The Coolidge Economy

When Calvin Coolidge suddenly and unexpectedly became President of the United States in 1923, he had a carefully articulated and precisely planned economic policy, although he did not expect that he would have the opportunity to implement it. President Warren Harding’s sudden death placed Coolidge into the position of having to make fiscal decisions, and he was prepared to do because of his systematic understanding of economics.

Coolidge retained Harding’s appointee, Andrew Mellon, as Secretary of Treasury. Despite the abrupt nature of his ascent to the presidency, Coolidge was confident, because he had not only worked out his economic policy over the previous years, but his experience as governor of Massachusetts had given his practical experience in taxation and budgeting.

While we have brief motion pictures and sound recordings of other presidents, Coolidge was perhaps the first president to make frequent and deliberate use of radio broadcasts and film newsreels. The confident expertise which Coolidge exuded was caught on film at an early press conference. Historian Amity Shlaes writes:

The extent to which the new administration would prioritize economy became clear at one of the first press conferences, one that Mellon, finally on U.S. soil, was able to attend. Coolidge, more relaxed than they had ever seen him, led his cabinet to pose outdoors on the White House lawn before a crowd. As the cameras of Fox News and others rolled, Coolidge seated himself in the center chair, and Secretary Hughes placed himself to the president’s right, legs spread out wide. The seat to the new president’s left waited open for Mellon. But Mellon was seconds slow to arrive. In that moment, the camera caught Coolidge’s eagerness. The presidential eyes hunted for the Treasury secretary. The president’s arm motioned. The tap of the hand was a swift but unmistakable, invitation and command.

What was Coolidge’s economic policy? He used the word ‘economy’ in the sense of behaving ‘economically’ - i.e., spending as little as possible. The core of his fiscal policy was reducing government spending. This would lead to reduced deficits, reduced debts, and reduced taxation. Reduced taxation would ease the burden on the middle and working classes, raise wages, and create jobs. These ideas don’t sound new to modern readers, but in the 1920s they were novel.

A convincing speaker, Coolidge argued for his plan, and got support from a wide variety of voters. Even significant members of the opposition party supported the plan. Historian David Greenberg writes:

The 1926 Mellon bill provided for across-the-board income tax cuts, zeroed out the gift tax, halved the estate tax, and slashed surtaxes on the wealthy by 20 percent. Supporting it were several trade associations, banks, local chambers of commerce, and a business lobby formerly called the American Bankers’ League, which had renamed itself the American Taxpayers’ League. The Democrats, adrift and cowed by their 1924 election losses, folded their hand; Senator Furnifold Simmons, one of Coolidge’s chief antagonists, from 1924, backed the new bill, he said, “to make businessmen realize that the Democratic Party is not bent on taxing them or their enterprises exorbitantly.” And with the financial outlook now rosy and the federal budget running a surplus, tax cuts were an easy sell. Coolidge even began to worry that Congress had cut taxes too much and that deficits would return. He warned lawmakers that after the easy work of cutting taxes, they would also have to rein in spending - threatening to veto various appropriations bills if they defied him.

Coolidge rightly understood that tax cuts must be accompanied by spending cuts; otherwise, an increasing deficit and debt would result - the very opposite of the anticipated outcome of such policies. Several of his successors have attempted but failed to replicate his results: they have cut taxes but not spending. These later presidents did what they did, either because they were thwarted in their intended spending cuts by the opposition party, or because they did not fully understand the necessity of such cuts.

Reducing tax was, for Coolidge, not merely an exercise in applying some abstract economic hypothesis. Rather he understood tax cuts to be incremental increases in freedom and in human dignity. If a worker pays 10% or 20% of his income in taxes, this means that for 10% or 20% of his time, he was working for naught, which is tantamount to having his time stolen from him.

Lower taxes freed the ordinary worker to access the fruit of his labor. Lower taxes gave the worker a choice about what would be done with the fruit of his labor. Rather than have the government decide how to spend his money, the worker would be free to spend his own money as he pleased, or to save it, or to give it away. Tax policy was, for Coolidge, social policy. He strengthened the American economy, but he also saw these actions as improving the lives of citizens. Historian Robert Ferrell writes:

If Calvin Coolidge prided himself on one single aspect of his presidential years, it was his policy of fiscal economy. “I favor the policy of economy,” he declared, “not because I wish to save money, but because I wish to save people.” The “people” part of the equation was perhaps a rhetorical flourish, yet people were involved; he may have been speaking of their labor, which he would save by not spending it. In any case, he saw absolute, positive good in fiscal economy, and therefore he not merely balanced the budget but obtained a surplus during every one of his presidential years (as Harding had done before him).

