At least since Karl Marx, but even earlier, we know also that economic dangers play a motivating role in history. While a doctrinaire Marxist claims economics as the chief or even sole engine of history, it is less controversial to hypothesize that economics are among the main movers.
In 1920, the United States found itself enduring economic hardship. Although the war had been over for more than a year, its lingering effects included massive debt and an anemic trade relationship with Europe. But the war was not the only reason for a weak economy. Damage had been done to the nation’s financial system even prior to the war. The Wilson administration had eagerly implemented the sixteenth amendment, violated the property rights of American citizens by cruel and bitter taxation. Woodrow Wilson had also intervened into the sphere of personal choice by private citizens: the Federal Trade Commission, allegedly organized to protect consumers, reduced competition between businesses and thereby increased prices; the Federal Reserve System exerted control over the economy, reducing choice and creating risks which would eventually lead to the Great Depression.
While it is easy to condemn these actions in hindsight, it must be remembered that some members of the “progressive movement” - the movement which instituted these actions - were perhaps sincere, if gravely mistaken, in their desire to do something helpful for the average American. Not all of them were cynically manipulating the laws and the economy in order to gather power to themselves.
The net result was that by mid 1920, the ordinary citizen was not enjoying the hoped-for blessings of peace. The war was over, but the economy was crippled. In fact, America’s involvement in the war had been direct for only one year, and indirect involvement had been, if anything, profitable for the American economy in the years prior to the nation’s official entry into the war in 1917. Describing Wilson’s postwar economic misery, Amity Shlaes writes:
The country was expecting a revival, but instead the economy worsened before Americans’ eyes. Debt plagued many companies. Even Henry Ford was struggling under a giant burden of debt. Frederick Gillett told Amherst alumni at the Hotel Commodore in New York that February that “the present is one of the most critical times in the whole history of our country.” The federal war debt was $21 billion alone and the entire federal debt more like $25 billion; ten times the debt before the war. State and federal taxes both had escalated in recent years. Senator Borah had once said he could not imagine the top rate on income tax going over 20 percent; now the top rate was over 70 percent.
Two poisons were killing the economy: debt and taxes. 1920 was an election year, and, of course, the economy would be a major issue in the political campaigns. What the American voters wanted to was to move forward - to get past the burdens of high taxes, to get past the task of paying of the national debt, and to move into the prosperity which lay beyond. It is in part a rhetorical flourish to cast this as a “return” to the past, while simultaneously depicting it as a move into the future. In either case, or in both cases, citizens knew that they were bearing the burden of Wilson’s progressivism, with its high tax rates and micro-management of their personal decisions.
In this context the word “normalcy” was born. Although the word had been in use since at least 1857, Warren Harding is often credited with at least popularizing, if not inventing the word. Ordinary voters wanted a life not filled with wartime urgency, not burdened by taxes and by national debt, and free from interfering government regulations. On May 14, 1920, Harding, campaigning for the presidency, catapulted the word into fame. In Boston, at the Home Market Club, several speakers addressed the crowd, including Calvin Coolidge. Harding spoke later in the day. Coolidge and Harding expressed similar views, but Harding’s speech would be the one to became famous as he introduced the word. Amity Shlaes recounts the event:
Harding went at the same matters more deftly. He defended the free market more robustly and assailed “the false economics which lure economic control to utter chaos. The world,” Harding said, “needs to be reminded that all human ills are not curable by legislation.” Rather than shouting or demanding discipline, Harding appealed to common sense. It was daunting to see how Harding’s gracious humor could melt even the stiff Boston crowd. “If I lived in Massachusetts I should be for Governor Coolidge for President,” he jovially allowed. “Coming from Ohio, I am for Harding.” Harding’s rhetorical style was often criticized, but this time the alliteration soothed rather than distracted.
The speech which Harding delivered that day became a turning-point in American political rhetoric, and a turning point in United States history. Harding’s use of the word ‘normalcy’ connected the best of the past with the best of the future. The nation had lived through a roller-coaster ride of progressivist interventionist policies. Even if well-intentioned, those policies had produced the political and economic equivalent of nausea: too much roller-coaster.
Such was the state of the nation in 1920. The successful campaign of Harding for the presidency was a sign of the voters’ desire for “normalcy” - a chance for moving forward from Wilson’s nightmarish bureaucracy, a chance for moving forward into an environment in which each citizen would have a chance - a chance for political expression, a chance for economic opportunity. Harding, as president, began to unfold that opportunity. Harding’s premature death, and an overplayed scandal of much publicity and little substance, got in the way of Harding’s concept of expanding freedom.
In terms of policy, the Harding administration and the Coolidge administration can be seen as largely continuous. In terms of the politics with which those policies were implemented, there was a significant difference in style. Which one was more effective remains a matter of research for historians. But the cumulative efforts of both offered a sense of hope to the average citizen. Opportunities seemed suddenly plentiful, after the barren days of the Wilson administration. Historian David Greenberg writes:
Apart from taxation, Coolidge also made strides in his second term in minimizing the regulation of business and finance. In his fourth annual message to Congress, on December 7, 1926, he issued a call “for reducing, rather than expanding, government bureaus which seek to regulate and control the business activities of the people.” To the objection that workers, consumers, and other citizens needed safeguards, the president replied, “Unfortunately, human nature cannot be changed by an act of the legislature. … It is too much assumed that because an abuse exists it is the business of the national government to remedy it.”
The mechanisms by which Coolidge and Harding created opportunities for citizens were simple in principle: cut taxes, cut spending even more, and reduce the national debt. These principles created prosperity for all Americans.
In creating economic benefits for all Americans, Coolidge and Harding went sharply against the grain of the Wilson administration. While Woodrow Wilson had worked to keep Blacks out of universities, mercilessly mocked the Republican Party’s habit of appointing African-Americans to significant federal posts, and re-segregated civil service jobs such as those in the Post Office to keep “Negroes” from working near other people, Coolidge and Harding both spoke courageously in favor of anti-lynching laws. While Woodrow Wilson referred publicly to Blacks in racial epithets which are too crude to mention in this blog, Coolidge was the first sitting United States president to give a commencement address at a “Historically Black College” or “Historically Black University” when he spoke at the graduation ceremonies at Howard University. African-Americans understood Coolidge’s bold stance against the KKK and voted for him in large numbers in 1924. Coolidge’s campaign mocked the Klan with its deliberately misspelled slogan, “Keep Kool with Koolidge!”
Historian Robert Ferrell explains how the Harding and Coolidge policies created wealth, jobs, and prosperity for all citizens, of all races, of all classes, in all parts of the country:
In holding down government expenditures and saving enough money to retire the debt, Coolidge employed several devices, one of which was the Bureau of the Budget. The very fact that the bureau’s statisticians and accountants were screening the proposed expenses of cabinet departments and the independent agencies gave comfort to the parsimonious president. The bureau’s experts also could watch for special proposals by those well-known spendthrifts, the members of Congress. When the president presented his annual budget he could feel fairly sure that it was as low as he properly should go, and not a crazy quilt of special-interest propositions.
The Coolidge and Harding administrations successfully used free market policies to combat racism, to offer opportunities to Americans of every class and region, and to generate prosperity for the nation generally. The laissez-faire policies of Coolidge and Harding cannot be blamed for the Great Depression: although the exact causes of the Depression are still debated, they seem to emanate generally from Wilson’s Federal Reserve Board and from tariff and taxation policies which distorted the organic and natural trends of the market.
In any case, Wilson’s policies left the nation in economic shambles in 1920. Harding and Coolidge are properly seen as revitalizing not only the nation’s economy, but also revitalizing civil liberties in general.