The Great Refrainer: The Legacy of Calvin Coolidge

Amity Shlaes discusses her book Coolidge.

This meeting is part of a series hosted with the National History Center featuring prominent historians who will examine the events and times that shaped foreign policy as we know it today

EVAN THOMAS: Good evening, everybody. Welcome to today's Council on Foreign Relations meeting with Amity Shlaes, "The Great Refrainer: The Legacy of Calvin Coolidge." This meeting is a part of a series that the CFR is cosponsoring with the National History Center, an initiative of the American Historical Association. We'd like to thank Roger Louis, who is sitting right here. He is the director of the National History Center and helped us create this series, which aims to make a connection between U.S. foreign policy and history.

Amity Shlaes is the director of the Four Percent Growth Project at the George W. Bush Institute. You've all read her columns and pieces over the years in the Wall Street Journal, the Financial Times, Bloomberg most recently, Forbes, other publications. Her book, "The Forgotten Man," was a huge best seller, argued that FDR made the Great Depression even greater and got us hooked on the entitlement state. She has now written "Coolidge." In fact, she wrote it right here at the Council on Foreign Relations, I believe. Her biography of "the great refrainer," as she calls him, also sold very well. It's been very well received. I read it over the weekend. It is a fascinating book, which you should buy right out here.

She has a great eye for detail. She gets "silent Cal" in all of his rocky New England recalcitrant glory. Here is a love letter Cal wrote his intended, Grace: "My dear Miss Goodhue, the mosquitoes? Have you recovered from them yet?" Period. (Laughter.) A man of few words who got right to the point.

Amity, you called Coolidge "the forgotten president." Why should he be remembered now?

AMITY SHLAES: Thank you, everyone, I'll say.

I think you could say it in one line: He was president for 67 months of peacetime, and when Coolidge left office the federal government was smaller than when he came in. How about that?

MR. THOMAS: And that is remarkable. (Applause.) And that's a model for us today?

MS. SHLAES: That could be a model for us today. Also, presidents are also like stocks or baseball players. You look for the one whose price and value are far apart. If you are a biography entrepreneur and Coolidge is priced so low, ranked in the bottom quarter of presidents, and his value is so high, that he seemed a good investment. (Laughter.)

MR. THOMAS: So tell us a little bit about how you got to him. Why did you do Coolidge?

MS. SHLAES: Well, I want to thank very, very fast my dear colleagues in this room who made this book possible, especially Professor Bhagwati – Professor Bhagwati, behind him Professor Desai. And I don't have my long glasses on. Nancy Bodurtha is here, I saw. And I know Janine Hill was signed up, but to all of you, thank you – Richard Haass and everyone – Benn Steil – who helped.

Why did I get started on – when I was studying "The Forgotten Man" and learning about the 1930s, I was thinking, what came before? And in the end I had to write an additional chapter, the first chapter last, which is what came before the New Deal and also what came before Herbert Hoover, because in "Forgotten Man" I actually group FDR and Hoover together as two interventionists. So they seem quite similar in that regard.

And what came before was this unknown fellow, Coolidge, who didn't talk and people made fun of him all the time, especially people who were academics. That's always a key. You know, why are they disliking him so much? What bugs them about – you know, often there's a reason.

And Coolidge intrigued me because he had held back as a manager. A lot of us study management, you know, in business school and so on. Who is a good manager who knows how to delegate how could he do that, and usually presidents are supposed to be strong and masculine and commander in chief and so on, and here he was a true delegator as a president.

So that was interesting too. But the final answer is in the book about the '30s, "The Forgotten Man" could be subtitled, "how they wrecked it," right? So this is a book about a period that started wrecked, and it's how they fixed it, especially how Coolidge helped to fix it. How do you take a mess and fix it? That's what he did as a president, along with Harding.

MR. THOMAS: And how did he do it, exactly? What was the mess and how did he fix it?

MS. SHLAES: Well, the mess was they came out of the war, World War I. They had inflation, though they lied about it. They had a terrible debt. Today we speak of trillions. They had billions – which were disconcerting to them – billions and billions in debt where they had very little before. The budget was not in balance. The tax rate was in the 70s. There was unemployment. There was unrest and a sense, well, the U.S. might go the way of Europe, and yet somehow the U.S. stabilized. As the pendulum was swinging, it became more stable.

And Harding and Coolidge ran on a ticket of normalcy in 1920, which again sounds like a really off-putting concept – they want us all to be normal or stupid – but what they meant was – Coolidge was a stickler for English so he didn't like the word normalcy. He said "less economic uncertainty." That's what he thought normalcy was, and that sounds more familiar to us. So Coolidge – they ran on a ticket of making the government more predictable and probably smaller.

And then they did it. And first Harding did it but, you know, long story short, Harding had the idea to say no, to cut back, and he had the party platform to say no, but some of this is also about temperament and who you are, and Harding had a heart that said, yes. He always liked to say yes to colleagues and say yes to friends, so he didn't really have the guts to follow through with the program, and he only vetoed a few times. And, you know, we know all the scandals about – whereas Coolidge had the plan, the doctrine, the party assignment, and also the temperament to cut, and so he did. He finished the revolution that Harding started.

MR. THOMAS: There's a strong moral tone in this book. The first sentence of it, for those of you who have read it, is "Debt takes its toll," and is referring to I guess his great-grandfather. But there is a strong sense of Coolidge as a moral man exercising moral leadership. Talk to us a little bit about that, and bring it up to the present if you can, whether that's even possible today.

MS. SHLAES: Right. Well, the Coolidges made balancing the budget and also allowing the economy to grow – they didn't use "grow" as a transitive verb. You know, we don't grow plants. Plants grow. We create the environment for plants to grow, so that's – you know, when we talk about growth now. Everything was about this, and Coolidge didn't just say that happens over there. Even the Coolidge household was about these policies, so that when they got a gift from the mayor of Johannesburg in South Africa – it came by ship – two lion cubs, twins – twin lion cubs for the president, and they named them Budget Bureau and Tax Reduction. (Laughter.)

