“We’re in for a Coolidge revival”
No sooner did Coolidge become president than he went on a budget and tax cutting spree to terminate what he called the “despotic exactions” of the past years. The immediate aim was to enact Harding’s hope to roll back the higher progressive income tax that Wilson had imposed during World War I. Coolidge, for his part, idolized the Treasury secretary Andrew Mellon, whose frosty credo was that “the people generally must become more interested in saving the government’s money than in spending it.” Tax cuts, Shlaes asserts, were “not merely to favor the rich, as many said. The tax rate cuts at the top were designed to favor enterprise. If people got to keep more of their money, they would hire others, Mellon said.” As Mellon saw it, this was “scientific taxation,” a program he detailed in 1924 in his classic statement of supply-side economics, “Taxation: The People’s Business.” But progressive Republicans initially impeded Coolidge and Mellon’s sweeping plans. Coolidge was undaunted. “Cutting rates brought more revenue,” says Shlaes. “So cutting rates even more might bring yet more cash.” All Coolidge could think about was economizing. He was a cheap tipper. He berated the White House housekeeper, Mrs. Jaffray, for favoring specialty shops rather than the new supermarkets. Talking to a group of Jewish philanthropists, he admitted that the budget was “a sort of obsession with me. . . . I regard a good budget as among the noblest monuments of virtue.” When the mayor of Johannesburg, South Africa, sent the Coolidges two lion cubs, the White House named them Tax Reduction and Budget Bureau. In 1926, Coolidge finally got the tax cuts he had always dreamed about, what Shlaes deems nothing less than “a beauty to behold, with its surtax rate topping out at 20 percent.” By the end of his term, only the very wealthiest Americans paid any income tax at all. Frenzied speculation took off. The bubble would soon pop. But Shlaes suavely dismisses the notion that Coolidge bears responsibility for the Great Depression and suggests his work was “complete, ready as a kind of blessing for another era.”









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South Sea Bubble.
A fool and his money …
OldEnglish on February 17, 2013 at 6:59 PM
It’s amazing to me that Coolidge and Harding are taught to Americans from the 4th Grade on as having “caused” the Great Depression, while Roosevelt is taught as having “led us through” the Depression that was the entirety of his 12 years in office, and that the Trade War General Herbert Hoover is identified more with the policies of the former than the latter.
The reality is that the Great Depression, much like the Obama Recovery, was caused by reaction to the correction, not the correction itself. Overheated markets collapse. It happens. When we continue forward without burning capitalism at the stake, suspending normal order, and bailing out everyone, the losses are written off and growth resumes. This, however, is letting a crisis go to waste.
HitNRun on February 17, 2013 at 7:01 PM
The greatest thing Calvin Coolidge did was pass his immigration reform bill…
ninjapirate on February 17, 2013 at 7:26 PM
Oh, PLEASE listen to this! Last night’s Larry Kudlow had on Amity Shlaes author of a new book on Coolidge and devoted a huge portion of his radio show on him.
You can stream it from here: http://www.wabcradio.com/page.php?page_id=552
crosspatch on February 17, 2013 at 7:30 PM
Which he was displeased with because it continued to prevent Asians from becoming citizens, and the resulting ban on immigration from Japan contributed to their entry into WWII.
Count to 10 on February 17, 2013 at 7:34 PM
Yes! Yes! A thousand times yes!
Indeed.
Punchenko on February 17, 2013 at 7:37 PM
…is a testament to the ineffectiveness of our public school system.
itsnotaboutme on February 17, 2013 at 7:37 PM
Not really. Japan’s entry into WWII was about oil, not about immigration policy. Japan needed oil, we refused to sell it to them because of their incursion into China. So Japan decided to take the Dutch East Indies (now known as Indonesia) to get their oil and coal. Japan needed to knock out the US Pacific fleet to do that. Japan would have succeeded, too, had they gone ahead with the third strike on Pearl Harbor which was supposed to take out the oil storage depots and dry docks. The US would have been forced to pull the fleet back to San Francisco because we did not have sufficient tanker capacity to maintain operations out of Hawaii if those tank farms were destroyed. The Japanese got cold feet, declared success after two waves, left the oil storage and dry docks intact, and lost the war.
crosspatch on February 17, 2013 at 7:42 PM
When I went to school it was Hoover who was blamed, not Coolidge, but the truth is, had Roosevelt not meddled, the economy was already starting to turn around when he took office in 1933. Roosevelt’s actions, in particular wage controls, actually EXTENDED the Great Depression by another 7 years.
http://newsroom.ucla.edu/portal/ucla/FDR-s-Policies-Prolonged-Depression-5409.aspx
crosspatch on February 17, 2013 at 7:46 PM
Also, Shlaes wrote this one, too:
http://www.amazon.com/Forgotten-Man-History-Great-Depression/dp/0060936428/
crosspatch on February 17, 2013 at 7:54 PM
It’s all kind of convolved together — it was a snowballing of deteriorating relations. The inability of Japanese to immigrate to the US contributed to the Japanese impression that they would have to expand aggressively in order to gain respect from the West (and thus, some level of security against being colonized like China). At any rate Coolidge wasn’t happy that the Asians were excluded from the immigration bill.
Count to 10 on February 17, 2013 at 8:10 PM
Hoover engaged in something of “voluntary” wage controls, talking CEOs into freezing wages instead of lowering them — something that worsened the Depression — out of fear of the “Wage Price Spiral”.
Count to 10 on February 17, 2013 at 8:12 PM
This article isn’t worth the comment, except to document how far the NYT has degraded intellectually
‘excavating’ a hero
a ‘bleak omen’ from the past
This is junior high level script. Maybe the author is a bleak omen of the dumbing down of the language. Perhaps his intentions should be excavated
entagor on February 17, 2013 at 8:35 PM
Yeah, but he sipped water too.
SagebrushPuppet on February 17, 2013 at 9:31 PM
Initially, for a brief period, yes. But actually, it was starting to gain traction. Depression would have been over by ’35 had Roosevelt decided not to meddle.
In other words, Hoover’s methods meant a sharper but briefer depression. Roosevelt’s methods meant we were probably in for perpetual depression had WWII not come along.
crosspatch on February 17, 2013 at 9:39 PM
The greatest thing Calvin Coolidge did was pass his immigration reform bill…ninjapirate on February 17, 2013 at 7:26 PM
No. The Immigration Law of 1924 was designed to exclude individuals of Eastern European or Southern European extraction, as well as nearly all Asians (Indians/Chinese/Japanese/Koreans).
It was the Know Nothing wing of the Republican Party in action.
Look at this immigration act as the reason why the United States paid no attention to Golda Meir when she plead with the us in 1939 to admit the Jews. In fact, Adolf Hitler actually chortled at the results of the Convention held to address the plight of the Jews under his government:
Gustav Shroder, captain of the MS St. Louis, and his 937 Jewish passenger refugees, discovered first hand the meaning of “illegal alien” as well as the fact that Hitler’s sneer at the United States was absolutely correct. 254 of those later died at the hands of the Nazis.
This kind of thinking is why people from these ethnicities are no longer friendly to the Republican Party, and why any other ideas we might have about saving our nation are stilborn in their eyes.
unclesmrgol on February 17, 2013 at 10:51 PM
No. Hoover was FDR lite. He started off with “tax the rich” and tariffs — and FDR doubled down.
unclesmrgol on February 17, 2013 at 10:52 PM
They were not excluded from the immigration bill — they were included in the immigration bill — and excluded from immigrating.
Whatever Coolidge felt about Asian immigration (“America must be kept American”) — he signed the bill into law.
unclesmrgol on February 17, 2013 at 11:07 PM