It’s comforting to know that you can still make a Man of the Year cover some 80 years posthumously – thank you, The American Spectator !
80 years ago on this day, Calvin Coolidge devoted his daily column to a subject near and dear to his heart ( as it ought to be to ours), namely, government debt.He scarcely could have anticipated the day when the national government would be debating ever more extravagant debt ceilings. I wonder if his thinking really is so old-fashioned and outmoded or whether we might do well to follow his advice regarding the virtues of thrift and economy.
As the income and earning power of the people decline, due to depression, governmental debts and expenses become a real problem. We have been going through an era when nearly all the public debts except those of the national government have been increasing. The expectation was that the general expansion of business would make it easy to pay them. Now the opposite condition prevails.
Ba retiring and refunding its debt the national government is saving nearly half a billion dollars annually in interest. The only other course would have been more extravagant spending or reduction of taxes. Either one of these would have aggravated the present serious situation of the Treasury.
When money is borrowed by a government or an individual to pay current expenses it means living on capital. If carried far enough, disaster results. When debts are paid it means capital is restored. If carried far enough, prosperity and plenty follow. Some of our municipalities borrowed too much in the day of plenty and are not able to meet their obligations. The national government economized some, though not enough, in the day of plenty and is now able to get credit to take care of the day of adversity.
In his column for April 25, 1931, the former president turned his attention to the question of historical perspective. Of course, popular esteem of his own person and presidency waxed and waned over the years; we are now roughly at that point in time where his era is as distant to us as 1845 was to the readers of his column. While I would be reluctant to characterize the Hoover years as a period when “the country met its difficulties remarkably well”, certainly Coolidge’s own acumen as a statesman is due for a reassessment.
Contemporary opinion is usually too critical and often misdirected. In the perspective of history many of our present seeming imperfections will disappear and the good qualities of our society and government will be more apparent. Before becoming entirely discouraged and hastily deciding everything has so deteriorated that confidence is no longer warranted, it would be well to read some former opinions. Discouraging conclusions are not new. They have continually been expressed even by the able and the thoughtful from the foundation of our republic. As judicially minded a man as Chancellor Kent wrote in 1845, “I think we have at Washington the meanest man, malignant, party hacks and tools that ever were doomed to curse a republic.” Yet the country not only survived, but the government of that day is now conceded to have included some of our most brilliant statesmen.
Sometimes the whole body of the Congress falls into disfavor because of the actions of a few members. The blame lies with the voters who elect undesirable persons. When elected, other members have to work with them.
This republic has a good government. The future undoubtedly will judge this period as a time when the country met its difficulties remarkably well.
In his daily syndicated column Calvin Coolidge Says, the former president remarked on the human quality of ingenuity, so often found in Americans, particularly those of the Yankee variety. While padding his quota of words somewhat with economic statistics, he nevertheless stressed the eternal truth of creativity and ingenuity being innate human qualities that succeed best where the people are free from interference and direction, even when (government) direction is given with the best intentions:
We cannot make any proper estimate of the present or the future without taking into consideration the natural and unconquerable impulse of human nature to improve, produce and progress. Left to itself it will find a way.
A reliable publication recently stated that last year over six hundred new tools were perfected to make the labor of man more effective and more expeditious. The record of new corporationsorganized in the State of New York for the March quarter was over sixty-five hundred. That was thirty-one more than the corresponding period in the previous year. A survey of industrial conditions about the metropolitan area of New York City discloses that four years ago there were thirty-four thousand manufacturing plants with an average of twenty-nine employees.
These accomplishments are not the result of huge aggregations of capital and great engineering skill – they represent the inherent creative energy and ingenuity of the people. This is apparent in every workshop and on every farm in the land. That is the spirit of life. Nowhere has it been so predominant than in the United States. It is a guarantee for the future.
Calvin Coolidge’s daily column of March 13, 1931, had as its theme the then recently held conference of the National Progressive Conference. Apparently at that point, no one was yet aware that the progressive movement asa force in U.S. politics was on its last legs, about to be absorbed into the New Deal Democratic Party of the 1930s. One is struck by Coolidge’s fairness: rather than condemning this gathering of what were after all fairly left-wing characters, he is willing to grant them sincerity, while remaining skeptical about the viability of their programs.
