Essays, Papers & Addresses

Coolidge and American Business


by Robert Sobel ©1988

Robert Sobel taught history at Hofstra University for more than forty years. He is author of more than two dozen books on American economic and business history, including Herbert Hoover and the Onset of the Great Depression and Coolidge: An American Enigma.


Part 1. Coolidge and the New Deal Historians

Consider the following quotation, spliced from two of Calvin Coolidge’s public addresses. It is to be found in Arthur Schlesinger Jr.’s The Age of Roosevelt: Crisis of the Old Order: “His speeches offered his social philosophy in dry pellets of aphorism. ‘The chief business of the American people,’ he said, ‘is business.’ But to Coolidge, business was more than business; it was a religion; and to it he committed all the passion of his arid nature. ‘The man who builds a factory,’ he wrote, ‘builds a temple … The man who works there worships there.'”

That certainly sounds as though Coolidge was comparing business favorably to religion. The second speech was to the Amherst Alumni Association in 1916, when Coolidge was one month into his first term as Lieutenant Governor of Massachusetts. Here is the full paragraph:

I agree that the measure of success is not merchandise but character. But I do criticize those sentiments, held in too many respectable quarters, that our economic system is fundamentally wrong, that commerce is only selfishness, and that our citizens, holding the hope of all that America means, are living in industrial slavery. I appeal to Amherst men to reiterate and sustain the Amherst doctrine, that the man who builds a factory builds a temple, that the man who works there worships there, and to each is due, not scorn or blame, but reverence and praise.

So it turns out that in this instance, Coolidge is talking of the dignity of labor, not at all drawing a comparison between the workplace and the church.

As for “the chief business of the American people is business,” one might understand why, if taken alone, such an utterance might be interpreted as meaning that Coolidge believed America a land of pure and unalloyed materialism. In January, 1925, Coolidge delivered this speech, entitled: “The Press Under a Free Government,” before the American Society of Newspaper Editors. There was nothing unusual about this; Coolidge delivered scores of such addresses before special interest groups. This one was better reasoned than any but a handful of his talks, and marked by several felicitous phrases. In the middle of the speech, the President said:

There does not seem to be cause for alarm in the dual relationship of the press to the public, whereby it is on one side a purveyor of information and opinion and on the other side a purely business enterprise. Rather, it is probable that a press which maintains an intimate touch with the business currents of the nation, is likely to be more reliable than it would be if it were a stranger to these influences. After all, the chief business of the American people is business [emphasis added]. They are profoundly concerned with producing, buying, selling, investing, and prospering in the world. I am strongly of the opinion that the great majority of people will always find these are moving impulses of our life.

What the President appeared to be saying was that the press would do well to pay some attention to the many ways in which business is conducted in America, since most Americans care deeply about such matters, which are “moving impulses of life.” Even so, one might understand why, if taken alone, such a paragraph might be interpreted as meaning that Coolidge believed America was and should be a land of pure and unalloyed materialism. A skeptical person might also have concluded that he approved of this stance.

The New York Times reporter who provided the lead for the story thought otherwise. The next day’s newspaper headlined the speech this way: “Coolidge declares Press Must Foster America’s Idealism,” with one subhead being: “In Address to Editors, He Warns Them Against the Evils of Propaganda,” and another, “Financially Strong Journalism, He Says, is Not Likely to Betray the Nation.” In the second paragraph of his story on the speech, the reporter wrote: “President Coolidge declared that the cause of liberty was dependent upon the freedom of the press, saying that under a system of free government it was highly important that the people could be correctly enlightened.” There was no mention in the newspaper story about “the chief business of America….”

The newspaperman covering the speech arrived at the conclusion expressed in the headline based on what Coolidge said immediately after that so-often paraphrased statement. The President went on to assert that individuals who fear the press will betray the American people are mistaken. “American newspapers have seemed to me to be particularly representative of this practical idealism of our people.” “The business side of journalism is important.” to be sure, but “it is not the main element which appeals to the American people.”

