This is Mises weekends with your host Jeff Deist. Alright, ladies and gentlemen. Welcome once again to Mises Weekends. We’re very, very pleased to have a special guest this weekend Amity Shlaes who is a good friend of Bob Luddy, one of our board members. Many of you probably know her writing and outlets, like Wall Street Journal and Forbes. She has apparently four New York Times bestsellers, including The Forgotten Man, which our listeners will, will enjoy hearing about as a bit of a revisionist history of the Great Depression period. But, today our topic relates to Calvin Coolidge, someone upon whom she is an expert. She sits on the board of the Calvin Coolidge foundation, but she’s also written a book about him just entitled Coolidge, which was again a best-seller in the New York Times, and it really goes into the man in some ways that most libertarians probably have not. So, that said, that mouthful said. Amity Shlaes, thanks so much for your time today. Oh, Thank you! I’m glad to be here. Well, I want to start with some big-picture stuff. It’s interesting how today, especially in our presidential politicians we, we expect omniscience and we expect hubris almost. I wonder if her, if being taciturn, almost hurt Hillary Clinton? In other words, Calvin Coolidge was very unlike the archetype of a politician today. In other words, he displayed humility rather than hubris. Well, that’s right, and he wasn’t alone. I mean this came out of an epoch that was quite common in the period basically the American ethic, which is that we serve. Whether it’s our church, or our business, or our family, or our community, It’s a focus of service. So, I’d like to think of a country that’s all Boyscouts or tries to be. It’s interesting though that he, the time that he served in the White House here he has wedged between these two progressive avatars. In between Woodrow Wilson, whom a lot of libertarians hate, and an FDR. And he, in many senses, he was the antithesis of both of them in his, his sense of what government could do. Well, touché. The, I think, can you have a triple sandwich? He sandwiched among Theodore Roosevelt, Woodrow Wilson, and Franklin Roosevelt. So, Theodore Roosevelt was the first modern activist he said ‘get action’, he actually said that and he was quite impulsive and believed in jumping in and making decisions late as the mood struck him. Wilson had a theory or two especially regarding international relations. But, basically also believed in activism and that through action we changed the world. If we need a world treaty so that we won’t have a war again everyone has to sign it. He didn’t look to individuals, but rather to signature statesmen and groups. And after a Coolidge was Franklin Roosevelt who focused almost exclusively upon groups, and giving them political rewards, and thought of America as a series of coalitions of groups who needed action, political and economic, in order to thrive. Coolidge is completely different. I mean if he, if he were a sport he’d be a windsurfer, because the windsurfing looks so easy it’s all about holding still. When you try the inaction of windsurfing, you find It’s very hard on your core, right? He, he held still and therefore the country moved forward like a sailboat or a windsurfer. And you know what? He demonstrated, or reminded us, is that inaction is tough when you’re a chief executive because everyone always pushes the button and wants you to act. Coolidge was quite conscious of this. He said ‘I’ve never been hurt by anything I didn’t say.’ He pointed out that ‘when rocks come rolling down the road at you nine out of ten rolled into the ditch before they get to you.’ He actually told his father, while he was still mayor of Northampton, Massachusetts for Smith colleges, and his father was a lawmaker in the capital of Vermont Montpelier, that ‘it is better not to sign a bad law. It’s better to stop or block a bad law than to sign a good one.’ That’s pretty strong to view yourself as a blocker. That’s, that’s, that’s quite in a different sense that we use it today, and to see blocking is full of merit. Well, the other interesting thing about him, of course, is that World War One was still hanging in the air and he used the term ‘post-war normalcy.’ Talk a little bit about, about that and how we don’t seem to be able to reach that in America anymore. Wars don’t end. Wars don’t and that’s right, and if you look I, we don’t have a chart today. But, if you look at what happens to government’s after Wars and some of our friends have done this, oh quite well. What you see is the government usually gets a ‘new normal’ which is a bigger government after each war. So, the government gets bumped up with each war, and then bumps up some more with the next war, and there’s never a full-scale retreat. Coolidge restrained government more than other leaders following a little war, in his case World War one. And he did that consciously or what’s fantastic about him Especially now when you look at what lawmakers are able to achieve. What presidents are able to achieve is that Coolidge served 67 months and that would be from 1923 to 1929. And when he left government, the government was actually smaller than when he came in and, being a sophisticated audience, our listeners will say ‘Oh, Amity, is that per capita? Is it real?’ No. of course It’s real. It’s also nominal, but in addition he didn’t just restrain the increase, Coolidge. He actually shrank the government. So, you don’t need to do that per capita stuff. He shrank the government. How did that happen? and that goes back to his 50 vetoes. He vetoed like crazy, Which is tough to do. It makes you unpopular. So, just to clarify, he left office with a nominally smaller annual federal budget than when he entered is, is this correct? That is correct. Wow! Well, you know coming out of World War One, the Federalist website published this great speech he gave at the American Legion in 1925 where he actually did use the term ‘America first.’ But then he draws it out a little bit, and he talks about not viewing ourselves as superior to the rest of the world. So, give us sort of your thoughts of his foreign policy. Well, Coolidge that’s a wonderful speech and you want to think particularly you know where it came from in the period where the Ku Klux Klan, still existed in meaningful form, was still killing people. Where he was with the more Restrictionist Party, Coolidge the Republican Party. They were, his party was, for immigration restriction. It was not I would say as close to the ‘Kook’, I mean obviously it’s not as close to the Ku Klux Klan, as the Democratic Party, but it was a Restrictionist Party, and in that speech Coolidge, Coolidge said, I’m going to read it to you “Whether one traces his Americanism back three centuries to the Mayflower, or three years of the steerage, is not half so important as…” ‘what we do when we are here, because once we are here now’ I paraphrase it, but this is what he said; “we are all now in the same boat.” Anyone who lives in America is in the same boat. And that’s a wonderful worldwide signal from Coolidge. America is a model where everyone is in the same boat. We don’t have social classes here, that’s the point he’s making in terms of foreign policy. Coolidge was not a neocon, he was not an intervener, he pretty much believed that staying out of conflict was the best thing for the United States. He got tangled in a few latin-american conflicts, even one in Nicaragua with the people who later became the Contras. But, he didn’t jump in with two feet the way say Theodore Roosevelt had. But, this wasn’t just a policy thing, this almost seems intrinsic in his worldview that governments, government power should be used judiciously and that includes trying to remake or fix other parts of the world. Of course! Remember the U.S. is an island at that time. If, there weren’t airplanes in his life and his presidency did you know he saw Charles Lindbergh crossed the Atlantic and celebrated that, but there weren’t routine flights. So, he thought well maybe that’s okay that it’s an island and let’s see what we can do here domestically. He was, of course, an enormous non-intervener. Let’s mention some of the things he vetoed – farm subsidy twice, and that wasn’t easy because he’s from an agricultural place, Vermont, right? Cheese. His father had a cooperative cheese factory in Plymouth notch. And we hope your listeners will visit us there, because the cheese factory is still open and the cheese is pretty good. Wow! Anyway, so you might imagine an Ag situation and an Ag situation it where Ag isn’t easy. You know what people say about Vermont? They say that the farmers there farm rocks. It’s very hilly. It’s not happy soil, It’s not good for wheat. It had a terrible downturn when the Midwest was discovered- that is in the 19th century- and everyone saw how much easier it was to get grain out of an acre of land in the Midwest or, the, or farther west. The people of Vermont went away to the Midwest, and eventually also to the south, and to California. So, Coolidge well-understood agricultural hardship. And yet he vetoed twice Agricultural subsidy because he thought once the trend started it would never end, and he was right. There’s some funny descriptions of interactions with Coolidge. One was when some farming Lobby came to see him and Coolidge was rather silent, right? And he had a lot of, he would use the pause in his, in his rhetoric so he would say something like, He did, sorry he did say, he said when they asked ‘well farmers never have made much money’ (pause) ‘Don’t suppose they ever will’ (pause) ‘Don’t suppose there’s much the government can do about it.’ You want to contrast that with the action plans both parties have had vis-à-vis farmers today. Another area of serious vetoing with pensions. He foresaw what entitlements would do to the United States, and he opposed that, and therefore Coolidge vetoed Veteran pensions, which were sort of the beginning of what we would call Social Security. And that was tough too, because the veterans had only one leg. Remember we’re very close to World War one, they didn’t have penicillin, their wives didn’t work, they needed pensions. But, Coolidge just said this trend will be too much for our government to bear; and therefore, I’m going to veto this legislation. Well the other thing that there was, of course, fairly new at the time, was the central bank – the Fed had only been created about a decade earlier. Talk about what was then a very new concept, even monetary policy. Give us his views or his thoughts on money. Well, he didn’t have a lot, and he wasn’t sure though it was his job to take care of money. Remember, for example, the Securities and Exchange Commission didn’t exist yet. So, who regulated the stock market in New York? Well, New York State. (Mmm) With the Martin Act, with various laws. So, when it came to the Treasury and the Fed, we had a different Fed law from what we have today. The Treasury was more involved but, Coolidge believed in delegation and he had the world’s best Treasury secretary, the world’s best debt rearranger, the world’s best refinancer, Andrew Mellon at the Treasury Post. So, whatever Andrew Mellon said Coolidge thought was fine, and most of us would as well that you know the era has been remembered, that era has been criticized as being one that was too easy. That is interest rates were so low, that therefore, therefore, therefore there was a bubble, and then a bubble pops, and the Great Depression, and we hear that a lot well. What were those really easy interest rates that United States had, they were over 4%. (Hmm) So, what are what are we today? So, you know, in Coolidge time except for the stock market, and the real estate market in Florida, it was hard to find huge inflation. You could, some people even see deflation and things went pretty well. When the stock market got too high which was towards the end of the Coolidge presidency when I’m, I’m trying to remember. But, I believe when he left office the Dow was about 280. Coolidge was disturbed, and he thought there’d be a crash. But, there had been many, many crashes four or five in his lifetime without any great depression. Right, they had the panic, and a snap back, and Coolidge had no reason to believe that wouldn’t repeat itself. One thing that’s worth knowing is that when the crash happened, of course under Herbert Hoover and Hoover acted more like a Democrat than a Republican, well as far as response to the crash, he believed in easing. He believed in spending to stimulate, he believed in pushing wages upward in a downturn. So that the worker will spend and stimulate the economy. He believed in heavily regulating Wall Street and also chastising it for a downturn. These were not concepts that were Coolidge – that Coolidge would have agreed with or understood. Isn’t it great though that he had this sort of homespun wisdom on money? He has this great quote that you have given in a Forbes article, “Inflation is repudiation.” They didn’t have this technocratic view of monetary policy. They thought inflation was bad, and they actually thought deflation was good, whereas today, we imagine all kinds of powers at the Fed. Right, they thought deflation was good and they weren’t used to a lot of inflation come. The inflation after World War one took them all by surprise. Coolidge had observed that what the policy was in the downturn of the early ’20s well. Perceiving a downturn – and fearing it – the government raised interest rates and cut the government, cut itself in half. That’s not what we do today. And you know what that terrible downturn of the early 20s went away pretty fast. And it’s the ‘Forgotten Depression.’ Jim Grant even wrote a book called that. So, take from that what lessons you will. Coolidge, I mean in our conversation, Coolidge probably wouldn’t have spoken of inflation so much as of credit. That’s the way they thought of it (Mm-hmm) credit from banks, you know credit in the marketplace, too much credit, too little credit and there’s some merit in that as well. He didn’t know much about the Fed. It was a new entity no one knew what the Fed might do, or could do. You know, this was just the beginning of when we were beginning to think about, what we would call ‘open market operations’ today. Right, but as you mentioned there was no ‘dual mandate. The Fed was a different thing back then and I imagine that he saw it as some sort of backstop – a banker’s bank to, to eliminate troubles, to provide liquidity in a crisis, and not much more than that. And, of course, he was trained in law not, not economics per se. I think monetary policy conceptually was a new thing. Yes, it was a new thing, and I don’t think they dreamed of managing