In terms of specific numbers, the Coolidge tax cuts, and their effect on the economy, are described by historian Thomas Sowell:

What actually followed the cuts in tax rates in the 1920s were rising output, rising employment to produce that output, rising incomes as a result and rising tax revenues for the government because of the rising incomes, even though the tax rates had been lowered. Another consequence was that people in higher income brackets not only paid a larger total amount of taxes, but a higher percentage of all taxes.

Who should get the credit for the improvement in the economy? Many historians point to Andrew Mellon, but Mellon was retained by Coolidge, and Mellon’s proposals would not have become law without Coolidge’s support.

Did America’s prosperity during these years, produced by Coolidge and Mellon, come at the cost of the economic collapse of the 1930s? Probably not. The Great Depression was created when what could have been a temporary self-correction in the economy was turned into a chronic condition by certain taxes and tariffs which distorted natural market forces, by the mere existence of the Federal Reserve System, and by well-intentioned but counterproductive attempts to intervene in the economy.

It was careful analysis which led Coolidge and Mellon to their policies, and careful implementation of those policies led to an era of prosperity for citizens of all classes.

The Economic Pain of the Great Depression

By the late 1930's, the misery of the Great Depression had been growing for several years. Unemployment in the United States was worse in 1938 than it was in 1937, and the stock market remained a disaster. What began as a temporary correction in late 1929 was extended for a decade.

Roosevelt's celebrated New Deal programs included four steps: the creation of a large amount of debt as the government borrowed huge sums of money; a significant increase in taxation; a high degree of regulation on almost every aspect of the economy; and a series of "make work" programs which created government jobs.

In August 1937, after the nation and its economy had suffered extensive damage inflicted upon it by the New Deal programs, many of the country's employers were unable to offer meaningful work. Historian Amity Shlaes writes:

Companies were also marking new lows. Leonard Ayres, the executive at Cleveland Trust who had called on Alf Landon with Anderson in 1936, tried to get a grasp on the story by comparing the profitability of corporations in the current decade to that in the preceding one. He found that close to two of three had been profitable from the midteens through the 1920s. Since the Depression, however, that ratio had dropped below one in three, so that "for nearly a decade now the great majority of corporations have been losing money instead of making it," he would note. The editors at the Economist in London were also watching, trying to put what was happening to the United States in perspective. In 1930, the per capita national income of the United States had been one-third larger than that of Britain, the magazine wrote. At the end of the 1930s, it was about the same. The problem, the magazine would conclude several years later, was "institutional obstructions to a free flow of capital." The 1930s, all in all, the magazine would decide, were a strange decade; maybe, as it wrote, the United States really had forgotten how to grow.

It was a decade of misery. Several other countries had been able to find a slow steady path to recovery, but in the United States, the indicators got steadily worse. The Great Depression was worldwide, but took a different shape in each country. In America, the New Deal programs, well-intentioned as they might have been, prevented recovery.

Coolidge's Lasting Contributions

Calvin Coolidge accomplished feats which proved to strengthen the United States long after he left office. In matters of domestic policy, his victories were in the matter of race relations and in the matter of carefully managing the money which belonged to the citizens; in matters of foreign policy, he eased tensions among the nations by means of the Dawes Plan and the Kellogg-Briand Pact.

Long before occupying the White House, Coolidge was an acknowledged expert at fiscal policy. He was resourceful at finding ways to reduce government spending. Historian Amity Shlaes writes:

It was as president that Coolidge's saving proved so exceptional. Coolidge hacked away at the federal budget with a discipline tragically missing in his well-intentioned predecessor, Warren G. Harding. Coolidge vetoed fifty bills and turned down new spending, even for projects such as farm subsidies and construction of rural roads that would have immensely benefitted the region from which he hailed.

By foregoing the short-term gains which might arise from federal funds for agriculture or road-building, Coolidge made possible larger and longer-term gains which were reaped when these sectors were allowed to grow organically. Likewise, the growth of electrification under Coolidge was greater precisely because he did not enact something like the Rural Electrification Act. While many citizens obtained electrification under Coolidge between late 1923 and early 1929, relatively few people gained electrification after March 1933, despite Congress's approval of Roosevelt's Rural Electrification bill.