It is only those who do not understand our people, who believe our national life is entirely absorbed by material motives. We make no concealment of the fact that we want wealth, but there are many other things we want much more. We want peace and honor, and that charity which is so strong an element of all civilization. The chief ideal of the American people is idealism. I cannot repeat too often that America is a nation of idealists. That is the only motive to which they ever give any strong and lasting reaction. No newspaper can be a success which fails to appeal to that element of our national life. It is in this direction that the public press can lend its strongest support to our Government. I could not truly criticize the vast importance of the counting room, but my ultimate faith I would place in the high idealism of the editorial room of American newspapers.

So in the end Coolidge appears to be saying that while he knows newspapers are businesses and want to show profits, he had confidence such matters would not sway reporters and editors.

What Coolidge expressed that day was a thought he explored often in his speeches. On July 5 of the following year, speaking in Philadelphia at the celebration of the 150th anniversary of the Declaration of Independence, he said:

We live in an age of science and of abounding accumulation of material things. These did not create our Declaration. Our Declaration created them. The things of the spirit come first. Unless we cling to that, all our material prosperity, overwhelming though it may appear, will turn to a barren scepter in our grasp.

On June 11, 1928, in a speech dealing with the budget Coolidge put it this way: “Prosperity is only an instrument to be used, not a deity to be worshipped.” Still, the phrase, “the chief business of America is business,” (most of the time the word “chief’ is dropped, making it sound even more pro-business) remains the one scholars, textbook writers, and journalists fall back on to characterize the man and his views toward business.

Now try this one, from William Leuchtenburg’s The Perils of Prosperity: “Coolidge had the small-town man’s awe of the successful big-city businessman. As Governor he had looked up to Senator Murray Crane, the Massachusetts paper tycoon; as President he looked up to Andrew Mellon, head of the aluminum monopoly. In the State House he had been shepherded by Frank Stearns, the Boston department store executive later known as Lord Lingerie. When he entered the White House, Coolidge installed William Butler, a Massachusetts textile manufacturer, as head of the Republican Party; at the 1924 convention, Henry Cabot Lodge sat unnoticed and unconsulted.”

Crane was different from others in that he was scrupulously clean. Coolidge inherited Mellon from Harding, and of course held him in respect, as did many Americans at a time when he was called “the greatest Secretary of the Treasury since Alexander Hamilton.” To identify Mellon as head of the aluminum monopoly, meaning Alcoa, is somewhat disingenuous. Mellon’s place in business history derives more from his leadership of the Mellon Bank, and in addition to Alcoa, the bank controlled Gulf Oil and other major corporations, which goes to indicate the writer’s unfamiliarity with the man and his period.

Anyone who knows about Coolidge’s relationship with Stearns knows that there was never any question as to its propriety: Stearns admired Coolidge, worked for him assiduously, and asked nothing in return. After Coolidge’s death, he disappeared from public life. One must wonder why that business about “Lord Lingerie’ was thrown in. Butler was Crane’s lieutenant, and it was only natural for him after Crane’s death to assume some place in the Coolidge government as well as Lodge’s place in the Senate upon Lodge’s death. Why should Coolidge consult Lodge? Coolidge was in the Crane camp, and Lodge was a rival. Is the author suggesting that just because they both came from Massachusetts there had to be an affinity?

One final quotation, from John Blum, one of the authors of a best-selling college text, The National Experience

Coolidge was devoted to the dominant values of his time, to business, materialism, elitism, and their corollaries. If only the rich were worthy, it followed that government should beware the counsels of the majority. Since poverty was the wage of sin, government should not tax the virtuous rich in order to assist the unworthy poor. And since the rich best understood their own interests, government should not interfere with the businesses they ran, though it should help promote them at home and abroad.