MR. THOMAS: Had to.

MS. SHLAES: Great name for your pets, right? And when I talked to – you know, when you talk to post-war economists about this, when you talk to the Republican Party about this, you talk to the Democratic Party about this, John F. Kennedy if he were here – the point was – and they fed them steak evenly, and you can see in the Library of Congress pictures of the steaks that were put out to lure the lion cubs. They grew. They grew evenly. And they didn't have a big old lion called Tax Cut and a little bitty runt cub called Budget Bureau. They always were supposed to weigh the same.

And Coolidge was making a point. He felt you couldn't cut the tax rates, even if you got more revenue, which you often did, without being sure you had an eye on the budget. And I like about Coolidge that he was profoundly uncomfortable with the responsibility of all this money. Do we all know people like this? And he wasn't so sure about what he was told about the tax cuts. He was told that if he cut the rate, he might get more revenue. And he didn't like that for two reasons.

One reason was, what if you didn't get the revenue and then you had a deficit and it was your responsibility, right? So that was bad. That was really bad. But even worse was the possibility that you did get the revenue. Well, then the Democrats or the other Republicans, those Progressives, might spend the money and make the government bigger. So there he was between two hard places with this concept of tax cuts and getting where more revenue, but the fact was – and that's just a different temperament from a modern politician of either party.

MR. THOMAS: Well, I mean, so Ronald Reagan may have put his portrait in the Cabinet room and all that, but he's not a supply-sider as we understand them in the modern sense. I mean, scientific taxation is the equivalent, but that's not the way his mind was working, right?

MS. SHLAES: Well, his mind – I didn't really say it well, but there was another factor, which I think is a supply-sider or a Democrat conservative, fiscally, might take up. I mean, he really believed in political trust. So if he squandered the money that came in from the tax cuts, which it did – statistics of income, you can see it right there – then the voters might not trust him and trust the presidency. And he saw his job as sustaining the presidency as office, and cleaning it up, because, as we recall, Harding tarnished it. Harding was a slob, just as Alice Roosevelt Longworth called him.

So Coolidge wanted to clean up that office, and he did by always sort of monitoring everything. And when the money didn't come in, well, he thought he might raise – he thought maybe we should have an auto tax. Why is that? Well, it's very close to what we needed the money for, which was highways. He didn't get as far as Eisenhower, your period, but, well, if we're going to get in the highway business at all, well, then an auto tax is the best kind of tax because the levy is close to the project for which the money will go. Well, that's closer to fee-for-service, less susceptible to corruption.

All these thoughts were going through his head. And I like that. I wouldn't say he's – I don't want to make it out that modern Republicans or modern tax-cutters of any party are so different that he would hate them, but he's just a slightly different animal. It warrants study. And this trust part is especially key. He did earn voter trust.

MR. THOMAS: We think of the 1920s as a pretty wild, loose time. We associate them really in some way more with Harding's behavior than with Coolidge's. Did Coolidge make an effort to affect American mores? Did he inveigh against loose living?

MS. SHLAES: Well, he was a pragmatist who believed in the rule of law. And the problem with Prohibition was people violated the rule of law all the time with Prohibition. It wasn't the alcohol that bugged him. It was the erosion of the rule of law because people got accustomed to going around the law. So that bothered him even more – Mellon used to write in these reports of the irritation because we had to spend so much on the Coast Guard to stop all the liquor coming in, right? You know, you imagine the Treasury secretary writing these.

They didn't like the Prohibition law because it got in the way of other projects, but they knew they had to sustain it. So in that area he was completely pragmatic, even vis-à-vis Prohibition, this being, I guess, the symbol of morality of that period. He didn't like false morality, and you can even see it in his stock purchases if you look closely, because we did have access to some of his, by themselves.

And one of the – one of the products he bought was Standard Brands, which was recommended by the Wall Street Journal as a good hedge against depression because Standard Brands was a sort of amalgamation of food stocks, including yeast, and people – well, people will buy food even in a depression, right, and Coolidge was hedging for the Depression. But he was also hedging – going long on yeast, which was what would be necessary when Prohibition ended. He knew all about beer. He had been of counsel to a brewery as a young man and he knew that beer was important to economic growth. (Laughter.)

MR. THOMAS: He sounds like a – he doesn't really sound like a politician. I mean, he sounds like sort of a normal New Englander maybe, but a normal – he doesn't sound like somebody who's out there caging votes, and yet he was a very successful politician.

MS. SHLAES: Well, in a way he was caging votes – that's a good question; thank you – more than we are because they didn't have radio most of his career, so he had to actually shake hands with everyone: I want your vote. I need your vote. Thank you. He couldn't just say it over the radio even until well after World War I. So that required a lot of shoe leather to do that.

But yes, you're right. He was a child of the period when senators were picked by state legislatures. He was moreover on the continuum of the republic than we're accustomed to today, less of a democrat – lower case "d" – and highly concerned with sustaining a balance there and keeping higher morals in the U.S. So the most crucial decision of his life was the one – he was enormously popular and the Republican Party was even more neurotic than it is today, and they wanted him to run in '28 because he was popular, and yet he chose not to run, famously.

And I'm sure, having looked at the papers – and you can read it right in his autobiography – that the main concern there was political corruption. He wrote: It's important to change officers from time to time. Power corrupts. Absolute power corrupts absolutely. He was acting like – and that was a moral decision that was very painful because, guess what? When you do something moral and upright and wander off by yourself, well, everyone doesn't always follow you, do they, right? You pat yourself on your sanctimonious back but it doesn't mean the crowd rewards you for doing that you think is right.

