'COOLIDGE' A New Book by Amity Shlaes; 2013

Review by

Sampson Iroabuchi Onwuka'

'Coolidge' is a new book by Amity Shlaes focuses on the achievement of the life of Calvin Coolidge from his junior years at Plymouth Notch, Vermont, to his reign in Massachusetts as both Lieutenant Governor and Governor of the State of Massachusetts. She draws from those early years in Vermont and reign as Massachusetts Governor to demonstrate how the  Presidency of Calvin Coolidge from 1923-1929 of these United States could be understood. That some of the characterization of the President, as perhaps a specialist in cut back spending is a function of the man's Presidency, yet the argument may take a new form if we add the limits of the Presidential Power under Woodrow Wilson.

According to her, "Coolidge made virtue out of inaction", citing familiar words from Coolidge that "It is much more important to kill bad bills than to pass good ones", that the congress should "Give administration a chance to catch up with legislation." The author tried to show the records of Coolidge in passing 'Revenue Tax' 1924, 'Indian Citizenship Act' sometime later and 'Radio Acts'. All these Acts including Coolidge unwillingness to spend seem to have helped the contract the role of Government in US and seem to have been an acquired taste from his years in the American Rail Road Industries.

From an exercised mind on Coolidge and the Age of Depression, this book show no signs of an expert on the subject. It writes for an audience unfamiliar with the subject - as if to lead them to a new idea. Not that we fail to come out convinced on the author's academics, but she seem to pay lip service to darker issues associated with Coolidge. It is not unkind to compare the role of FDR in the War with those of Coolidge in peace times. But how peaceful was Coolidge 20's when the word Communist was hardly a learned syllable but was gaining international reputation that both the assault in Shanghai of pro-Communist faction and the bloody counter insurgence of both 1922 and 1927, sent China into a whole new territory.

It is true that the 1920's was an era of prohibition but the censorship of wine and beer houses did not translate into the culture of free economy or chime the dichotomy of liberal involvement of the Government. In a essence, there is no time in the History of the Americas that gangsters ruled America than the 1920's. We may or may not see this as an outcome of minimum government involvement, but we cannot pretend that Hoover who challenged these gangsters -  beginning with his trumpeting of unlawful oil drilling activity on 'Government land', to the increase on Border patrol and Government spending on Military and Police that we began to see a whining down of cartels in Opium and illegal bunking of naturally resources. 

In this circumstance and judging from the incident of the later years, if not in respect to Hoover but others like FDR, it would be hard to conceive of Coolidge or a President like Coolidge who was as capable as FDR, to pursue the 'do-nothing-policy' of Adam Smith in the guise of Free Market. It surely, would have been hard to conceive of 'do-nothing-policy' at a time when for instance the Nazis, were polluting half of Europe. Politically, Coolidge was strongish and terribly educated at that, but in terms of the neutral meter of a populist capitalist empire like the United States towards domestic as international affairs - the economy vel non, the policies of the President from 1923-1929 didn't exactly match the man.

What we know from facts of history is that under Coolidge, who is perhaps no doubt a capable attorney and who brutally put down striking opposition in Massachusetts, did not do so much help to forestall the rise of racially discharged groups such as the KKK in the 1920's which culminated in their Pride match on Washington D.C in 1928. This group, KKK, contrary to all theories, were however not the only hate group operating in the 20's in the United States, but at least they took new roots in the fuller view of the wider Americans and at an age when more than once, the party had been disbanded.

At this period in many parts of Europe, including the fore mentioned Germany, a certain sect of human society were also shivering over the clouds and troubled waters of a new party.

It may be true that the Tulsa Race Riot of 1921 occurred when Coolidge was Vice President, but it doesn't save from blame since both the Police, the District Attorneys and the leading potentates in Tulsa or on Federal Assignment, actually did anything to the perpetrators.  But of course, these are tedious extensions of the matters arising from the do-nothing tradition which should or should not be attributed to Coolidge. It is common sense, however that the prevalence of Race Riots in the 20's ended with the arrival of Hoover, but the man who did anything of use in racial profiling of officers in the Army was FDR, although Taft was the man behind the execution of the project.   

                                                                  II

There is no quarrel over the 'this' and 'that' of  Coolidge's past but the psychology innuendo of a life developed from scarcity is not a masterpiece for any age. There is also a problem of the length of the book, that if she is willing to write a book of 576 pages, it matters seriously that the first 300 pages should not be wasted on stories about the Coolidge's past and upbringing. That her book is reputed to have 4 star is had to comprehend, that from what we read in her book, at least by personal doing on her 'Coolidge', the book is hardly a 3 star.