This is offered without a scintilla of evidence. I don’t know how Blum came to some of these conclusions. Not tax the rich to assist the unworthy poor? In 1920, 15.4 percent of total personal income taxes were paid by those who earned less than $5,000. By 1929, it was down to 0.4 percent. In the same period the percentage of total taxes paid by those who earned more than $100,000 went from 29.9 percent to 65.2 percent. In his 1929 budget address, Coolidge noted that in 1928, 54 percent of federal receipts had been derived from income taxes, up from the 42 percent of 1923. Earlier he had asserted that tax cuts would boost income tax collections as a result of their stimulative effect on the economy–an argument later used by John F. Kennedy.

Finally, what is to be made of Blum’s statement that Coolidge believed “government should not interfere with the businesses they ran, though it should help promote them at home and abroad.” As Governor of Massachusetts, Coolidge supported wages and hours legislation, opposed child labor, imposed economic controls during World War I, favored safety measures in factories, and even worker representation on corporate boards.

Did he support these measures while president? No, because in the 1920s, such matters were considered the responsibilities of state and local governments. As for promoting business interests at home and abroad, or course Coolidge did. So did all American presidents. The founding fathers were quite explicit in their objective to leverage political freedom through economic liberalism “‘The spirit for Trade which pervades these States is not to be restrained,” George Washington wrote to James Warren in 1784. Jefferson, the supposed believer in an unadorned agrarian America, actually thought of farmer-businessmen, not the simple yeomen. Europe was short of grain and starting to import large amounts of cotton, which suggested the eventual emergence of what today would be called “agribusiness.” Toward this end Jefferson advocated building canals and land freeholding and wrote to Washington, “Since all the world was becoming commercial, America too must get as much as possible of this modern source of wealth and power.”

And so on through the presidencies. Lincoln gave financial and other support to railroads. Herbert Hoover set up the Reconstruction Finance Corporation to assist businesses and banks during the Great Depression, and Franklin D. Roosevelt, in the NRA, at the beginning of his first administration, suspended the antitrust laws and urged businesses to come together to set prices, maintain wages, and divide markets.

One might argue that there have been periods when big business was seen as predatory and very much in need of control. One of these would be the Progressive Era. Did government reject the notion of aiding business in that period? The Department of Commerce and Labor, established in 1903 by Theodore Roosevelt and then in 1913 as the separate Commerce Department by Woodrow Wilson, was supposed to assist American businesses in their overseas ventures. Roosevelt and Wilson are not ordinarily perceived as supporters of American business interests abroad. President Clinton’s Secretary of Commerce, Ron Brown, was renowned for his ability to get foreign contracts for American businesses, and while in China in 1998, Clinton arranged for Chinese orders of $2.5 billion for the likes of Boeing, General Electric, and IBM. Would Blum consider such behavior improper?

To cap things off, in a sidebar, Blum offered a quote from Walter Lippmann’s Men of Destiny, in which he carefully truncates the journalist’s statement about Coolidge to switch its meaning. On the preceding page is a picture of a smiling Coolidge, waving his hat. The caption reads: “Calvin Coolidge in smug delight.” How Blum (or his picture editor) came to this conclusion is not known.

What do Schlesinger, Leuchtenburg, and Blum have in common? They are of the same generation, born between 1917 and 1922. Each entertains fond memories of the New Deal and the national unity that marked American society during World War II. Their careers really began in the post-World War II period. The memories of Roosevelt were fresh, they were New Dealers in their youths, and devoted to the man and what he represented-the New Deal struggle against the Great Depression and the battle against fascism in World War II. That Roosevelt was a great president is something impartial historians should recognize. To be a great president one must live in times when greatness is demanded. Washington had the burden of establishing the new nation, Lincoln had to face the possible dissolution of the Union, and Roosevelt had the Depression and the War. FDR restored confidence in a nation which had been badly shaken. This is the view that animates what often is termed “The New Deal School of History.”