And his party wasn't grateful that he saved the presidency by sparing the office. They were angry because they thought they might lose the election. And they turned on him and he was alone in this moral decision not to run again. So it's interesting.

MR. THOMAS: I mean, can you imagine a modest, reticent, taciturn presidential candidate today? Is that even conceivable? (Laughter.)

MS. SHLAES: I do think it is. The times have to be a bit harder. Right now we're a bit anesthetized, for whatever reason, I think.

MR. THOMAS: But that's interesting. You think if things got harder and tougher, people might look to that time –

MS. SHLAES: We could have a thought experiment. We've all been just writing these columns because, unfortunately, Mrs. Thatcher passed away, right? And if you do a thought – I can see some people who are in the U.K. in the early '70s and may have met some Tories. And if you met the Tories in the early '70s, they didn't say, we want an "iron lady." They said, we want to be compassionate conservatives, didn't they, the Tory Party.

But, you know, there were some difficult events in the United Kingdom. The economy really had some terrible trouble, and suddenly the party developed an appetite from the lady who became, you know, Prime Minister Thatcher. So she was – that kind of figure was not attractive, right? He wasn't really like that, was he? So it depends a lot on the times. What seems important to me is that we appreciate that these models exist, so when the moment comes that we need another kind of candidate that we've at least thought about it, you know?

MR. THOMAS: I mean, it does – he came before the period you write about in "The Forgotten Man" when the welfare state is essentially created, the entitlement state. We've become – Western democracies have become pretty addicted to this state in which we have enormous entitlements and welfare benefits. It's hard for me to imagine modern democracies taking away those benefits and really truly cutting back, and yet it seems that maybe have to. I mean, are we permanently addicted to the welfare state, or is it possible to ratchet back?

MS. SHLAES: Well, eventually the dollar won't always rule. Eventually there will be a challenge to the United States and it will have to be like other countries that are a bit concerned about their currency, and then have to ratchet back in order to – right, in order to sustain. We just haven't reached that point yet.

MR. THOMAS: As long as we're the reserve currency we can keep printing money and just –

MS. SHLAES: As long as we're in this kind of – we're the important reserve – we have a vanity and a certain provincial aspect that we think we do what we choose because of our culture, but eventually there will be pressure enough – not this time there wasn't, but there will be – it was sort of perverse but eventually there will be a challenge to us, and then we'll have to be like other countries. You know, maybe we'll put our interest rate up and then we'll – you know, we'll think it through.

MR. THOMAS: Well, other countries aren't so eager to do it either.

MS. SHLAES: No.

MR. THOMAS: I mean, I can't say that Europe – Europe has done some, but they seem to be backing off, and in fact I would say Paul Krugman is winning the argument these days, you know, against austerity, and Europe seems to be backing off on it, and certainly you aren't hearing a lot of arguments here for it. It seems to me the tide is going the other way right now.

MS. SHLAES: Krugman is a long way from Coolidge. (Laughter.) I'm not going to rise to – necessarily rise to that, right? I'm just kidding. I'm sorry about that one. But it's easy to win when we have such low interest rates, so there's a certain circularity to it.

MR. THOMAS: Right.

MS. SHLAES: And when companies have been waiting to grow for a long time.

MR. THOMAS: So what's the scenario that brings the day when we have to face –

MS. SHLAES: Well, honestly I don't think I could go farther than that. I just have observed over time, and some of us have, that things change quickly in countries, and then all of a sudden a different model shows up. I actually brought a document with me because this is the Council on Foreign Relations and I wanted you to know that Coolidge had relations with the Council on Foreign Relations. In 1922, at the very – if you don't mind me –

MR. THOMAS: Please.

MS. SHLAES: – at the very beginning of its existence, because his cousin, Archibald, was editor of Foreign Affairs. (Laughter.) And Archibald went to Harvard and Coolidge went to Amherst. And Archibald was a very fine person, also involved with the Harvard library and so on. And Coolidge was just a swamp Coolidge, from the point of view of the Boston Coolidges. There was a whole thing going on which branched the family you were in, and the Boston Coolidges were related to Thomas Jefferson and they thought they were very fine. But there was an interaction between the two of them.

The first thing I wanted you to know, when Coolidge became the candidate for vice president, the foreign newspapers had to react, and of course they had never heard of any Coolidge but Archibald Coolidge, and so they wrote – I found the Berliner Tageblatt wrote, "Through the victory of the Republican ticket, Archibald Coolidge has been elected vice president of the United States." (Laughter.) Imagine how old Calvin from Vermont and Amherst felt that.

And Calvin, because we're at the CFR, I wanted to let you know that when he became a vice presidential candidate, he decided to study foreign policy. He was regarded as a great provincial, right? Only Massachusetts all his life. He never went abroad until Canada, right, until he was president. And he wrote to Archibald for advice, because Archibald was a high and mighty, again, professor. But he knew that Archibald talked a lot, and Coolidge, you know, didn't like to talk a lot.

So he said – this is what he wrote to his cousin, who hadn't been very nice to him before, right – too famous, the cousin: "You are familiar with Europe, European subjects, which I am not. So I wish to ask you if the following statement would be correct. Perhaps you can indicate by writing yes or no" – (laughter) – "and returning it to me." So here's the statement. Here's the Coolidge-to-Coolidge question, the statement: "The great powers of Europe made a treaty for neutralization of Belgium, under which they agreed not to violate Belgian territory by invasion before World War I." And I believe that the Harvard cousin could not refrain and wrote many paragraphs back about the neutral status of Belgian in diplomatic history.

That gives you a feel for him. He wasn't anti-intellectual at all, but I think he posed too – there's an act here as anti-intellectual vis-à-vis – you know, vis-à-vis some others, and I like that very much about him. It makes me laugh.

MR. THOMAS: On foreign affairs he was a little naïve about international law, yes? I mean –

MS. SHLAES: So I'm wondering what you think about that because –

MR. THOMAS: I think he was naïve about international law.

