Coolidge

by Amity Shlaes

In Mellon, Coolidge was finding the cabinet member who shared his moral outrage at expenditure. In Coolidge, Mellon was finding a skilled legislator who might help him realize an old dream. Others observed the strength of the connection. People said of the pair that they conversed in pauses.

Coolidge believed higher taxes were wrong because they took away from men money that was their property; he believed lower rates were good precisely because they encouraged enterprise, but also because they brought less money. Low rates starved the government beast.

Mellon thought there was more to it all. He believed in what he and a few others referred to as “scientific taxation.” Scientific taxation was simple, Mellon’s team explained. Most people simply stuck with their arithmetic. They took the new tax rate, multiplied it by the old number of sales, and reckoned their loss. Their arithmetic did not allow for the possibility of more sales. Mellon thought lower rates could yield more revenues.

How did a business decide what price to charge for freight? The answer was a shipping company always aimed to charge, as the railmen put it, “what the traffic will bear.” If the company raised fees too high, people would not use your company or your railroad to ship their goods. And sometimes a big cut in rates brought many more customers. Such a large rate cut would therefore cost only a little revenue. Sometimes you could lower a freight rate and even get more revenue than you had at the higher freight charge. Then you not only made up what’d you lost on paper but gained extra revenue. In any case, what mattered in all such readjustments was the change on the margin. You wanted the price, the freight rate, to be just low enough that someone would ship an additional box or an additional container, rather than choosing to wait another day.

one might cut tax rates and get more revenue, not less. Top rates, the surtax on top of the base, or normal tax, mattered especially.

Efficiency, Mellon taught, could be improved elsewhere in the tax code. Currently the code allowed full deductions for business losses; Mellon thought only a portion of the losses should be deductible; the traffic of business could bear that, in his judgment. Dividends went untaxed; Mellon wanted to treat them and some other forms of unearned income as taxable, and at a higher rate than wages. States were borrowing at rates that alarmed Mellon, enjoying the advantage of the tax protection for municipal bonds. Money that could be invested in private companies was going to those states. That protection ought to be reduced. One way was to pass an amendment to the Constitution ending the special tax status of all new municipal bonds, so that cash in the future might flow to private-sector companies. It was important to protect the old bonds because they were contracts, but by doing this prospectively, one could divert capital back to companies.

One of the topics that would have to be addressed in the speech was immigration. Gompers and several other union leaders enthusiastically backed congressional plans to restrict immigration. Domestic workers would confront less competition and enjoy greater leverage with employers.

At one hospital in Washington, Mount Alto Veterans, a dental aide was even caught stealing gold allocated for veterans’ teeth.

One man, the new director of the Veterans Bureau, General Frank Hines, had been paid $4,800 a year for two hours of work.

Forbes’s bureau had paid nine times the appraised value for a site in Excelsior Springs, Missouri, and then built a hospital on such shabby plans that no veterans were being served there.

The president applied the same scrutiny to the household budget as he did to the federal budget. Later Mrs. Jaffray described her shock. “The president of the United States for the first time took a personal interest in the actual management of the White House.”

Did the dress in the painting have to be so red? Could it not be another color? The artist told Calvin the dress had to be red; contrast was important because the red set off the white dog. If contrast was necessary, Coolidge countered, why not dye the dog red?

The Mellon Plan, he said, was not to help an individual millionaire; it was to make capital available for all.

unusually, spent some extra cash when they ordered an appropriation of $300,000 to improve conditions in the detention quarters on Ellis Island, including adding new equipment for the nursery and kindergarten for detainees, electric wiring for the station, and 350 new beds to replace the flimsy wire-bottomed cots.

Bryan wrote to ask if Coolidge would consider debt forgiveness for Europe. Coolidge could not agree to breach of contract. That seemed immoral. But he could agree that one partner might in a new contract agree to easier terms; that was what Mellon was doing with foreign debt when he could.

Stone, likewise, made his own calls at the Justice Department. He shifted personnel around; removed William Burns, the head of the Bureau of Investigation; and curtailed wiretapping,

The scientists at the Chemical Warfare Service had noticed that workers who spent days with chlorine suffered from few colds. They now recommended gassing patients to reduce their colds. Secretary of War Weeks had already tried chlorine gas for his cold and found it beneficial. For forty-five minutes, Coolidge inhaled in an airtight chamber; afterward, he declared himself better. In taking the cure, he strengthened a fad: 146 members of the House of Representatives and 23 senators also tried it.