It is notable that Coolidge states as a universally shared viewpoint that the rewards of industry should be “even better” distributed. This alone gives the lie to the standard caricature of him as a materialistic stooge of capitalism. Equally notable is his qualification that this goal will not be reached by “more politics, or more government.” Evidently, Coolidge believed in the invisible hand of markets rather than heavy-handed government intervention to bring about prosperity.
There is no need for hasty judgment on the progressive’s conference held inWashington. Many sincere people attended it. Their assumption that they are better than any of the political parties will do no harm. Apparently they have an ambitious program. They seek to guide all other public officers. Their official members have not always shown great capacity for co-operation. If they now learn to co-operate with each other they later may be able better to co-operate with other members of the Congress.
The conference has accomplished little by naked criticism. Every one knows that the government is not perfect. Almost everyone suspects that it will not be made perfect for some time. Yet we all want to see it improved. We all desire progress, prosperity and an even better distribution of the rewards of industry, although in these we now surpass the world. Very few now believe that these things can be secured by more extravagance, more loafing, more politics, or more government.
The discussion may prove helpful. A reduction of vague ideas to specific proposals usually shows whether they are sound. The formation of a constructive common-sense program for perfecting the country will not be found easy.
In his eminently worthwhile book, “America’s Great Depression” (available as PDF at the Mises Institute website), Murray N. Rothbard characterizes 1931 as “the tragic year” – the year in which international crises as well as Hoover administration misjudgments pushed the country after an optimistic start to the year, ineluctably into the Depression.
Poring over the draft of his daily newspaper column on Feb. 23, 1931, Calvin Coolidge settled on a topic always near and dear to his heart – taxation. And his comments again seem strangely timely even today:
One of the most astounding spectacles is the complacency with which people permit themselves to be plundered by extravagant government expenditure under the pretense of taxing the rich to help the poor. The poor are not helped but hurt. Taxes have to be collected by the rich before they are paid. They are collected from all people. A higher tax means real wages are lower. The cost of living is higher. The chance to work is less. Every home is burdened. Its value is decreased. The quality of the food, clothing and shelter of the children is reduced.
The Congress and the legislatures know these results of extravagance. The people may not fully realize them but they suffer from them. Legislators do not want to be extravagant. Minorities drive them to it. The people who pay and suffer give little vocal support to economy. They make no threat of political retaliation against those who are taking their money, increasing their cost of living, removing their chance to work. Those who demand appropriations inspire all the fear. Aggregate state and town debt, national and local taxes are increasing enormously. Unless the people resist vigorously and immediately they will be overwhelmed.
In his daily column of Feb. 18, 1931, a scant 80 years ago today, Calvin Coolidge reiterated his belief that the repayment of debt must take precedence over other other considerations, such as further reducing taxes. It is a message that Republicans might do well to heed today.
We still have a small body of thought that considers the national debt has been reduced too fast. It is claimed that the surplus should have been applied to a reduction of taxes. By the same reasoning it would be proven that taxes should be kept down and money borrowed to meet running expenses. It was a great saving to the taxpayers to reduce the debt when the value of the dollar was low. It takes about twice as much cotton, corn, wheat, copper and other materials now to make the same payments as it did two or three years ago.
If it is argued that liquidation of the debt disturbed financial conditions one answer to that is that for every dollar the national debt was reduced state and local governments increased their debts over a dollar.
Besides these reasons any one who knows the enormous pressure on the Congress by organized minorities knows that if the revenues had not been used to reduce the debt they would have gone into additional expenditures rather than tax reduction. Great interest charges have been eliminated. Sound finance calls for payment of debt and makes the revenues of each year meet the expenditures.
On a contemporary note, Nick Gillespie and Veronique de Rugy detail in their very worthwhile article, The 19 Percent Solution, that the main driver of a veritable spending explosion projected by the CBO over the next decades is interest spending, which will grow from 1.4 percent of GDP (or $204 billion in 2010 dollars) to an astonishing 41.4 percent of GDP (or $27.2 trillion in 2010 dollars) over the next 70 years. Even in the short run, it will balloon to 7 percent of GDP by 2030. As every businessperson knows, deficit spending today triggers an avalanche of interest down the road. Coolidge was right that debt reduction is the best strategy to save taxpayers money in the long run.