MS. SHLAES: So I was hoping there would be someone here from Ethiopia, because what happened was he stewarded the Kellogg-Briand Pact all the way through, right? And he achieved what Wilson did not, which is he got an international treaty through the Senate with great effort, working with Kellogg, who also read the law. Kellogg was from Minnesota, right? But this pact outlawing war was naïve, right, incredibly naïve because it provided cover to bullies like Mussolini.

And one of the things that I noticed that was very compelling was the prince regent, I guess he was, the young man leader, not yet the total leader, of Abyssinia-Ethiopia was the man who would become Haile Selassie. And he sent Coolidge a giant gold shield, you know, sort of a sign of tribal respect: I send you the most valuable thing I have, with lots of precious stones in it. And Coolidge sent back four law books. (Laughter.) And that was definitely – they said a – wait, a "swordless sheath" is what the treaty was.

But that gives you an idea of who he was. He really, rather like Wilson, believed in international law. And some treaties – and we can see now that that was naïve. I agree with you.

MR. THOMAS: He was sort of a flinty, tough guy in some ways, so I'm sort of surprised that he was as dreamy as he was about the efficacy of international law.

MS. SHLAES: I think anyone who greeted the troops when they came home from World War I, one-third of them was disabled. They were missing legs. There were no antibiotics. There were no beautiful prostheses. They couldn't do Wounded Warrior. You know, there was none of this culture. And the troops came home and they were disabled and their wives didn't work.

It was incredibly grim and painful. And Coolidge as governor had to go out in the little craft and talk in the megaphone and say, welcome back to America, to these lice-ridden, wounded people. Anyone who experienced World War I close-hand was grossed out by it forever. It just was so awful. So that made them dreamy and insane in their effort to prevent war.

MR. THOMAS: We're going to turn to the members in a moment here, but let me just ask you, what is the lesson that – and I know this from trying to do similar things. This is a dangerous game to play. But what is the lesson you want us to take from today from Calvin Coolidge?

MS. SHLAES: Two things. Just that there are other models of leader. A low-key delegating leader can succeed also politically. He was, as I say, enormously popular. He had more votes – there were huge numbers of Progressives in 1924 when he was forced to run for president, and he won the election with an absolute majority, with more votes than the Democrats and the Progressives combined. The Progressives had 17 percent, like Ross Perot or something. Nonetheless, he took Coolidge running on austerity, wearing the red letter on his breast of A, won. And he would have won again in '28.

So, one, austerity can win, even when progressive movement is strong, and also that austerity as economic policy on the part of the government can co-exist with or even foster prosperity. So we tend to say, oh, austerity – there's another book out this month, austerity is terrible, right – that it can co-exist with or foster prosperity if the government becomes smaller and holds back. So thank you for asking.

MR. THOMAS: OK, I'd like to invite the members to join our conversation. A reminder: The meeting's on the record, and to please wait for the microphone and speak directly into it. Stand and state your affiliation, as you all know these rules. And please limit yourself to one question, and keep it concise to allow others to ask questions as well. So who would like to ask a question? Don't be shy. Sir.

Q: Tim Ferguson with Forbes, a former colleague of Amity's. Congratulations on the book.

A question about the politics of the severe farm downturn that occurred during Coolidge's presidency. I'm just curious, within a Republican Party that was traditionally strong in the farm belt, what effect that had. Was there at that time no expectation that there would be federal bailouts of any kind?

MS. SHLAES: Thank you for the question, Tim.

We know there was a depression for farmers in the '20s. Everybody else didn't have a depression, more or less, but the farmers – prices low, especially at the beginning. They had terrible problems with mortgages. Coolidge came from a farming town, nominally farming, because later the agricultural – you know, some New Deal authority went to his town and found that not a single acre of Plymouth Notch was truly arable.

So he came from a farming place that was always failing and where half the people had left. And his father ran a cooperative cheese factory. So what is a cheese factory in a time before refrigeration? It's sort of an exercise in desperation. You can't refrigerate your milk and your train doesn't come to your town, so you make cheese, which is less perishable, and send it, what, by cart to Boston.

So he knew very well of the hardship of agriculture. He lived it. He had in his pocket several hundred acres he never mentioned. You know, background family money, right? And yet he was hard on farming in the following way: He believed in federal subsidy for co-ops like his father's, but he didn't want to create a giant international system where you might subsidize farmers to export, which is what the complicated McNary-Haugen law. Let's see: Take it overseas, sell it for lower prices, dump – you know, he really didn't like that. He vetoed those laws twice. And people were astounded that he would do it.

And he had a key ally in that, Tim, in California. It's the reason for the friendship. It was Herbert Hoover, because Hoover was of California. He went to college there. He was in the first pioneer class of Tim's college, Stanford, but he didn't like ag subsidy. And so without Hoover I don't think it would have been easy for Coolidge to battle the Republican progressives. Remember, many of the Republicans of the West were for farming subsidy. It wasn't just – this wasn't Democrat versus Republican.

And the two things I'd say about it is that Coolidge was very tough to veto McNary-Haugen, the big bill. And there's a famous story where Mr. Cooper from one of the farm boards – there were those then too – came to see him and blah, blah, blah, the farm has been suffering and – well, Coolidge said: Farmers never have made much money. I don't suppose they ever will. (Laughter.) I don't suppose there's much we can do about it. Very tough.

What was the – was he – (inaudible)? Not at all. What he believed was probably most people who live on farms should move into the town. And you can see he made a very great conciliatory trip to the Dakotas in '27 basically to shake the hands of all the farmers who were moving into the town. And there's a famous story where he went to greet a famer and talk about this and that, and it turned out that the farmer wasn't a farmer anymore; he was an automobile salesman.