If Congress overrode an immigration veto, he would suffer twice an indignity that Harding had never suffered.

The opposition was quick to crow, not only at the victory but also in mockery of Coolidge’s tactic of cutting first. “If the Republicans had possessed courage they would have created a deficit and then we would not have a bonus,” the Democrat Carter Glass told a ladies’ luncheon in Philadelphia on May 27.

He warned, however, that the precedent of an increase for the post office staff was itself troubling: “an organized effort by a great body of public employees to secure an indiscriminate increase in compensation should have the most searching scrutiny.”

The great glooming presence that overshadowed the conference was the Ku Klux Klan: some Democrats wanted condemnation of the murderous group written into the party platform, but others were blocking it; in New Jersey, across the river, Democratic Klansmen held a rival rally. The Klan hung like a cancer on the party’s future. That year, the convention and its shadow were nicknamed a “Klanbake.”

“I am for economy. After that I am for more economy. At this time, and under present circumstances, that is my conception of serving the people.’’

Coolidge would not give up until he completed his own campaigns: the campaign to push the government back—back from spiritual life, back from commerce, back from new sectors in the economy—and find prosperity and peace.

the Lincoln Highway. The Lincoln was not a road that had been manufactured by the federal government; it had developed organically, as town after town put up money to pave a leg of it.

The recent agreements that Treasury and Dawes had arranged were tough, but the fact that they had been made would help Great Britain in its own campaign. And now the United States was negotiating with other countries. As its wealth and gold reserves grew, it might be able to afford easier terms to desperate foreign governments than it was giving Great Britain. The United States’ budgeting was a virtuous circle that would benefit Europe as well.

reform. Scientific taxation theory actually functioned: with lower rates you get more activity and therefore more revenue. When you dropped tax rates, people kept more of their business and sometimes did more business. Take away the car tax, and people would buy more cars. Lower rates meant that the economy would grow even faster than the revenues grew.

There was still a danger. The tax cuts could also have the opposite of the intended effect, making the government bigger. If the tax cuts yielded the full coffers Mellon promised, those coffers in turn would tempt Congress, Republican or Democratic, to spend more.

Now a voter wrote to complain that a black man was competing for a nomination to run for Congress. Coolidge saw to it that his reply was published. He wrote, “I was amazed to receive such a letter. During the war 500,000 colored men and boys were called up under the draft not one of whom sought to evade it. A colored man is precisely as much entitled to submit his candidacy” as any other citizen.

“I believe in budgets. I want other people to believe in them. I have had a small one to run my own home; and besides that, I am the head of the organization that makes the greatest of all budgets, that of the United States government. Do you wonder, then, that at times I dream of balance sheets and sinking funds, and deficits, and tax rates, and all the rest?”

The most important thing now was to free the individual, for, as Coolidge said, “It is our theory that the people own the government, not that the government should own the people.”

Weather Bureau would cease sending out postcards carrying forecasts, a tradition for nearly half a century; the newspapers nowadays carried such material

Post office bags could be made of plain gray canvas, not the traditional white with blue stripes: savings, $50,000 a year.

The Washington Post’s editorialists were outraged at both the newfangled demand for testimony and the line of questioning: “A Senator, acting in the equivocal capacity of counsel for another Senator under judicial investigation, is virtually saying to the Attorney General: I have the power to prevent you from becoming a member of the Supreme Court.”

“If income taxes are so excessive that a man of ability finds he must work more than three days a week for the Government and has but three days a week for himself he will become discouraged and decide that the result is not worth his effort.”

“Whether one traces his Americanism back three centuries to the Mayflower or three years to the steerage is not half so important as whether his Americanism of today is real and genuine. No matter by what various crafts we came here, we are all now in the same boat.”

“Pay your debts while you can,” he admonished. In desperation, the opponents of the legislation began to quantify the share of the tax break that the wealthy would claim. This, they were discovering, was an easy way to frame an opponent. General, across-the-board cuts of any progressive structure always favored the rich, since they had been paying more under progressivity to begin with. Senator George Norris pointed out, “Mr. Mellon himself gets a larger personal reduction than the aggregate of practically all the taxpayers in the state of Nebraska.” So he did. But Mellon paid more tax than the citizens of that state as well.