the economy through the monetary. But you’d want to interview Andrew Mellon here. I mean go back and look at that one. In defensive of Mellon, you know a lot of monetary books say of Mellon, well he got too close to England. The head of the New York Fed, Benjamin Strong, which was more influential, then got too close to Montague Norman in England, and it was all about this special relationship, and the U.S., led by Benjamin Strong and in the background Mellon, did too much for England. And all that, that’s nice. I mean, that’s a very interesting book. Lester Chandler wrote it. But, there’s another argument which I think was more central to Mellon, and to, to everyone which is the following: Europe owed the US money. It might go bankrupt, it might default these European nations. Optimal, or at least better, would be to somehow help the European nations to refinance. Right? So, so if you make credit easier for them. They’re less likely to default and set a terrible precedent regarding contracts. That was the thinking, better to refinance than to default, and with that goes easier monetary policy, and interest rates do go down. So, that was very helpful to many European nations where I would kind of, where I would have said or I would complain, is at the same time, the US had tariffs and tariffs hurt the very countries you’re trying to help. So, it was a hypocritical policy seen from, from economics. But, but since the income tax was fairly new and only afflicted the very wealthy higher income earners at the time, didn’t, didn’t Coolidge, like most Americans, have a different view of tariffs than we do now? Because that was the primary source of income to government, Federal government at least. Well, that you’re explaining the political basis for the pro-tariff policy of the Republican Party, but tell that to a German carmaker who’s trying to recover from the Treaty of Versailles (mmm-hmm) You know? He needs to sell the cars to help the country pay the debt, the Weimar Republic is struggling, and we blew them off, no question. You know, no question we blew them off and therefore it became easier for them to succumb to Fascism. I want to correct something I said earlier. of course it was the Sandinistas who were involved in Nicaragua at the time. I don’t want to say what became the Sandinistas Sandino whom the US was concerned about. Well, so by today’s standards, would you, would you term Coolidge somewhat of a protectionist, relative to at least the rhetorically pre-trade GOP of 2018? Not just somewhat, really a protectionist. He was – really all the GOP was – all protectionist. That’s Coolidge’s work it’s, it’s unattractive, but he wouldn’t have been true to his party if he hadn’t been a protectionist and he wouldn’t have been able. I one, one can doubt that he wouldn’t have been, you know, it might have been overridden if he had vetoed protectionism, and, as it happened, the big protectionist laws were before and after him. So, you have for Fordney–McCumber in early 20s, and Smoot–Hawley under Hoover. So, but, Coolidge could have done more to curtail protections. He didn’t. What, what do you think his presidency, what role do you think it played in, in what came after? I mean obviously, FDR was a, was, is a bigger name. He’s considered a transitional president. Whereas, I think a lot of critics would say Coolidge was a placeholder. Why do you think he doesn’t get his due? I’m feeling a little guilty here, I spoke of Coolidge’s work, but not his beauty. His beauty was that he cuts taxes dramatically multiple times in the face of opposition. Bringing the top marginal rate after many battles down to 25 percent. So, that’s below Ronald Reagan and the rate had been over 50% even though the income tax was young in the 20s. It was already a powerful tool, and the Treasury recognized that it’s like getting a new race car for the Treasury to get this income tax, and they wanted to use it. So, with great effort, Coolidge cut the tax back in face of also opposition within his own party. Because, remember, at that time the Republicans were the progressives, and he gets a lot of points for that, and he did it, you know. He waged war to lower taxes the way other presidents wage wars abroad. He bent his energies as he said to the tax cut and it was followed accompanied by, and followed by strong prosperity. So, anyone who studies taxes should have a look at that twenties reform of Coolidge. Please note the statistics of income, which are online. They will show that the government made more money back. We see more revenues than expected. So, supply siders can find some evidence for their argument in the ’20s. About the ’30s the way that we look at presidents is sort of like sports players, like athletes. You know sports stars, we rank them. So, somebody’s topped, somebody else has to be bottom ranking. It’s zero sum; you can’t just have two tops. You’re forced to to make a