Coolidge believed in the mobility of people, and that the economy was shifting. It wasn't that he hated farmers. He just thought probably also more people might move to the city and farming might happen with fewer farmers. So that's all there in that, so the background. And the South Dakotans loved him. That was interesting. And that was – many of them understood what he was trying to do. Their affection for independence vied with their need for subsidy, in their breasts.

MR. THOMAS: Sir.

Q: Hi, I'm Steve Mariotti from the Network for Teaching Entrepreneurship. I love this book.

MS. SHLAES: Thank you.

Q: I met you the other night.

I wanted to know, was there any connection between Coolidge and the Austrian economists like von Mises? And was he aware of that literature?

MS. SHLAES: Well, I think in the 1920s Friedrich von Hayek was washing dishes somewhere between here and 14^th Street, right? And Mises was just, what, a little bitty economist at NYU that didn't even get to be a big, full member of the department, did he, because he was a little too strange for whoever was at NYU, and he wasn't at Columbia, was he?

So when nothing – so they weren't forces yet themselves. And as some people know, the first book I ever read about Coolidge was deeply critical of him, and it wasn't a left-wing book or a centrist book or even a Samuelson book. It was Murray Rothbard. And he took from Benjamin Anderson, because they thought Coolidge was inflationist. They really hit him hard for inflation, which is a little confusing because the prices weren't going up in the '20s except for sometimes real estate and later stocks. But it wasn't even. So this is this question of is a bubble just a bubble in one sector or is it reflecting overall inflation, or what was it?

But what Austrians care about that Coolidge cares about deeply is this small businessman, or the person who is an entrepreneur. And he was very supportive of Mellon, who was a wild entrepreneurial theorist and created this whole institution, which was then novel, the Mellon Institute, what we now know as Carnegie Mellon, where he had this idea, if you put scientists somewhere, then businesses can come with their problems and then maybe the scientists will solve them and they'll get paid money, and then there will be patents.

And it was sort of right. You know, if you go look at the rate of patenting in the Mellon Institute, it's phenomenal. And they did all these kinds of things while they kind of worked on what would become penicillin, and they got it wrong but someone else – blah, blah, blah. You know, you name it; that stuff happened.

So I think what Coolidge was is a kind of sage New Englander who was supportive of that spirit. And as evidenced in that ag story, he understood creative destruction and change and was comfortable with it. So, yeah.

MR. THOMAS: Right there.

Q: Thank you. Hi. Minky Worden. I'm at Human Rights Watch. And I'm afraid I haven't had a chance to read the book yet because my husband has been hogging it. (Laughter.) I couldn't help but think his comments about farmers today would have gone very viral on the Internet very fast.

Can you give us an idea of which contemporary politicians share some of the same values as Coolidge? Sorry to put you on the spot.

MS. SHLAES: That's so loaded, though. Oh, thank you, Minky, for that question, though. (Laughter.) That's so loaded. I think any politician who – I see to the left, in the corner of my eye, Dean Cooley of NYU, who might – I was thinking might amplify the entrepreneurial question. So any politician who thinks about economics in a new way and doesn't just look at aggregates or monetary – Milton Friedman was not Coolidge's person. Just as Coolidge wasn't a neocon in foreign policy, he wasn't a monetarist either. He would have said this is credit.

So if you hear someone talk about trust and banking and very small business, that would be more the Coolidge end of it. It's public already because he's on the jacket of the book, but Paul Ryan cares about – has the temperament of President Coolidge, which is the one who will always, you know, look at the numbers, even firing the housekeeper and so on. So that's very, very interesting to see. I'm wondering about – I've heard Mr. Cruz, Senator Cruz, talk about "debt first," which is unusual for a politician, particularly in this quarter, right? Everything seems sort of rosy now. But I do think anyone, including Democrats, is capable of doing what Minky asked. Thank you.

There's Dean Cooley.

Q: Hi. Tom Cooley from NYU.

Amity, to what extent do you think Coolidge's success was at least in part because he was fortunate enough to be pursuing this program at a time of great technological innovation, that he was lucky in a sense that he was in that spot when there was this wave of innovation, electrification, mechanical agriculture and so on?

MS. SHLAES: Tom, I do – I should mention this is the co-host of a wonderful conference we had here, which was burning hot, right, a few years ago on the – it was called the Second Look conference. And we looked at the 1930s, and Tom presented a paper and others did, what really happened in the 1930s. And we looked at labor price and a lot of other things like that. Professor O'Hanyon (ph) was here.

Of course he was lucky. There were a lot of ideas. But you want to look at what made – when do ideas happen? Some of this is timing, right? So war was gone, so that meant the ideas could be developed, right? Edison had already – the assembly line started in 1913, for example, but when could we get some fabulous productivity gains from it in the '20s? If you look at the productivity gain data, right, it's so glorious, not only labor but also capital.

What else happened in the '20s, because – in addition to peace, we cut the capital gains tax. And more importantly, it was uncertain how capital would be treated and whether it was subject to the income tax at income tax rates, which going into the '20s were 70 (percent), or whether it was not taxable at all, kind of a European notion, and they kind of established, well, it's going to be 12 (percent).

Well, that was an enormous liberation from – and ended what they called in that era a capital strike. The capital was less nervous. That was part of normalcy. So those are two factors. So you have luck, OK, and then you have environmental factors that reduce your concern.

But third of all – and this is what's so intensely modern and surprising to me about Coolidge – he really liked networks. He would have understood Facebook. He would have been working on that math trying to figure out which node, you know, with the higher mathematicians, because Vermont was covered with railroads. And Tom is from Vermont I think originally, right?

OK, so it's a sea place covered with railroads, even though the hills and the grades and the different – but the one place the railroad chose not to go was his town. It went to Rutland. It went to Ludlow, where Okemo is now. It went to Woodstock, right? It didn't go to Plymouth Notch, and Plymouth Notch died because of it.

