Benjamin
Franklin: “The way to wealth, if you desire it, is as plain as the way
to market. It depends chiefly on two words, industry and frugality. That
is, waste neither time nor money, but make the best use of both.”
Shlaes, Amity. The Forgotten Man (p. 24). HarperCollins. Kindle Edition.
Mellon, true to form, had focused on allowing businesses to work on their own, which to him meant reducing taxes.
Shlaes, Amity. The Forgotten Man (p. 31). HarperCollins. Kindle Edition.
He did not see taxation as a moral matter. Taxes were a practical thing: a tax was a price. And one could only charge “what the traffic will bear,” as he put it, drawing on a metaphor from his own railroad freight days. When a government overtaxed, it hurt itself, for it got less revenue. Taxes that were too high, Mellon noted, simply were not paid.
Shlaes, Amity. The Forgotten Man (p. 31). HarperCollins. Kindle Edition.
In this period, the first half of the 1920s, both Mellon and Hoover published books codifying their philosophies. The austere Mellon gave his an unexpectedly populist title: Taxation: The People’s Business. In it he laid out the theories of his fellow Scot Adam Smith to justify his program of continued tax-cutting.
Shlaes, Amity. The Forgotten Man (p. 33). HarperCollins. Kindle Edition.
The government is just a business.” The lesson of the book was simple: people responded to tax rates, and lower rates might promote growth in the 1920s and pull in higher revenues for government. The whole idea of overtaxation was to Mellon un-American. “Any man of energy and initiative in this country can get what he wants out of life. But when initiative is crippled by legislation or by a tax system which denies him the right to receive a reasonable share of his earnings, then he will no longer exert himself and the country will be deprived of the energy on which its continued greatness depends.” When failure attended business, after all, noted Mellon, “the loss is borne by the adventurer.”
Shlaes, Amity. The Forgotten Man (pp. 33-34). HarperCollins. Kindle Edition.
...municipal bonds were bad because they deprived the Treasury of revenue. The better philosophy was to lower rates over all. Mellon also disliked other tax loopholes,
Shlaes, Amity. The Forgotten Man (p. 34). HarperCollins. Kindle Edition.
Hoover gave his book a title similar to Mellon’s— American Individualism. But the text, like Hoover’s work, was distinct. Hoover rejected the old brand of absolute individualism and disdained laissez-faire economics as “theoretic and emotional.” Private property, he also said, was “not a fetich” for Americans.
Shlaes, Amity. The Forgotten Man (p. 34). HarperCollins. Kindle Edition.
Hoover: America must move toward regulation: “Our mass of regulation of public utilities and our legislation against restraint of trade is the monument to our intent to preserve an equality of opportunity,”
Shlaes, Amity. The Forgotten Man (p. 34). HarperCollins. Kindle Edition.
The supposedly cold Coolidge heartily approved of Mellon’s tax policy, saying that “the wise and correct course to follow in taxation and all other economic legislation 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.” Mellon, with Coolidge’s support, reduced the national debt from $ 24 billion to $ 16 billion. He did away with the excess-profits tax— it was wrong to say that profits were excessive anyhow, when they created the work. Negotiating past the progressive George Norris, he put through the Revenue Act of 1926,
Shlaes, Amity. The Forgotten Man (p. 37). HarperCollins. Kindle Edition.
more importantly, was the average real wage, solid evidence that a tax cut for the rich was also good for Henry Ford’s worker. The after-inflation earnings of employees grew 16 percent from 1923 to 1929. Revenues continued to flow in just as the treasury secretary had so pointedly predicted. Mellon was managing to balance the budget and to reduce the staff of tax officials at the Bureau of Internal Revenue.
Shlaes, Amity. The Forgotten Man (p. 38). HarperCollins. Kindle Edition.
Matters were different when it came to Hoover. Coolidge understood the political success of the beneficent hand, but he did not believe in it. Man himself, he would write toward the end of the 1920s, was after all “but an instrument in the hands of God.” More and more Coolidge was thinking of God— in 1924, his son Calvin got a blister on his toe playing tennis on the South Lawn of the White House, and in those prepenicillin days, the blister brought on an infection that killed him. This tragedy made Coolidge brittle, impatient, and irritable, and one of the people who irritated him was the persistent Hoover, so different from Mellon. Where the president eschewed technology, Hoover was always playing with it. Coolidge also hated Hoover’s tendency to react to news with grand, intrusive plans. Could not Hoover see where some of his rescues had led? At one point later on, the minimalist president Calvin Coolidge concluded quite simply that “that man has offered me unsolicited advice for six years, all of it bad.”
Shlaes, Amity. The Forgotten Man (p. 38). HarperCollins. Kindle Edition.
Beyond grief lay Coolidge’s accurate perception that in the 1920s Mellon’s and his own policies were yielding the good that the men had predicted. Today we estimate that the highest level of unemployment under President Coolidge had been 5 percent in the year he was elected. From there it dropped to 3.2 percent in 1925 and then into the twos and ones. Citizens could afford all the new products. There was nothing bubbly about the potential for productivity gains.
Shlaes, Amity. The Forgotten Man (pp. 38-39). HarperCollins. Kindle Edition.
with Edison, now just on the brink of retirement. It contained the following exchange: NYT: “Do you think President Coolidge will be renominated and reelected?” Edison: “He ought to be.” Still, evaluating the specific worth of Mellon’s contribution or Coolidge’s reticence remained hard for most. Only a few favored Mellon over Hoover as Coolidge did. To the rest of the country Mellon was a distant figure. To the farmers, he was even the enemy; his gold standard kept grain prices low.
Shlaes, Amity. The Forgotten Man (p. 44). HarperCollins. Kindle Edition.