However, it is common sense to suggest that if an Amateur had written such a book, the whole morose introspection on notional U.S economy leading to the Depression which inveighed with reasons on Hoover, will amount to nothing. The biting sarcasm is that the author is an expert on the subject, yet she succumbs to the polarizing indices from Coolidge to Hoover and even in one instance misdirects Coolidge comment to Mellow to Hoover.

The best that can be said about the author for a start is that she write for instance a new graduate on the subject but with the velocity of an accomplished Novelist.   

That as from facts as from her 'Coolidge'-, Coolidge was for Free market and minimum Government intervention. It was Coolidge Bull that that galvanized the more radical shift towards Government spending, it was Hoovers' and began in 1929, eight months into his office. To be sure, the book is not about Hoover and to be clear on Hoover, he was responsible for some of the gullible offenses of Taxes and Tariff in his regime as President and it was his responsibility to steer the country from the problems that the Americans were facing. But such acquired opinion, only lames in the light of the fact that Hoover also expanded the role of Government and initiated a recipe for the New Deal, especially Farm Subsidy.

It is not surprising that the three primary statues, the security Act of '33, Securities Act '34' and Securities Act of '44, was made in respect to the problems associated with Free Market. The bang on "full disclosure" on the activity of the securities, time of scheduled disclosure, merit review, all took place as reaction to   

                                                               III

In one short sense, it is possible to argue that Amity Shlaes is not an Economist. But this is not the central issue from the book, for sure, there is a huge gap in the treatment of Coolidge's Economic side despite her numbers, but on the tussle that one perceives her Psychological analysis of Coolidge - who is quite central to the Depression - as more important than the Economic problems, then the book achieved its aim. It may also seem true that author Amity Shlaes is for Free Markets, and may be leaning towards the Austrian School of Economics but Adam Smith's popular dispatches on Free Market better surmises the 'do nothing' approach of the President.

To be fair, we not deny that the Austrian School as championed by Ludwig von Mises helped to stabilize European markets for a while in the 19th century. This school includes, Henry Hazlitt, and Murray Rothbard. Of Course they were other such as August Hayek and Joseph Schumpeter, but these men were purer but original members of the Austrian School and nearly all of them did not believe in Government expansion and Goodwill spending. From Von Mises we learn of "A sound currency tied to Gold" out of which he argued that Europe needed a sound system to help distribution of income and enhance the staying power of European Economy through saving. In any event, the rationale of Moises and other members of the Austrian School is that "free market" involved some government responsibilities but too much of it, and this view of sound currency tied to Gold ultimately drove the four leading European economies to bind their currency to gold, and when these European nations including Britain experienced problems of any sort with their economy it paralleled U.S market, in that if Britain, Germany, or Europe as they say sneezed, America caught Cold.

This was common from 1870-1914 or reconstruction era and it was also a period of the Gold Rush in California and in South, which in times of the demands for Gold in Europe as equal to money, America, particularity California was their final destination. It is not impossible to exaggerate that the Shift from Europe to America, for no other incident was particularly instrumental in the transfer of people and intellectual resource-power from Europe to America than the Gold rush of the late Reconstruction Era, but then, there was the Pogroms in Russia and its May Laws of 1895. In essence, either the faith on gold which misplaced in the 19th century or that gold misplaced European faith, but as the migration continued to America including Chinese who will be decimated in time, until America began to appeal to all asunder. This was the era the these gentle men, FDR, Hoover, and Calvin Coolidge were born, and the respective last was at the threshold of the Old America, the other was transition handle, the first Championed a new America.

From this era, it may also seem that America who like Europe, placed a measure of Gold to their Dollar was already catching up to the World Powers and was in fact ahead by the end of the 1900. When the Reconstruction ended and with that came also the Federal Reserve System in 1915. But from the end of reconstruction, America has already started to expand, and while Europe choked Africa in names of Commerce, Colonization, and Christianity, American resorted to building industries in America and throughout North America with lessons from reconstruction and engineering experience from the Civil War, such that as Europe depended on goods from the Africa and Asia, America deepened its local resources. The end result was currency stability managed through gold and America was already breaking the barrier long before the Great Depression. The Central Crux of Coolidge was these years, how immigration that brought Europe to America, brought the Old to the New.        