So he saw the incredibly high price of not being in a network, of not being – and he got all obsessed with them. He's one of those boys who played with trains, definitely. And so he moves to North Hampton and they had trolleys, and his wife is on the floor building trolleys with – their boys all have cars. His wife spent her whole, you know – well, five or six years on the floor building trains with the kids, and Coolidge spent – meantime was off doing the politics of trolley finance.

Oh, North Hampton was connected to Hadley, which was connected to – which was connected to Amherst and the trolley. And he got his father to invest in trolley stock, which was a bad idea, because he so believed – and so then very late in his life he liked things like that go. He didn't drive himself, he was too preoccupied, but he liked things that go and he got very much obsessed with aviation.

So insofar as you have a president who understands the potential of innovation to completely transform something, he had that, which is unusual for someone who's basically a lawyer-politician, isn't it? And I like that very much about him.

His proudest moment ever I think – and it's the high point of the book – is when his little village, as I said where nobody went, the dying Plymouth Notch, Charles Lindberg kindly overflew it and dropped down a note: To the town of Plymouth from Charles Lindberg. He was already famous, Lindberg. And that was – he got – that was like the only connect. The connection that you always long for suddenly – even commerce could connect even Plymouth Notch. So I find that non-luck. I find that wisdom, right? Thank you.

MR. THOMAS: Sir?

Q: Roger Louis, National History Center and University of Texas.

Amity, I thought one of the most interesting parts of the book were Coolidge's reflection, his thoughts after he ceased to be president. On the changing political circumstances and economy would you comment?

MS. SHLAES: Well, I'm very glad to see you and very proud of the University of Texas. The Bush Center is very proud of the University of Texas, even though we are affiliated with SMU. And I'm especially glad to see you because I am the mother of a young man who is graduating from UT in a day or two. So I'll just say that.

So wait, now I'm – the question was, what did he do after the presidency when the letdown – well, it's not always given to us – I think I wrote this – to be appreciated for what we did in our retirement, is it? Well, maybe what we did is appreciated but after we pass. And that's the sort of challenge of retirement, to find utility in that time absent appreciation.

And the presidency is a vanity machine, right? It serves one nonstop. Coolidge wrote this. You know, yes, people are saying how great you are every second of your day. They're lying their heads off to tell you. (Laughter.) And even someone who's not a narcissist is sort of forced into the narcissistic mode, right: I am great. Everyone says I'm great. And it's all about me all the time, because – so recovering from the presidency is probably worse that recovering from being a talk show host. (Laughter.) I mean, it's very, very difficult.

And he had his difficulties handling it, and he did it in two ways. One way, he needed a routine. And he got a routine because he got a column, and the column was enormously successful. He made more money than he ever dreamed of, twice of three times as much as he made as president. And it embarrassed him after a while how much he made. And he bought a house and that was about it. That was enough. So that was one good thing. I mean, when you have a little sorrow you need a routine first, even before – it might not be a perfect routine, but a routine, and the column was his routine. And Mr. Beavey (ph) came and so on.

And the second thing he did was kept his mouth shut. Very difficult. Well, do you prefer Ryan or Cruz, right? You know, do you prefer – what do you think about – let's talk – no, right, which I think reflects great discipline.

And the one thing that I very much admire, I will say, about President Bush and his association with the Bush Center, is he really doesn't say what he thinks about what President Obama is doing. He's really quite supportive. And you can see how incredibly hard that must be after the presidency, if you're still sentient. And when Hoover – (laughter) – Hoover was going to be nominated, Coolidge arranged – I mean you should have elective surgery or something at each of these moments. You just don't have to be conscious, so you don't say anything.

Coolidge was hoping to be in a holiday place where there was no radio or electricity when Hoover won the Republican nomination so he wouldn't say anything, but his wife was sick and that plan was ruined, and he actually had to be available to reporters when someone he didn't like was nominated for his job. And he still managed to shut up, which is hard. (Laughter.)

MR. THOMAS: He wrote in his autobiography, "It is difficult for men in high office to avoid the malady of self-delusion. They are always surrounded by worshippers. They are constantly and for the most part sincerely assured of their greatness." (Laughter.)

Sir.

Q: Hi. I'm Eddie Fishman, Foreign Affairs magazine, I guess a former colleague of Archibald Coolidge.

MS. : Microphone.

Q: Oh, sorry. My question relates to the Great Depression, which I guess was sort of referenced in the last question. I mean, I guess it sort of broke out quite soon after Coolidge left office, so I'm just curious what responsibility if any do you think that Coolidge bears for the economic collapse of 1929. And if not, who can you blame it on if not Coolidge?

MS. SHLAES: Oh, thank you.

Well, if I were like Coolidge I would answer with my monosyllable, right? No. Not – right? (Laughter.) But every president has some responsibility for what follows him, right? "The Forgotten Man" is a history of the 1930s, so in "Forgotten Man," which is the first book, to which this book is the prequel, I think – there was a crash.

In Coolidge's career there were six or seven crashes. His life about correlates to the experience of the Dow. The Dow Jones Industrial Average starts in the 1890s. He saw crashes. They went 30 percent. They went more. It never happened that a Great Depression of 10 years in Coolidge experience followed a stock market crash – market crash, and then it fluctuated back up.

So he expected the market to crash but he didn't think it was the president's job – he was profoundly uncomfortable with a high market. But he didn't believe it was the president's job to manage the stock market. We had no SEC at that time, and it was New York State or the Martin Act or something. I mean, what laws did we have? And the self-government of our stock exchange friends, the brethren who were in charge of that. And everyone did not have stocks in '29, contra myth. If you go back and look, I think 10 percent of Americans held stocks. It wasn't 50 (percent).

And so he expected the stock market to crash. He didn't expect the Depression to follow. He wouldn't have believed the Depression was caused by the crash. He would have been right. The crash was caused by a number of things – excuse me, the Depression was caused by a number of things, starting with the crash and then we had a big monetary event. We had international events written about by Mr. Kindleberger, for example.