Moreover, Roosevelt changed the very nature of the presidency and the relations between the states and the federal government. After Roosevelt all presidents wanted to be seen as “strong.” Coolidge, the last president of what might be considered the “republican” as opposed to the “imperial’ age, warned against those who wanted to be strong presidents, since the stronger the president, the less freedom the people would have.

Even though there were some negative treatments of Coolidge in the 1930s and 1940s, the true beginning may be dated to the publication in 1957 of Schlesinger’s Crisis of the Old Order. Leuchtenburg’s The Perils of Prosperity was published the following year. Blum’s biography of Teddy Roosevelt had appeared in 1954, but he soon was writing about FDR as well. By then memories of Coolidge had faded, and those who had voted for him a quarter of a century earlier either had been converted to the New Deal or died. By then, too, the Republican responsibility for the Great Depression was annealed in the public conscience. The fact is that in this period the New York Stock Exchange was chartered in New York, and was deemed not involved in interstate commerce. New York governors had investigated Wall Street on several occasions and forced reforms, but no American president had done so. Coolidge asserted he had no control over what happened on Wall Street and that it was the obligation of the state’s governors to act if reforms or curbs were needed. There were no protests to these statements, which were part of the wisdom of the time. New York’s governors said and did nothing. Who were they? Alfred E. Smith and Franklin Delano Roosevelt.

Roosevelt is not their only hero. Woodrow Wilson fills the bill nicely, and in fact Blum is one of the leading historians of the Progressive Era, who has written fulsomely of Wilson, as have the others. The scholar-president had a flurry of legislation in his first term and the Great Crusade of World War I in the second. He was a shattered hero in the view of the New Deal School, whose dreams for peace and justice were smashed, but fortunately were revived by the man who served him as assistant secretary of the navy, FDR.

Given this template, what is one to make of those who came between Wilson and Roosevelt, who reversed Wilson’s policies and preceded Roosevelt? Clearly they have to be at best misguided tools of the “predatory interests,” namely big business, who caused the stock market crash of 1929 and the Great Depression that followed. The fact is that in the 1920 GOP primaries business funds went to the candidacies of Frank Lowden and Leonard Wood, that Coolidge never received meaningful financial support from businesses for any legislative or executive favors offered, and that Hoover’s associational philosophy and service under Wilson made him quite different from Harding and Coolidge. Indeed, the policies he advocated and put into place bore more resemblance to the early New Deal than the Harding-Coolidge years.

The negative images of Coolidge, as a tool of business, appeared in the late 1930s but more important, after World War II. It was not in biographies and most scholarly articles, but rather in textbooks and works dealing with the New Deal. The books and articles on Coolidge written in his lifetime were for the most part complementary, with some exceptions, such as Oswald Garrison Villard’s The Nation. In 1936, when the New Dealers were blaming the GOP’s leaders for having caused the depression, the Republicans nominated Governor Alf Landon of Kansas for the presidency. Landon was honest, decent, and colorless. Hoping to draw upon memories of a better time, the Republicans advertised Landon as “The Kansas Coolidge.” Even then, they knew that the American people harbored favorable memories of Coolidge. It didn’t work. Roosevelt won in a landslide.

However, these negative views of Coolidge are not confined to the New Deal historians, but rather pervade the discipline. One might wonder why this is so. To appreciate it, a brief exploration of the training of historians is needed. Professional historians rarely are generalists. One makes a reputation in the field through specialization, writing books and articles on a narrow band of subjects in which the historian, if fortunate, intelligent, and capable, becomes known as an authority. I am, for example, a business historian, but I can’t stop there. The area of business I concentrate on is financial history. Narrow it further. The history of financial markets? All financial markets? No, only American, and in the 20th century at that. Now ask yourself, how worthwhile is my opinion on the New England colonies in the 17th century? On the history of the Spanish missions? On the Indian Wars? On American foreign policy toward Australia at the turn of the century? You get the idea. I may know how to obtain information, synthesize it, and at times may have some worthwhile things to say on these subjects. But everything? Of course not. So a colonial historian setting out to write a high school text will quote Coolidge as having said something about business, without bothering to go much further. After all, would you expect him to go into the files to find out if Roosevelt actually said, “The only thing we have to fear is fear itself’? Everyone knows that he did. No wonder Coolidge receives the reputation of being a tool of big business. These historians are usually not malicious or mendacious. They simply do not know any better than to rely upon the experts–like Schlesinger, Leuchtenburg, and Blum.