choice, and since Coolidge was the antithesis of Roosevelt and Roosevelt had to be a hero, Coolidge went down. The evidence that Coolidge’s offers that policies other than Rooseveltians policies have merit, is disquieting to people who want to argue for active government. So, they consciously or unconsciously will, usually unconsciously, will suppress it. And why is Roosevelt so popular? I in ‘Forgotten Man’ my, my book, I talk a lot about this. Well, one reason is he, he had a first class temperament – very lovable, and another was he led our country in a war most Americans believed was necessary. And, he did that well. So, if a president is a war hero and stopped the Nazis, you’re gonna forgive him his econ. Because there’s a general consensus. Roosevelt’s econ wasn’t so awesome and that, that didn’t stop the Great Depression, which went on so many years. But studying Roosevelt must have given you a lot of insights for that book and and I’ll recommend it again to listeners. It’s called ‘The Forgotten Man’, and it is apparently a bit of a revisionist view of the Great Depression. And it’s been attacked by no less than Paul Krugman. Which is a badge of honor for our listeners. Oh, well, I’m very fortunate. I mean the book is taught all over the country. So, I, I don’t have anything to complain about. It wasn’t a bit of a revision, It was a serious revision. And my current book, ‘The Great Society,’ is also a serious revision. But, the econ in it is pretty square econ, it’s just pre-war econ. It’s not, I know that in your world you have wonderful books, perhaps you have Benjamin Anderson economics and the public welfare. The pre-war econ warrants study; it makes sense. You know when people raise wages, That’s nice when people force companies to raise wages, well those companies hire fewer people. That’s absolutely true. Modern econ tends to deny that, so the basic truths are so obvious those were Coolidge’s. And, you know, therefore it’s interesting. Well, I want to finish up just by talking a little bit more about Coolidge the man. This is so great. We tend to think of presidents almost as demigods now and when they leave office they have these big lives. He didn’t have a big life, did he? He just went home to Vermont and he has this great quote that you give. This is so un-Trump like, he said “I do not choose to run for president in 1928.” I mean what a self-effacing guy. Am I understating it? Oh, no, it’s wonderful. Well, I think, you know, it’s always a little bit of indecision when you’re president with the others say I should run, I might. But, I think he is saying ‘this is my choice, and I don’t want it.’ And we, by the way, have a ‘I do choose to run Coolidge Road race’ this fall at Plymouth Notch, and we invite you to travel to the Notch. So that you can experience Coolidge yourself at Saturday, October 6th, 10:00 a.m in Vermont Plymouth Notch a 5k ok hills you get an apple, you get an apple at the local apple festival. We also have the ‘I do not choose to run walk’ for those who choose to walk. So yeah, he did say that and in his autobiography he says It’s, I’m paraphrasing because I don’t have it in front of me, but to the effect that, ‘It’s useful for the American people, even if safeguard, to know that their president is not a great man, that he comes from the people and returns to the people.’ Very different attitude from that of today, whether Democrat or Republican. Today, we treat not only presidents as demigods, demigods and royalty, but we also treat senators that way, or they appear on TV like little demigods. So, what would a different view the Coolidge’s went back to their house which was half of a two-family in 1929. Unfortunately, they couldn’t have any peace because tourists. Coolidge was popular, so tourists came, drove by in their automobiles to see the president on his porch, and eventually the Coolidges had to buy a house. The first house they bought elsewhere in Northampton, which had a fence and a garden, so they’re a bit set back from the Coolidge tourists. Well, all I can say in closing is unfortunately today we insist on electing and running megalomaniacs for public office. Especially presidents. We want people to be able to solve climate change, and Syria, and Ukraine, and stock markets, and monetary policy, and there’s just no humans who are equipped to that. God knows we could use just a quiet competent administrator these days. That said, Amity Shlaes, Thank you so much for your time! Again, she is the chairman of the board of the Calvin Coolidge Foundation, which is actually in the middle of a capital campaign. It’s a big organization raising about sixty million dollars. So, it’s far more active than you might think. And, again, encourage you to check her out on Twitter @AmityShlaes. Ladies and gentlemen, have a great weekend. Subscribe to Mises weekends via iTunesU, Stitcher and SoundCloud or listen on Mises.org and YouTube.