Act of 1913 is signed into law by Woodrow Wilson and reestablishes the federal income tax. This gave the government much more revenue and more freedom when enacting fiscal policy. -
Henry Ford implements his assembly line
In 1913 Henry Ford first uses implements his assembly line in a car factory. This greatly increased the efficiency of manufacturing. Furthermore, the rapid increase in vehicle ownership spurred other industries, such as road construction. -
Panama Canal opens
In 1914 the Panama Canal is finished and opens. This greatly increased the efficiency of shipping by sea for US and the world. Additionally the US made money through tolls by running canal for decades afterwards. -
Clayton Antitrust Act
In 1890 The Sherman Antitrust Act is passed. It is intended to prevent anti competitive practices. The Sherman act was somewhat ineffective for various reasons. In 1914 The Clayton Antitrust Act is passed. It exempts unions and expands upon what is considered anti competitive. This act allowed effective enforcement of antitrust regulation, which keeps the open market competitive. Competition is what gives the open market its advantages for consumers, so this act benefited consumers greatly. -
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WWI
WWI started in 1914. The US didn't join the combat until 1917, but the US provide loans and equipment to combating countries before entering the war themselves. In 1918 the war ended. When WWI started inflation rose rapidly and the GDP fell at first. Additionally there was a short recession after WWI because of a reduction in production and soldiers being unemployed. After, the economy grew rapidly from the political and financial favor it had over european countries that were involved in WWI. -
Prohibition is established
In 1920 the prohibition of alcohol goes into effect. This caused many thousands of jobs related to alcohol manufacturing and distribution to be lost. Furthermore, many states and the federal government relied on alcohol taxes for their revenue (75% of New York's revenue and $11 billion of the federal government's revenue came from alcohol taxes), so prohibition greatly decreased their revenue, which resulted in them levying income taxes as a major revenue sources going forward.