Coolidge was constantly working to reduce the nation's debt. The result was that taxpayer dollars were not being used to pay interest. Coolidge understood that having a debt reduced the nation's productivity, and that paying interest was a waste of money. During Coolidge's administration, unemployment was low and went lower.

Between August 1923 and March 1929, the economy encouraged invention and growth. Inventors found opportunities to bring new technologies to market. Average citizens were able to obtain these new goods and the standard of living increased for Americans of all classes.

Coolidge served for sixty-seven months, finishing out Harding's term after Harding died in early August 1923 and remaining until March 1929. Under Coolidge, the federal debt fell. Under Coolidge, the federal budget was always in surplus. Under Coolidge, unemployment was 5 percent or even 3 percent. Under Coolidge, Americans wired their homes for electricity and bought their first cars or household appliances on credit. Under Coolidge, the economy grew strongly, even as the federal government shrank. Under Coolidge, the rates of patent applications and patents granted increased dynamically. Under Coolidge, there came no federal antilynching law, but lynchings themselves became less frequent and Ku Klux Klan membership dropped by millions. Under Coolidge, a man from a town without a railroad station, Americans moved from the road into the air.

Perhaps Coolidge's one regret was Congress's refusal to pass the antilynching bills which he encouraged. He worked around this partisan opposition by finding other ways to advance African-American civil rights. He was the first incumbent president to give a commencement address at a historically Black college when he spoke at Howard University in 1924.

In sharp contrast to Woodrow Wilson, who was an enthusiastic supporter of the KKK, Coolidge made fun of the Klan, and was clear in his speeches that would support the right of African-Americans to vote, even as he supported their other civil rights.

Imperialism - Or Not

Many nations have built empires over the centuries: the Persians, Greeks, and Romans did it in ancient times; the Spanish and British did it in more recent centuries. An empire is a collection of kingdoms or countries, under the leadership or control of the imperial nation.

The United States, however, did not get into the empire-building business. Having worked to gain its independence from an imperial power, the United States asserted, in the words of the Monroe Doctrine, that its role would be to prevent imperial interference in, or takeovers of, independent nations.

To be sure, history books typically make the claim that, while the United States did not build a traditional empire, it did engage in economic imperialism. While this claim is impressive, it is also specious. The trade relations which the United States formed during the last half of the nineteenth century and the first half of the twentieth century were largely voluntary and mutually beneficial.

The results of the Spanish-American War in 1898, a bit of the alleged American imperialism, were in fact deliberate steps to prevent the formation of an empire. Discussions of the territories involved - Guam, Cuba, Puerto Rico, and the Philippines - centered around the notion that these entities were to be put on a path to independence.

Newspapers inside the U.S. at the time reveal that discussions of sovereignty for these former Spanish colonies were front and center. On June 11, 1904, The New York Times, under the headline "President Planning Filipino Home Rule," published the following:

Secretary Taft received the Philippine Commissioners at the War Department today, and in the course of a speech intimated that in the even of Mr. Roosevelt being elected President the Filipinos might soon enjoy home rule.

Taft was, at the time, Secretary of War, but had served as Governor-General of the Philippines until late 1903. Roosevelt was at the time finishing up McKinley's term, and would soon be elected to the Presidency on his own. There was a strong anti-imperialist movement in the United States, and leaders of that movement, including Lyman Abbott, lobbied the government to ensure that the Philippines would not become part of an American empire, but instead would be independent.

The fact that Dr. Abbott, the acknowledged champion of the idea "The Philippines for the Filipinos," comes here at this time as the invited guest of the President, and that he publicly declares that he aims to set in motion public sentiment favorable to the self-government of the Philippines, however, is taken to mean that he believes the President may be won over to this view in question, and there is a disposition to expect that not long after Roosevelt enters on his term as President of the United States in his own right by virtue of his election, should the November election result favorably to him, he will take a position indicating the ultimate relinquishment of the Philippines as an absolute dependency.

As it turned out, it took a little longer to grant full sovereignty to the Philippines. Woodrow Wilson's racist views delayed the matter, as did World War One and World War Two. But in 1934, Congress approved a measure to put the Philippines on a ten-year path to independence, and despite the hardship of WWII in the Pacific, the United States kept that promise, and the Philippines did indeed become a free nation because of America's work in liberating it from the Japanese.

But the eventual granting of Philippine independence was already a foregone conclusion in 1904. The New York Times continues:

It is known that in this view of the expedient disposition of the problem Secretary Taft share the hope that there may be ultimate self-government by the Filipinos.