Part II. Coolidge’s Thoughts Regarding the Relationship between Goverment and Business

Speaking to the New York Chamber of Commerce in November, 1925, Coolidge said:

New York is an imperial city, but it is not a seat of government. The empire over which it rules is not political but commercial. The great cities of the ancient world were the seats of both government and industrial power. The Middle Ages furnished a few exceptions. The great capitals of former times were not only seats of government but they actually governed. In the modern world government is inclined to be merely a tenant of the city. Political life and industrial life flow side by side, but practically separated from each other. When we contemplate the enormous power, autocratic and uncontrolled, which would have been created by joining the authority of government with the influence of business, we can better appreciate the wisdom of the fathers in their wise dispensation which made Washington the political center of the country and left New York to develop into its business center. They wrought mightily for freedom.

To Coolidge, the wedding of government and business would lead to socialism, communism, or fascism, and certainly alter the nature of American life. Yet Coolidge saw no difficulties in government aid to commercial aviation, grants for road building, or the protective tariff, once known as “Mother of the Trusts.” What he railed against was direct aid to business rather than assistance to infrastructure. It was a common enough thought at the time, shared by moderate Democrats and Republicans alike. Herbert Hoover certainly believed this. Writing in his Memoirs about Secretary of Agriculture Henry C. Wallace, who supported the McNary-Haugen bill which would have aided farmers directly, Hoover said, “My colleague, the Secretary of Agriculture, was in truth a fascist, but did not know it, when he proposed his price-and distribution-fixing legislation in that bill.”

Coolidge initially opposed aid for those who suffered as a result of the Mississippi flood of 1927. In those texts that deal with the flood this attitude often was attributed to an indifference to suffering. It might be instructive to go to the reasons he offered at the time.

It almost seems to me as though the protection of the people and the property in the lower Mississippi that need protection has been somewhat lost sight of and it has become a scramble to take care of the railroads and the banks and the individuals that might have invested in levee bonds, and the great lumber concerns that own many thousands of acres in that locality, with wonderful prospects for contractors.

In this way, Coolidge indicated that a prime reason he opposed the measure was not that he wanted to withhold assistance from individuals, but from business interests that would profit from such aid.

Of course, presidents and other politicians have been friendly to those interests which supported them financially or in other ways. How may one explain this? One view might be that the politicians were “bought.” Republicans oppose legislation to punish the tobacco interests–which contribute heavily to Republican candidates. President Clinton is opposed to limiting legal fees in class actions and is strongly opposed to the voucher system in education, perhaps reflecting the major financial support he received from legal and public education lobbyists. But is this really the way this situation came about? It might alternately be argued that today’s Republicans and Clinton were not bought, but rather received backing because contributors liked their ideas. In other words, the tobacco, legal, and public education people backed them because they felt their professed policies served the interests of their constituencies. This is a more likely possibility. It is also likely that businessmen during the 1920s applauded Coolidge because they felt his approach was good for them, and for the rest of the country as well. Too often historians assume the former rather than the latter. For example, in 1904, trustbuster Theodore Roosevelt ran against Alton Parker, the most conservative Democrat nominated since the Civil War. Business, led by J.P. Morgan and E.H. Harriman, contributed heavily to the Roosevelt campaign. Why? Because they feared Socialist Eugene V. Debs and knew they could come to terms with a man like TR, who distinguished between “good” and “bad” trusts.

The Literary Digest scanned the nation’s newspapers on September 29, 1923, barely two months after Coolidge took office, trying to determine whether there was any theme to the new administration.

