President Calvin Coolidge: Why his thinking matters today
By Andrew T. Kostanecki
Possibly no recent presidency has been more ignored, misunderstood and trivialized than that of Calvin Coolidge (1923 – 1929). Yet, one President, Ronald Regan, saw enough greatness in the man, his character and his ideas to hang his portrait in the Cabinet Room within the White House as an inspiration.
Under President Coolidge, the economy of the United States enjoyed its greatest period of growth combined with the lowest rate of inflation of the last 100 years. The national debt was reduced by 36%. It was the only period in which that has happened since the Civil War. Federal expenditures were reduced by 35%, per capita income rose 37% and tax rates were reduced by 20%. He established charitable deductions, repealed gift taxes, slashed estate taxes and took one third of the population off the tax roles. Yet tax revenues rose and unemployment dropped from 5.5% to 3.2%. It was a time of unparalleled prosperity.
That it would have been so was not obvious. The decade of World War I ending in 1919 had endured the highest rate of inflation on record. During the three years before President Warren Harding died (in 1923 when Vice President Coolidge became President), the U.S. economy was in further trouble with the highest deflation rate on record.
Nine months after Coolidge left office, the Great Depression was on the horizon but not innevitable. It did not end until World War II put the business of America back on its feet and the 1950’s returned the Stock Market to its pre 1929 level. Had the immensely popular Coolidge chosen to run for office in 1928, he would have had to deal with the Depression. Would he and his policies have spared the United States, and perhaps the world, from the calamity?
What Went Wrong After Coolidge?
If the period of the Coolidge presidency was the most prosperous on record, how is it that the United States and the world slid into the Great Depression in the decade that followed? The first warning of trouble ahead was the Stock Market Crash of October 1929. A speculative binge had led to a bubble waiting to burst, and it did. At first, the next president, Herbert Hoover did nothing and within a year the market had almost recovered to its previous high before slowly drifting downwards to a point that affected the capital structure of the world as well as that of the United States.
At the risk of greatly oversimplifying a complicated subject, as the economy faltered, the Hoover and Roosevelt administrations embarked on a series of interventionist steps that paralyzed investment and crippled the natural functioning of the marketplace, which, if left to its own devices, might well have pulled the United States out of its economic funk.
The first step was the passage of the Smoot-Hawley Bill and the imposition of tariffs on imported goods launching an international retaliatory tariff war that resulted in the essential financial collapse of Europe. Cut off from international trade and facing shrinking revenues, the United States slid into a period of deflation, in which money became increasingly scarce and increasingly valuable. Business started to contract. To make up for the loss of revenue, the Federal Reserve more than doubled interest rates, making investment capital just that much more expensive. In order to protect the livelihood of workers, the Government took the steps of mandating higher wages at a time when the market wanted wages to go down and then attempted to fix prices at a level that made it increasingly difficult for businesses to make a profit. To make matters worse, it simultaneously raised taxes at a time when neither the people nor businesses could afford the change.
To be sure, a period of freakish weather exacerbated an agricultural crisis. Crops failed and the largest industry in the United States and farmers were imperiled. In an attempt to stem the tide, the Government took steps to regulate farm prices and created a list of subsidies that further tampered with the natural functioning of the farm economy.
At its worst, during the Depression unemployment officially rose to 23% although the real number was probably closer to 30%. In the end, the biggest problem with the economy was deflation caused by the Government’s lack of confidence in the natural functioning of the marketplace and the public’s distrust of the Government’s willingness to allow investors and businesses to make a profit. Significantly, the Depression was neither universal nor inevitable. Some countries as diverse as Japan, New Zealand, Greece, Romania, Chile, Denmark and Finland actually saw their industrial production levels rise.
The Need to study the Policies of Calvin Coolidge
How would the economy of the United States have faired following the Crash if Calvin Coolidge had decided to run for a second elected term? It is a question that politicians, scholars and the public at large could and should debate. There might well be lessons there that have resonance today.
Today, with the financial markets in turmoil, a ballooning deficit, China and India impacting the world markets, immigration problems, civil rights unrest, global warming, the high cost of energy and increasing disparity between the wealthiest and poorest Americans, it is worth looking at this incredibly principled man and the things he did and did not do during his administration that might help provide guidance to future generations.
It is the reason why it makes sense to build an educational center where the words and actions of Calvin Coolidge are archived, where his principles can be studied, where conferences about the role of government can be debated and the public can become more familiar with this extraordinary man.
The Beliefs, Values and Principles of Calvin Coolidge
- He espoused the dignity and value of hard work, thrift, modesty and self-reliance.
- He had a deep belief in God and in religious freedom.
- He believed that “the chief business of the American people was business” and that the people were basically concerned with producing, buying, selling, investing and prospering in the world.
- He argued that material wealth was only a means to an end for achieving, “the multiplication of schools, the increase of knowledge, the dissemination of intelligence, the encouragement of science, the broadening of outlook, the expansion of liberties and the widening of culture.”
- Above all, he supported tax policies that encouraged investment and he blocked government interference in the natural functioning of the marketplace.
- He supported legislation against price-fixing.
- He believed that the world would do better if he “did no harm” and by holding back and providing stability, the citizens would know what to expect and not to expect from the Government.
- He believed that if the private sector was allowed to take the lead, the possibilities for progress would be boundless.
- He argued for the importance of letting Germany pay off its War debts.
- He championed the renunciation of war as an instrument of national policy. (Kellog-Briand Pact)
- He saw the rights of Colored People as “sacred”, supported civil rights and opposed the then powerful Ku Klux Klan.
- He supported shorter workweeks for women and children, equal pay for equal work, a minimum wage, an increase in the number of children’s playgrounds, a reduction in railway fares for workers and their children, improved workplace safety and funding for state hospitals for the mentally ill.