Thus it becomes clear that the United States, far from engaging in any form of imperialism, worked in fact to establish the Philippines as an independent nation-state, a goal clearly articulated by American policy makers in the late 1890's, written into law by Congress in 1934, and realized in the 1940's. As Dinesh D'Souza writes:

The United States was itself once a colony of Great Britain. After World War II, the United States used its influence to compel Britain and France to grant independence to many of their colonies, giving America an anti-colonial reputation. Even now Americans don't think of themselves as colonialists; on the contrary, we see ourselves as champions of self-government and liberty.

Not only the Philippines, but also Cuba established itself as an independent nation-state after the Spanish-American War. Again, voices inside the United States prevented the formation of an empire.

Saving the Economy, Again

The narrative of any nation can be told as a series of dangers which threaten the country, and a series of escapes by which the land and its people are returned to safety. Typically, histories conceptualize those dangers armies attacking the nation from without, subversives destabilizing the nation from within, weather inflicting floods or droughts, or diseases and plagues which sicken and kill the people in large numbers. Often a hero organizes the rescue.

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.

Woodrow Wilson, Herbert Hoover, and Race

The presidency of Woodrow Wilson marked a low point for African-Americans and their struggle for civil rights. Prior to taking office, Wilson, as president of Princeton University, had worked to deter Blacks from applying to Princeton; if they applied, he worked to ensure that they were not admitted. Addressing Princeton alumni, Wilson criticized President Theodore Roosevelt for appointing African-Americans to federal offices; Wilson used a crude racial epithet to describe Roosevelt's appointees.

Occupying the White House after Theodore Roosevelt - Wilson took office in March 1913, Roosevelt left in March 1909, with Taft serving a term in between - Wilson sought to undo the Republican Roosevelt's integration. In fact, Wilson would not only undo Roosevelt's appointments of Blacks to federal offices, but Wilson would also go on to undo the integration of the federal civil service which had been in place since Reconstruction. Wilson imposed segregation on various agencies within the government, e.g. the post office, which had been integrated for decades.

Beyond removing African-Americans from federal posts, and beyond re-segregating the civil service, Wilson went further. He publicly praised the KKK. This horrified not only Blacks, but millions of Americans - people of all races, religions, and ethnic background. His affirmation of the Ku Klux Klan was the final bit of evidence which confirmed that Woodrow Wilson was a hate-filled and bigoted racist.

Just as Wilson had worked to undo the desegregation of Teddy Roosevelt and William Taft, so Wilson's successors - Harding, Coolidge, and Hoover - worked to reintroduce integration to the federal government and civil rights to the Blacks. Harding and Coolidge both advanced a legislative agenda which included antilynching bills. Hoover worked to reintegrate federal agencies. Historian Jonathan Bean writes:

In 1913, Democratic president Woodrow Wilson ordered the segregation of government offices. Moorfield Storey and other officers of the NAACP protested, but Wilson responded: "[B]y putting certain bureaus and sections of the service in the charge of negroes we are rendering them more safe in their possession of office and less likely to be discriminated against." Perhaps because he had spent most of his adult life outside the United States, Secretary of Commerce Hoover was uninterested in racial issues; moreover, thinking in terms of rigid classes violated his individualist philosophy. Hoover's Red Cross work during the Great Flood of 1927 opened his eyes to racism in the South. The following year he responded positively when the NAACP asked him to desegregate the Commerce Department.

The narrative, then, is this: on the state level, the civil rights gained by the Blacks during Reconstruction began to evaporate during the late 1800's, as Democrats regained control of southern states from the Republicans. On the federal level, the civil rights gained by African-Americans during Reconstruction began to evaporate during the Democrat administration of Woodrow Wilson; Blacks began to regain ground on the federal level during the Republican administrations of Harding, Coolidge, and Hoover. African-Americans would have to wait longer to regain that ground on the state level, as the Democrat party held the southern states under racist domination even when the Republicans had influence on a federal level.

FDR's Policy Toward the Soviets

The Czarist regime which dominated Russian during the nineteenth century, and during the first few years of the twentieth century, was a cruel and paranoid regime. Even if the personality of the last Tsar, Nicholas II, was somewhat more humane - such is the hypothesis of some biographers - it was too little, too late. The Tsarist secret police mercilessly hunted anyone who seemed to be possibly involved with any critique of the government, arresting quite a few innocents along the way. This police force was known for brutal interrogations, beatings, and killings; suspects who survived to trial were not given what Western Civilization calls 'due process,' and were sentenced to long years in labor camps, where few survived their sentences, or were simply sentenced to death.