Coolidge was increasingly perplexed. As Hoover later recorded, the two had discovered that there was no getting around the essential difference in their philosophy: “One of his sayings was, ‘If you see ten troubles coming down the road, you can be sure that nine will run into the ditch before they reach you and you have to battle with only one of them.’… The trouble with this philosophy was that when the tenth trouble reached him he was wholly unprepared, and it had by that time acquired such momentum that it spelled disaster.”
Shlaes, Amity. The Forgotten Man (pp. 45-46). HarperCollins. Kindle Edition.
Coolidge now had a problem. If he didn’t want Hoover to supplant him, he didn’t necessarily want to stay either. “It is difficult for men in high office to avoid the malady of self-delusion. They are always surrounded by worshipers. They are constantly and for the most part sincerely assured of their greatness,” he would write shortly after leaving the presidency.
Shlaes, Amity. The Forgotten Man (p. 46). HarperCollins. Kindle Edition.
Coolidge made a thoughtful argument against long service in the job, noting that “the presidential office is of such a nature that it is difficult to conceive how one man can successfully serve the country for a term of more than eight years.” Too often, the man became the office. He did not want to be such a man.
Shlaes, Amity. The Forgotten Man (p. 46). HarperCollins. Kindle Edition.
That same summer, the summer of 1927, Coolidge issued a short statement: “I do not choose to run for president in 1928.” There was coyness there— what if there were no choice, and candidacy were foisted upon him? But with each month it became clearer that he would indeed leave the presidency after his five and a half years. It was another of Coolidge’s acts of refraining, his last and greatest. And again, it opened a door for Hoover.
Shlaes, Amity. The Forgotten Man (p. 46). HarperCollins. Kindle Edition.
Coolidge
on Hoover: At one point later on, the minimalist president Calvin
Coolidge concluded quite simply that “that man has offered me
unsolicited advice for six years, all of it bad.” He had a nickname for
Hoover: “Wonder Boy.”
The differences between Hoover and
Coolidge: The only party as alienated as they were was Calvin Coolidge,
who at first bridled at Hoover’s request that a battleship be placed at
his disposal so that he might cruise the coast of Latin America in the
long interregnum. Take a cruiser, Coolidge said, “it would not cost so much.”
Shlaes, Amity. The Forgotten Man (p. 81). HarperCollins. Kindle Edition.
Shlaes, Amity. The Forgotten Man (p. 38). HarperCollins. Kindle Edition.
In
1925 Coolidge summed up his philosophy, telling the American Society of
Newspaper Editors that “the chief ideal of the American people is
idealism.” But he also offered a counterpart to that: “The chief
business of the American people is business." It was the latter line
that was remembered, and proved too moderate for some. They shortly
altered it to the now better-known phrase “the business of America is
business.”
Shlaes, Amity. The Forgotten Man (p. 20). HarperCollins. Kindle Edition.
Coolidge
heartily approved of Mellon’s tax policy, saying that “the wise and
correct course to follow in taxation and all other economic legislation
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.” Mellon, with Coolidge’s support,
reduced the national debt from $ 24 billion to $ 16 billion. He did
away with the excess-profits tax— it was wrong to say that profits were
excessive anyhow, when they created the work.
Today
we estimate that the highest level of unemployment under President
Coolidge had been 5 percent in the year he was elected. From there it
dropped to 3.2 percent in 1925 and then into the twos and ones. Citizens
could afford all the new products. There was nothing bubbly about the
potential for productivity gains.
Shlaes, Amity. The Forgotten Man (p. 39). HarperCollins. Kindle Edition.
Benjamin
Franklin: “The way to wealth, if you desire it, is as plain as the way
to market. It depends chiefly on two words, industry and frugality. That
is, waste neither time nor money, but make the best use of both.”
Shlaes, Amity. The Forgotten Man (p. 24). HarperCollins. Kindle Edition.
This was the era of democracy; the era of the republic was passing. “In fact,” Roosevelt said, “in these last four years, we have made the exercise of all power more democratic; for we have begun to bring private autocratic powers into their proper subordination to the public’s government.”
Shlaes, Amity. The Forgotten Man (p. 299). HarperCollins. Kindle Edition.
For, as Roosevelt put it, “evil things formerly accepted will not be so easily condoned.”
Shlaes, Amity. The Forgotten Man (p. 299). HarperCollins. Kindle Edition.
What the interviewers observed especially was that Muncie’s citizens were unhappy at receiving two opposing lessons from governments. The first might be labeled: “Saving— the Private Man’s Only Safeguard.” The second was “Spending— the Nation’s Hope.” The citizens had trouble squaring those two ideals, and the contradiction made them anxious.
Shlaes, Amity. The Forgotten Man (p. 332). HarperCollins. Kindle Edition.
Was a liberal merely a left progressive? Or was a liberal someone who believed in liberalism in the classic sense, in the primacy of the individual and his freedom? Willkie railed against Roosevelt’s “philosophy of distributed scarcity.” And he argued, speaking of both the United States and Europe, that it was “from weakness that people reach for dictators and concentrated government power… “American liberalism does not consist merely in reforming things. It consists also in making things. The ability to grow, the ability to make things.” Redistribution was a loser’s game: “I am a liberal because I believe that in our industrial age there is no limit to the productive capacity of any man.” Growth, not government action, would lift the United States out of its troubles: “I say that we must substitute for the philosophy of distributed scarcity the philosophy of unlimited productivity. I stand for the restoration of full production and reemployment by private enterprise in America.”
Shlaes, Amity. The Forgotten Man (pp. 374-375). HarperCollins. Kindle Edition.