Content with his work, Coolidge in this period finally indulged in two purchases, one for himself, one for the country. He hired a sculptor, Bryant Baker, to go to Plymouth and make a bust of Colonel John. Baker was a distinguished artist and had sculpted both Norwegian King Olaf as a child and Great Britain’s King Edward VII. Coolidge took the bust to his study, so that he could see John and not merely hear his voice on the phone.

The U.S. flag by the president’s desk obscured the politicians present from some angles. Cameramen asked the president for permission to remove the flag. But Coolidge, who normally obliged the press men, this time denied permission. The Stars and Stripes had to be part of the scene; they came before individual politicians.

By lowering rates on the wealthy, the Treasury had actually collected more from them.

Word was that someone had checked with the Bureau of Internal Revenue as to whether a prize like Lindbergh’s might be subject to income tax. Embarrassed, Mellon’s staff had to report that the Orteig Award was subject to the levy. “It’s just something that can’t be helped,” said an anonymous bureau spokesman. “When we tax the money paid to a beauty contest winner, I don’t see how we can pass up the Lindbergh Prize.” Lindbergh owed $1,233.75 by the graduated code. Instantly, though, donors were there, offering to foot Lindy’s bill. In a cable, a Dallas man, William E. Easterwood, Jr., offered to pay the amount so that “the kid can have every cent of the prize money.”

Looking around at the ungraded roads, the Coolidges saw that their visit was a crucial one for the South Dakota economy. With automobile tourism just beginning, it was important for a place like the Black Hills to get its bid in early.

The crisis in Mexico had driven the U.S. ambassador there to resign and write a furious report: the Plutarco Calles government was waging a Soviet-style war against churches and confiscating U.S.-owned properties.

donning a Sioux headdress of feathers in Pine Ridge, South Dakota, and being initiated into the tribe by a direct descendant of Sitting Bull.

If you totaled the veteran payments with the military costs and the amount paid in interest on debt mostly generated by wars, you could see that about three-fourths of the federal costs had to do with war in one way or another.

Stimson was disarming Nicaragua by buying up rifles from the rebels. Rather than intervene in national conflicts, the administration often found itself helping to arm or disarm one side or the other in a conflict. That seemed an acceptable proxy. Lawyering or brokering was also the great skill of Coolidge’s secretary of state, Frank Kellogg, a skill Kellogg had begun to amass all the way back in the days when he had read the law and prosecuted great antitrust cases. One reason Coolidge liked Kellogg was that Kellogg was the old-fashioned kind of lawyer, like himself and Sargent and Lincoln: men who had read the law, and worked in the country before the city.

Along with the gift came a plea. Currently the United States had no representative in Addis Ababa. The prince regent hoped that the United States would send an ambassador. Ethiopia was asking for a U.S. presence because the United States “has no selfish political interest.” This was an indirect way of telling Coolidge what he already knew: that the Ethiopians were concerned that the British and Italians were colluding against them.

The writer Sinclair Lewis was working on a novel mocking Coolidge, targeting the president and his admirers as the ultimate in empty-headedness and banality.

the writer Sinclair Lewis had finished his book, which he titled The Man Who Knew Coolidge. This was an attack on middle-class culture generally, and Coolidge specifically.

The inventor of the flashlight, Conrad Hubert, had died in 1928 and had asked in his will that three-quarters of his fortune be given away by a committee made up of a Catholic, a Protestant, and a Jew. Governor Al Smith was selected as the Catholic; Julius Rosenwald, the founder of Sears, who also sat on a Mount Rushmore board, as the Jew; and Coolidge as the Protestant.

The magazine had asked him to write ten articles for the high sum of $2,000 each, but the magazine had published only six. Summoned by the ex-president to meet at the hotel, the editor knew what question would come, and it did: “I made a contract with you to write ten articles at $2,000 each and I wrote them and you published six, and you haven’t published the other four.” Yes, came the editor’s reply, with the predictable response: the magazine had paid for all ten. “But if they aren’t worth publishing,” Coolidge said, “they oughtn’t to be paid for,” and he pulled out a check for $8,000. The move was deliberate, and deliberately Coolidge: somehow he had not pleased the other party. He gave the money back even though the contract did not say that he had to. The point, for him, was a simple one: it was important to show people that you cared about what they expected, so that they would want to do business with you again.