Adam Smith 'Wealth of Nations; 1776', was believer in an Invisible hand controlling the markets, that the markets may experience bouts of disappointment and ups and downs, but it somehow repairs itself. He also mentioned that "the invisible hand" somehow set prices and wages according to the market. It is taken that this return of the markets to certain form or average is not different from 'mean reverting' but with the invisible hand goes to the theory of a divine force, that if we can allow it to function will naturally fix the market. The invisible hand the unknown and in many ways than one the 'demand' side and in some circle until Keynes, it was central banks and their Chairman. Coolidge was aware of this theory since he worked in the Rail Roads and saw the role of the Banks and the Bonds market in expanding the economy, that price was inversely correlated to bond yield and with rates at one all time low, such price was increasingly sensitive. People were better off with stock market, or for the fact that the Federal Reserve under Benjamin Strong bought much of the Bond from Treasury, meant that stocks prices were high since Bond was proving expensive.

Benjamin Strong (Big Ben I) was also concerned about the full market participation of the investing crowd and the money in circulation, and was the first or among the first to have mentioned that the Fed will be buying until when the market level up to certain and was concerned with the need to keep money in circulation even it means spreading the money from Helicopter. The Helicopter Ben as he was called, as reiterated by Milton Friedman and Anna Schwarz; 63' A Monetary History of the United States; 1867-1960' was in many ways the Architect of the 20's bull. In fact themes from Irving Fisher 'Money Illusion' 'Stock Market Crash and After' 'Theory of Interest' to Keynes many publication including the 1936 classic 'The General Theory of Employment, Interest and Money' all has the hallmarks of Benjamin Strong.    

Coolidge, faced with the departure of the Big Ben 'Benjamin Strong' and the rise of the Kuln, Loeb, and Co, as the Trust, and Andrew Mellow as Treasury Secretary, half her level in economics would have started from here, that the Feds action of buying into the bond, kept inflation low, but forced the gap between the Government Spending and Low Taxes to converge and above placed enormous faith on Stock market. But by the time, Hoover arrived, at the time that Feds Chairman, Strong, had succumbed 1928 to Tuberculous, the world was no longer at ease and the clearing house which was now overhaul with oversea investment tethered on the verge.

From the money side, the first and early things that can be said about Coolidge, must and must matter. That one, he was  from his early years a Rail Road man, and within the rising rank of his group, he was no stranger to the politics of the Bond Market, which as any body could tell tanked in the 1870-1914, reconstruction.

But there was something else, if we are going to get anyone their money back via the Bond, and keep the rates low, the stock market must maintain a certain momentum. If futures rates were higher than forward, the sensitive bias is positive. 

This level is the stuff learners and younger students of money.  

Peter L . Bernstein; 96, summarized an argument like this, that “production fell in 1930 by 9.3% and 1931 by 8.6%”, and the “...very bottom, in June 1932, GDP was 55% below its peak 1929 peak, even lower than it had 1920...” That “Total dividend paid by publicly held companies were cut on nineteen occasions between 1851 and 1929....”  

If we compare the dividends from publicly traded companies from the 1871 at the beginning of the reconstruction to 1915 at the birth of the Federal Reserve, the returns will show a loss by more than 30%, largely because of the Bond Market which performed higher than the Stock. If we add the benefits from 1914 of these public traded companies, most economist and economic historians will agree that these companies had a slashed dividend of more 40%, yet many of them did not manage to shed the stock market Bull from 1921 through 1929.

In fact, the statistics from 1929 at the beginning of the dive of the Stock prices downwards and the somewhere in 1933, publicly held companies from a number of sources will show that these companies has about the same number of losses as the years leading to the Great-Depression Era economies.

Here we may begin to look at the assumption in her book very clearly, for sure, the main event in Coolidge is not his Psychology but his Economic views. After all, Coolidge was the man who coined the saying, "...The Chief business of the American people, is business....".

Notionally, market power of banks may increase so also preferred factor with financial institutions and holdings, but the lack of general supervision and lack of specialty banks such as IMF or World Bank in the 1920's, placed a big burden on the Government who failed to deliver in the years leading to depression and the in depression era and after. In reality, the Depression Era was no such the problem of productivity since Government was activity spending, it was a matter of Deflation which Keynes mentions was primarily caused by fall in wages and demand. Yet the fall in production did not affect the country in the years preceding the Crash, it was the new tariff embargo and control of human activity of American soil, that placed accountability on Companies who from expenses to IRS income illegally operated under the radar, that the Psychology from a badly managed economic decade eventually correlated the unhealthy economy ridden to price fluctuation. Free market and lack of general oversight forced Value out of the market in the 1920's, that many European countries developed their own value along the currency which they still tied to Gold. The relationship between spot and forward rates is usually determined by interest rate of two countries, and since Europe was placing too much faith of high rates and from Gold ridden to Rothschild and Kuhn, it was a problem for the U.S Assets and for commodity prices. The fall of 1929 was a consequence of that age of doing nothing Presidents and Irving Fisher citing that a Plateau in market was reached knew what he was talking about.