Monroe had his era of “good feeling;” Jackson, as one of our editors recalls, his shibboleth of “local self-government;” we associate “Union” with Lincoln, the “square deal” and the “strenuous life” with Roosevelt, the “New Freedom” and “making the world safe for democracy” with Wilson; and, as Harding was consecrated to the restoration of “normalcy,” so the correspondents tell us, President Coolidge is pledged to the preservation of “stability.”

The writer then proceeded to quote from stories around the country, most of them in newspapers that were Republican and in which that theme appeared. Coolidge was supposed to have told reporters that he stood for “stability, confidence, and reassurance.” He added that his administration did not intend to “surrender to every emotional movement seeking remedies for economic conditions by legislation.” The New York Times took this to mean that Coolidge believed that “stability” would assure the business community that it could make plans without worrying about sudden shifts from Washington. The New York World thought for example, that Coolidge would not alter tariff rates unless absolutely necessary, and would not “rush to the front with proposals to Congress that would tend to undermine stability.” This, reflected The Philadelphia Inquirer, “is the kind of assurance that will be appreciated. The Philadelphia Public Ledger called the policy of stability “good hard sense.”

This country has come to a considerable degree of “normalcy.” What it needs now is a stabilization of its favorable situation and confidence that this will continue. Wages are very high and unemployment is negligible. Labor is, indeed, very well off. Business is good and industry is humming, The farm hysteria is hardly as vocal now as it was thirty days ago. Outside the wheat states, the farmer is going along very well. He had ample credit–too much in fact, according to his best friends. The all-around condition of the country is sound and warrants much optimism. Far-reaching changes, such as are constantly sought by the political devil doctors are the last thing this country needs.

The judgment that the country had calmed down from the turbulent postwar period and was growing economically was largely accurate. Many of the heated debates of that time had either ended or were muted. Given his temperament and inclination, Coolidge was a near-perfect person to preside over a period of stability. So it was, and would be so long as he remained in office.

Coolidge dispatched his final annual message to Congress on December 4, 1928.

No Congress of the United States ever assembled on surveying the state of the Union, has met with a more pleasing prospect than that which appears at the present time. In the domestic field there is tranquility and contentment, harmonious relations between management and wage earner, freedom from industrial strife, and the highest record of years of prosperity. In the foreign field there is peace, the good will that comes from mutual understanding, and the knowledge that the problems which a short time ago appeared so ominous are yielding to the touch of mutual friendship.

Few denied the essential truth of the statement, and certainly not businessmen. Note that Coolidge was commenting on the state of the union; he did riot claim he had been responsible for these happy circumstances.

Coolidge died in 1933, and the nation mourned. Toward the end of his life he told several people he felt he no longer fit in with his times, and perhaps this was so. He certainly would not fit in with the temper of politics we have today, which is all the worse for us. In the months that followed scores of prominent individuals chimed in with their reactions to Coolidge’s death and assessments of his accomplishments as president. They ranged from the adulatory to the unpleasant, from the eloquent to the clumsy. Al Smith offered one of the clearest and fairest assessments of the man:

I had a great liking and respect for him. Beneath a chilly, reserved and dignified exterior, he was keen, kindly and entirely free from conceit, pompousness, and political hokum. We are often told politics in a republic produced only demagogues. Calvin Coolidge was a most successful and popular politician, but he had nothing of the demagogue in him.

Coolidge was not a great president, thought Smith, but rather belonged

… in the class of Presidents who were distinguished for character more than for heroic achievements. His great task was to restore the dignity and prestige of the Presidency when it had reached the lowest ebb in our history, and to afford in a time of extravagance and waste, a shining public example of the simple and honest virtues which came down to him from his New England ancestors. These are no small achievements, and history will not forget them.

Calvin Coolidge was a salty, original character, an unmistakable home-grown, native American product, and his was one of those typically American careers, which begin on the sidewalks, or on the farm, and prove to the youth of the nation that this is still the land of unbounded opportunity.

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