- He passed legislation to limit rent increases and appointed a commission to study the idea of maternity leaves.
- He supported women’s suffrage and women’s rights.
- He ended the corruption that had festered in the previous (Harding) administration.
- What Coolidge Said
- In the face of today’s problems, his words resonate
His Core Values
On ideals: “There is no force so democratic as the force of an ideal.” “The chief ideal of the American people is idealism…..America is a nation of idealists.”
On Values: “We do not need more intellectual power, we need more moral power. We do not need more knowledge; we need more character. We do not need more government; we need more culture. We do not need more of the things that are seen, we need more of the things that are unseen. If the foundation is firm, the superstructure will stand.”
On Conservation: “Diminishing resources warn us of the necessity of conservation. The public domain is the property of the public. It is held in trust for the present and future generations. The material resources of our country are great, very great, but they are not inexhaustible.”
On wealth: “Wealth comes from industry and human toil. To dissipate it in waste and extravagance is disloyalty to humanity.”
On luck: “Real luck lies within ourselves. It is a question of character. It depends on whether we follow the inner light of conscience. The man who is right makes his own luck.”
On materialism: “Material rewards are limited and are only incidental, but the development of character is unlimited. The real standard of life is not one of quantity but of quality.”
Why he was not a target for abuse: “because I have tried to refrain from abusing other people.”
On his legacy: “Perhaps the most important accomplishment of my administration has been minding my own business.”
On Governance
On the Constitution: “No other document devised by the hand of man has ever brought so much progress and happiness to humanity. The good it has wrought can never be measured.”
On the Declaration of Independence: “If all men are created equal, that is final. If they are endowed with inalienable rights, that is final. If governments derive their just rights from the consent of the governed, that is final. No advance, no progress can be made beyond these propositions. If anyone wishes to deny their truth and their soundness, the only direction in which he can proceed historically is not forward, but backward toward the time when their was no equality, no rights of the individual, no rule of the people. Those who wish to proceed in that direction cannot lay claim to progress.”
On self-reliance: “We demand freedom of action and then expect the government in some miraculous way to save us from the consequences of our own acts. Self-government means self-reliance.”
On Governing: “Nothing is more dangerous to good government than great power in improper hands.”
On local government: “What we need is not more Federal Government but better local government.”
On legislating: “It is more important to kill bad bills than it is to pass good ones.”
On campaign funding: “I am totally unwilling to have a large sum of money raised and spent on my behalf.” “I do not like as a matter of principle large contributions given to campaign funds, because they create a bad impression and give the idea of wrongful motive.”
On strikes: “There is no right to strike against the public safety by anybody, anywhere, any time.”
On International relations
On globalization: “We must realize that our relationships with the outside world will increase in number and importance on our social structure. We cannot begin too soon to prepare for this future.”
On the League of Nations (United Nations?): The more I have seen of the conduct of our foreign relations, the more I am convinced we are better off out of the League.”
On War: “The only way to prepare for a short war is to prepare for a long one.”
“ No nation ever had an army large enough to guarantee it against attack in a time of peace.”
On thrift and the economy
On the virtue of economy: “I favor the policy of economy, not because I wish to save money, but because I wish to save people. The men and women of this country who toil are the ones who bear the cost of government. Every dollar that we carelessly waste means that their life will be so much the more meager. Every dollar that we prudently save means that their life will be so much the more abundant.”
About economic growth: “The key to national progress is ’constructive economy’ (reduction of taxes and the national debt). This policy has encouraged enterprise, made possible the highest rate of wages which has ever existed, returned large profits, brought to the homes of the people the greatest economic benefits they ever enjoyed, and given to the country as a whole an unexampled era of prosperity.”
On economic independence: “There can be no political independence without economic independence.”
On Civil Rights
On German contempt for racial integration within the U. S. Army: “What they say in scorn, let us say in praise. It would be fitting recognition of their worth to send our American Negro (troops) to inform the (Germans) on what terms their defeated armies are to be granted peace.”
On social welfare: “We cannot curtail care of mothers with dependent children or the support of the poor, the insane and the infirm.”
On government and business
On socializing the economy “These socialistic notions of government are not of my day. When I was in office, tax reduction, debt reduction, tariff stability and economy were the things to which I gave attention. We succeeded along those lines.”
On the Government entering business: “ When government enters business, it has a tendency to extravagance and inefficiency (and), having the power to crush all competitors, likewise closes the door of opportunity and results in monopoly.”
On profits: “We are dependent upon commercial and industrial prosperity. There is one condition by which men can secure a (good) wage be it labor or capital and that is that someone makes a profit. It cannot be done by law, it cannot be done by public ownership, and it cannot be done by socialism. When you deny the right to a profit you deny the right of a reward for thrift and industry.
On taxes: “I want taxes to be less, that people may have more.”
“The collection of any taxes which are not absolutely required, which do not beyond a reasonable doubt contribute to the public welfare, is only a species of legalized larceny.”
“The correct course to follow in taxation is not to destroy those who have already secured success, but to create conditions under which every one will have a better chance to be successful.”
“The power to tax is the power to destroy.”
“No matter what anyone may say about making the rich and the corporations pay the taxes, in the end they come out of the people who toil.”
On Freedom
“I want the people of America to be able to work less for the Government and more for themselves. I want them to have the rewards of their own industry. This is the chief meaning of freedom.”
“The meaning of America is not to be found in a life without toil. Freedom is not only bought with a great price, it is maintained by unremitting effort.”
“There is no greater service that we can render the oppressed of the earth than to maintain inviolate the freedom of our own citizens.”
Work is not a curse; it is the prerogative of intelligence…and the measure of civilization.”
Andrew Kostanecki
10/9/2008