What was the American economic system based on until 1930?

Until 1930 the American economic system was based on a self-regulating, free-market economy, also known as laissez-faire capitalism. Basic capitalism has the following four characteristics. First, land and capital are privately owned. In this case capital refers to the buildings, machines, and other equipment used for the production of goods. Most large factories in America today are owned by corporations; that is, their ownership is shared by hundreds of people who own a small fraction of the whole business. In many cases people who work in the factories own some small part of them. However, some factories and many farms are still owned by individuals.
    The second characteristic is that production is determined by market demands rather than by the government or a planning body. Manufacturers can decide what and how much they will produce. They make their decision on the basis of what people want to buy. Manufacturers must do constant market research to determine what people want so that they can determine what they should produce. They must also determine how much competition they will have when they manufacture a product.
    The third characteristic of capitalism is that self-interest is important to both the producer and the consumer. The consumer can choose to spend money on products that will bring the most satisfaction. The consumer’s self-interest is satisfied if they buy products that work well. Producers can make more money by selling more products; they sell more products if they please their consumers. This principle is known as consumer sovereignty. In other words consumers have all the power.
    The fourth characteristic is that, traditionally, the government’s role in a free market economy is very small. Competition makes the economy self-regulating, so government intervention is not necessary. In other words, the government does not need to set production standards or quotas. These will be determined by the consumers and their response to the products.
    The American economy maintained these four characteristics until the Great Depression of the 1930s when capitalism was seriously challenged. President Franklin Roosevelt restructured the financial system to remove the worst elements of capitalism. This meant that government began to play a larger role in controlling the economy. The American system since the 1930s has been referred to as "mixed" capitalism since it combines government supervision with other elements of capitalism such as private ownership and competition.
    For nearly twenty-five years after World War Ⅱ, the changes put into place during the Roosevelt administration allowed the economy to maintain constant growth with low inflation and a rising standard of living. In the mid-1960s the economy was again challenged by inflation, unemployment, critical shortages, and rising energy costs. Although the crisis of the 1960s and 1970s was brought under control, stock market crashes in the 1980s brought new challenges as did rising unemployment in the early 1990s.
    Although it has its drawbacks, the free market economy can also provide consumers with high-quality products and with a wide range of choices.