What we've looked at as well is general mode of intervention. There's a beautiful new index created by Mr. Davis of the University of Chicago, with Mr. Baker and Bloom of Stanford, which looks at policy uncertainty as causing depressions or delaying recovery, and they identify, through their new metric that '32, Hoover was very much to blame with his call for general action, the perpetuation of the downturn, particularly the stock low, which was '32, right? I'm feeling a little nervous having Dean Cooley here, but I believe the Dow hit its low of 41 in 1932. So they, with this great new metric they created, pinpoint Hoover, and I sort of intuitively would do that too.

If you look at the Depression over the years, another thing I've worked on, and systematically scholars like Harold Cole and Lee Ohanian have worked on is whether the labor price made the Depression worse, specifically whether forcing wages up in the name of what we would call Keynesianism or politics caused employers not to hire or rehire. And that goes very well with, you know, nice work if you can get it, or our own memory of that period, which is that it was OK if you had a job but it was very, very hard to get one, especially in the later '30s. So there you would start with Hoover's exhortation to employers not to let wages go down in the autumn of '29, which is very different from other recessions when wages were allowed to go down but people got to keep their job.

And then you'd follow it with a lot of laws that we had, whether Hoover and then Roosevelt, to prop labor price wages up – Davis-Bacon Act and then National Recovery Administration, and then of course Wagner Act, minimum wage and so on. So, I mean, there are many, many factors but I don't blame Coolidge.

MR. THOMAS: If you could hang on for a mic one second.

Q: Thank you, Amity. I'm Padma Desai, Columbia University. You said that he was president for 67 months, and when he left, the federal government was smaller. But, I mean, when he left, the economy was prospering. Would you say that there is an inverse relationship between the state of the American economy and the size of the federal government? For example, now the economy is not doing well, right? So the size of the federal government can be and perhaps should be bigger? I mean, I sound like a Democrat but –

MS. SHLAES: It's OK. (Laughter.) I think –

Q: Do you think that is that kind of a relationship, that when the economy is doing well, prospering, the size of the federal government can be smaller?

MS. SHLAES: It doesn't need the federal government.

Q: Yeah.

MS. SHLAES: Well, there is that argument. He wouldn't have necessarily – Coolidge was complicated and he wouldn't have said no government ever. He might have said – he was basically a state progressive. So he was a federalist, so he would have said the state of Massachusetts should provide the soldier pensions. Well, they did, many, many states. Or the state of Massachusetts should have deposit insurance, and they did.

In my own experience, sometimes smaller government promotes recovery, but politically we often tend to get bigger government come to the rescue, and sometimes government rescue is helpful. Sometimes government projects are helpful. Evan here wrote about Eisenhower. We know that sometimes infrastructure additions like highways are a good move by the federal government. So it's not as black and white or party political as one might think.

MR. THOMAS: Sir.

Q: Hi. I'm Greg Kuparich (ph). I'm from – yeah, his –

MS. SHLAES: It's Roger's colleague.

Q: Yeah, I'm from GW Law School. I'm afraid I haven't read the book yet but it is on the top of my post-exam reading list. (Laughter.)

I just wanted to ask if you thought that if Coolidge had been elected in '28 – or I guess more importantly, if he had lived into the '30s, if he had been able to arrest the slide of the United States into really hard-core isolationism – because it's always seemed to be to me a hallmark of his foreign policy, the Dawes Plan, the Washington Naval Treaties and everything going on in Asia – that there was an implied guarantee on the part of the United States that they would essentially back up this settlement plan which they were not a party to but that they were deeply interested in.

Because it really does – or do you think that the scale of the financial collapse would have essentially meant that we, you know, turned inward and basically let the rest of the world go on to their own devices, no matter whether or not he had been elected in '28 or if he had lived, you know, into the 1930s and '40s.

MS. SHLAES: That's a great question and a complicated one. So would he have gone over to Europe and eased credit? What could he have done that you're imagining?

MR. THOMAS: Well, really if – essentially if he had – because despite the sort of popular opinion of isolationism in the '20s, the entire thrust of his foreign policy, which this place is actually a direct response to, was making sure that America remained engaged with Europe and with especially Japan and with China but not actually putting, say, American troops or fleets right there. And I know that when FDR came in, despite his sort of later presence in World War II, his administration, for the first two administrations, was probably the most isolationist in U.S. history.

MS. SHLAES: Right. Well, you think of FDR – I mean, we know the story not just from Lee Cott's (ph) book, but also from John Brooks before, or from other accounts of the great London monetary conference where we just did whatever the heck we wanted the whole time, where FDR, he was sort of like sending missiles from his boat over to London, and Ramsay McDonald got all upset, right, and Shalimar Shoch (ph) said: What the heck? It's OK for the Nazis – for me to be with the Nazis because these American people are so unpredictable. I'm shortening it. But, yeah, if that's what you're referring to.

Coolidge isn't perfect, so you have a certain solicitousness on his part. If you look at his calendar you'll see it's one meeting after another with the Japanese ambassador. The president of the Tokyo University is, oh, it's got to be lunch. He's very good at understanding that the presidency was much about relations with people. He went to Cuba, and I chronicle that. So that's for it.

Mellon – one reason we were so easy with credit here was not because Mellon, you know, was crazy or because Montagu Norman had a romantic relationship with Benjamin Strong, but because they thought, well, it's easier to forgive loans – excuse me, to ease terms in Europe than to let Europe default. That was basically Mellon's policy: Well, let's ease up a bit. They were like Bernanke with homeowners, right? Let's ease up a bit, and then they'll recover and then they'll honor credit in the future, and markets will – et cetera.