Beyond chasing anyone who seemed likely to be critical of the government, the Czar utterly ruled out any reforms in his government which might move it in the direction of a republic with freely-elected representatives. His relations with the Duma - Russia's nominal parliament with little real power - went from bad to worse, as he refused to acknowledge the Duma as having any authority, and he dissolved it. Liberties like freedom of speech and freedom of the press were unknown. Although intended to prevent the government's overthrow, the Czarist regime's oppressiveness actually gave cause to revolutionaries.

Given the Czarist regime's harshness, it was no surprise that many western observers initially hoped that the 1917 revolution would give rise to a more humane government. The rhetoric put forth by Lenin and the other Bolshevik leaders sounded as if it would lead to the types of political liberties favored by Western Civilization.

But it soon became clear that the Soviet dictatorship would be no improvement over the czarist regime. By some metrics, it would be worse. The communist government of the Soviet Union murdered Russians by the millions. Freedom of religion, freedom of the press, and freedom of speech essentially disappeared. The Russians who had been oppressed by the czarist regime soon realized that they were being maltreated with even more brutality by the communists. Western observers who had hoped for progress under the Soviet Union saw Russia dissolve into a nightmare of cruelty.

By the time western governments, including that of the United States, realized which type of ruthless government was dominating Russia, it was too late. The results of the 1917 revolution were firmly in place. Not only did the communist dictatorship - which allowed no meaningful elections, but gave elaborate pretenses of such - have a secure grip on power in the Soviet Union, but it had also installed spies inside the United States government.

Although it was clear, equally to foreign policy specialists and to the ordinary citizen, that the Soviet government was no friend either to political liberty generally or to the United States specifically, policy makers inside the State Department were under the influence of misinformation given to them by Soviet agents who had obtained influential posts inside the government.

In addition to these moles, who were in two-way communication with the KGB and other Soviet agencies in Moscow, there were also sympathizers: those who were so infatuated with communist ideology that they continued to support Lenin and Stalin even after their atrocities became public.

There was a significant number of knowing and willing agents, both in the State Department and in other offices inside the United State government. There was also a large number of sympathizers, regarded by the Soviets as intellectual dupes, who were neither employed by, nor in direct contact with, Soviet intelligence agencies, but whose activities were certainly helpful to the Stalinists.

Among the agents on the Soviet payroll were State Department officials like Alger Hiss, Julian Wadleigh, Laurence Duggan, and Noel Field. They reported to agencies like the NKVD, the GPU, and the OGPU. Among those who, having a fondness for communist ideology, helped the Soviets without being on the payroll of the Soviet intelligence agencies and without direct contact to those agencies were men like Harry Hopkins, who perhaps never released state secrets to the Soviets, but who, wittingly or unwittingly, nudged United States policy in directions favorable to the Soviet Union.

Hopkins, for example, was convinced that the United States could form a "friendship" with the Soviet Union, even as Stalin was directing his spy networks to undermine the U.S. government. Hopkins hoped that the United States could render "assistance" to the Soviet Union, encouraging such friendship, even as the Comintern, an agency of the Soviet government, plotted the overthrow of the U.S. government. Policy documents formulated under the supervision of Harry Hopkins, and transmitted by Hopkins to President Franklin Roosevelt, contained these words and ideas.

By continuously feeding such misinformation to FDR, Roosevelt's policy views were nudged into a direction which played into the hands of the Soviets. To be sure, not all of Roosevelt's advisors were keen on Russian communism, and some of them warned the president about the dangers. Historian Medford Stanton Evans and Herbert Romerstein write:

Seeking Soviet “friendship” and giving Moscow “every assistance” indeed summed up American policy at Teheran and Yalta, and for some while before those meetings. The most vivid expression of Roosevelt’s ideas to this effect would be quoted by William Bullitt, a longtime confidant of the President, and his first envoy to Moscow. Bullitt recounted an episode early in the war in which he suggested to FDR that American Lend-Lease aid to Russia might provide some leverage with a balky Kremlin. To this, according to Bullitt, the President responded: “I have just a hunch that Stalin doesn’t want anything but security for his country, and I think that if I give him everything I possibly can and ask nothing from him in return, noblesse oblige, he won’t try to annex anything and will work for world democracy and peace.” (Emphasis added.) Bullitt, who had learned about Stalin the hard way in Russia, tried to dissuade the President from this view but was not successful.

The pro-Soviet advisors inside the Roosevelt administration mocked those who warned about the dangers of Stalin, even as Stalin was orchestrating a manmade famine in the Ukraine which would kill millions, and even as Stalin was preparing to team up with Hitler against the United States. The Soviet agents in the State Department ridiculed those who attempted to alert FDR to Stalin's sinister activities, scorning them as backward-looking. Any data about Soviet butchery was countered with reminders that the czarist government hadn't been that much worse.

After the 1917 revolution, a civil war between the "White Russians" and the "Red Russians" lasted from 1917 to 1923. The White Russians had hoped to dislodge the Bolsheviks, while the Red Russians were the communists who hoped to solidify their hold on power. During and after that war, which the White Russians lost, emigres from the White Russian side gave useful data to the State Department. The data from the White Russians complemented data gathered by Americans like William Bullitt on the ground in Russia.

As the ever-grimmer picture of Lenin's and Stalin's butchery and aggressions emerged, the pro-Soviet faction in the State Department worked to discredit the data offered by the White Russians.

When U.S. and Soviet diplomats met, three issues were on the table. First, the Soviet destruction of freedom of religion was extending even to visiting U.S. nationals on Russian soil. Second, the Comintern was continuing to organize subversive groups to attempt violent overthrows not only of freely-elected western governments, but also of the Chinese government. Finally, the Soviet government had confiscated and nationalized assets belonging to U.S. citizens which happened to be on Russian soil at the time of the revolution.

Although these human rights violations were flagrant and glaring, the pro-Soviet elements within the State Department still worked to steer the negotiations to the advantage of the Soviets. Historian Jean Edward Smith writes:

Because the career diplomats in the State Department - many of whom had spent the last fifteen years hobnobbing with White Russian emigres - were still imbued with nostalgia for the czarist past, Roosevelt handled the negotiations himself, first through Henry Morgenthau, then through William C. Bullitt. Morgenthau, as head of the Farm Credit Administration, dealt with the Soviet trade organization Amtorg; Bullitt with Boris Skvirsky, the senior Russian commercial representative in the United States. As a result of these covert discussions, FDR invited Soviet foreign minister Maxim Litvinov to Washington for direct negotiations in early November. The ostensible outstanding issued involved freedom of religion for Americans in Russia and the continued agitation for world revolution mounted by the Comintern. The real sticking point was the restitution of American property seized by the Soviet government in its nationalization decree of 1919. Roosevelt and Litvinov compromised. The agreement is known as the Litvinov Assignment. The Soviet government assigned to the United States its claim to all Russian property in the United States that antedated the Revolution. The United States agreed to seize the property on behalf of the Soviet Union, thus giving effect to the Soviet nationalization decree, and use the proceeds to pay the claims of Americans whose property in Russia had been confiscated. The constitutionality of the assignment was twice challenged before the Supreme Court, but in both instances it was upheld, the "taking clause" of the Constitution not withstanding.

Two factors shaped FDR's policy: first, pro-Soviet sympathizers in the State Department directed a continual stream of misinformation to him; second, his declining health stole his resilience and stamina and predisposed him to look for easy solutions rather than strive for diplomatic gains.

The Supreme Court was willing to go along with Roosevelt's policy toward the Soviets because it already had been at the receiving end of FDR's ability to bully the court. The two challenges, 1937 and 1942, to Roosevelt's deal with the Soviets, indicated that the U.S. government would be complicit in aiding the Soviet nationalization policy in seizing property which belonged to private citizens. Assets belonging to Russian citizens - assets which happened to be on U.S. soil - were seized, thus denying the rights of those citizens. The Soviet government had stolen assets both from U.S. citizens from Russian citizens, assets which happened to be on Russian soil at the time of the revolution. FDR would use the U.S. government to complete the theft by seizing any assets on U.S. soil which happened to belong to a Russian citizen. He would use the proceeds to pay the claims of American citizens whose property on Russian soil had been stolen by the Soviet government. But he was paying them with stolen cash. The Supreme Court did not have the stamina to resist Roosevelt's action; it knew that it would be bullied into submission for contradicting the Roosevelt administration, just as it had been bullied into approving the Agricultural Adjustment Act of 1938, after striking down its clone, the Agricultural Adjustment Act of 1933.

In the end, FDR knew better. He was savvy and cosmopolitan - he'd spent more time in Europe than many of his State Department appointees. But his illness sapped his strength, and his agreement with the Soviets was the easy way out - appeasing the Americans whose property had been confiscated by the Stalinists - and the easy way out was more appealing than insisting on a principled diplomatic stance.