So that was sort of the good part that I got to know. The bad part is that tariffs don't go with that, do they? Do they, right? And Coolidge didn't sign the great tariffs but the presidents before and after him did. And those were kind of thumbing – nose-thumbing gestures, sort of like what Roosevelt did – I had never thought about this; thank you – Roosevelt did that the – it's like, we don't care about you. We have to have tariffs.

And Coolidge could have done more to reduce tariffs. The president had some executive discretion, and he didn't really ever – you know, if you want to say what are the worst things about Coolidge, he was occasionally really mean to his wife and he supported tariffs. (Laughter.) You could get some bad marital snapshots. So those are the two.

So I don't give him an A on that, but I was interested to see the extent to which they worked with, you know, credit and all that in the deep hope that Europe would recover and be a better partner in future. And if you look at Kellogg-Briand, it's called Kellogg-Briand because we want to conciliate with France and we want to get them back on a payment schedule, and so we're engaging them on this quasi-silly exercise.

MR. THOMAS: Anybody else? Well, let's stay for cocktails. Thank you very much.

MS. SHLAES: Thank you very much too. (Applause.)

(END)

EVAN THOMAS: Good evening, everybody. Welcome to today's Council on Foreign Relations meeting with Amity Shlaes, "The Great Refrainer: The Legacy of Calvin Coolidge." This meeting is a part of a series that the CFR is cosponsoring with the National History Center, an initiative of the American Historical Association. We'd like to thank Roger Louis, who is sitting right here. He is the director of the National History Center and helped us create this series, which aims to make a connection between U.S. foreign policy and history.

Amity Shlaes is the director of the Four Percent Growth Project at the George W. Bush Institute. You've all read her columns and pieces over the years in the Wall Street Journal, the Financial Times, Bloomberg most recently, Forbes, other publications. Her book, "The Forgotten Man," was a huge best seller, argued that FDR made the Great Depression even greater and got us hooked on the entitlement state. She has now written "Coolidge." In fact, she wrote it right here at the Council on Foreign Relations, I believe. Her biography of "the great refrainer," as she calls him, also sold very well. It's been very well received. I read it over the weekend. It is a fascinating book, which you should buy right out here.

She has a great eye for detail. She gets "silent Cal" in all of his rocky New England recalcitrant glory. Here is a love letter Cal wrote his intended, Grace: "My dear Miss Goodhue, the mosquitoes? Have you recovered from them yet?" Period. (Laughter.) A man of few words who got right to the point.

Amity, you called Coolidge "the forgotten president." Why should he be remembered now?

AMITY SHLAES: Thank you, everyone, I'll say.

I think you could say it in one line: He was president for 67 months of peacetime, and when Coolidge left office the federal government was smaller than when he came in. How about that?

MR. THOMAS: And that is remarkable. (Applause.) And that's a model for us today?

MS. SHLAES: That could be a model for us today. Also, presidents are also like stocks or baseball players. You look for the one whose price and value are far apart. If you are a biography entrepreneur and Coolidge is priced so low, ranked in the bottom quarter of presidents, and his value is so high, that he seemed a good investment. (Laughter.)

MR. THOMAS: So tell us a little bit about how you got to him. Why did you do Coolidge?

MS. SHLAES: Well, I want to thank very, very fast my dear colleagues in this room who made this book possible, especially Professor Bhagwati – Professor Bhagwati, behind him Professor Desai. And I don't have my long glasses on. Nancy Bodurtha is here, I saw. And I know Janine Hill was signed up, but to all of you, thank you – Richard Haass and everyone – Benn Steil – who helped.

Why did I get started on – when I was studying "The Forgotten Man" and learning about the 1930s, I was thinking, what came before? And in the end I had to write an additional chapter, the first chapter last, which is what came before the New Deal and also what came before Herbert Hoover, because in "Forgotten Man" I actually group FDR and Hoover together as two interventionists. So they seem quite similar in that regard.

And what came before was this unknown fellow, Coolidge, who didn't talk and people made fun of him all the time, especially people who were academics. That's always a key. You know, why are they disliking him so much? What bugs them about – you know, often there's a reason.

And Coolidge intrigued me because he had held back as a manager. A lot of us study management, you know, in business school and so on. Who is a good manager who knows how to delegate how could he do that, and usually presidents are supposed to be strong and masculine and commander in chief and so on, and here he was a true delegator as a president.

So that was interesting too. But the final answer is in the book about the '30s, "The Forgotten Man" could be subtitled, "how they wrecked it," right? So this is a book about a period that started wrecked, and it's how they fixed it, especially how Coolidge helped to fix it. How do you take a mess and fix it? That's what he did as a president, along with Harding.

MR. THOMAS: And how did he do it, exactly? What was the mess and how did he fix it?

MS. SHLAES: Well, the mess was they came out of the war, World War I. They had inflation, though they lied about it. They had a terrible debt. Today we speak of trillions. They had billions – which were disconcerting to them – billions and billions in debt where they had very little before. The budget was not in balance. The tax rate was in the 70s. There was unemployment. There was unrest and a sense, well, the U.S. might go the way of Europe, and yet somehow the U.S. stabilized. As the pendulum was swinging, it became more stable.

And Harding and Coolidge ran on a ticket of normalcy in 1920, which again sounds like a really off-putting concept – they want us all to be normal or stupid – but what they meant was – Coolidge was a stickler for English so he didn't like the word normalcy. He said "less economic uncertainty." That's what he thought normalcy was, and that sounds more familiar to us. So Coolidge – they ran on a ticket of making the government more predictable and probably smaller.

And then they did it. And first Harding did it but, you know, long story short, Harding had the idea to say no, to cut back, and he had the party platform to say no, but some of this is also about temperament and who you are, and Harding had a heart that said, yes. He always liked to say yes to colleagues and say yes to friends, so he didn't really have the guts to follow through with the program, and he only vetoed a few times. And, you know, we know all the scandals about – whereas Coolidge had the plan, the doctrine, the party assignment, and also the temperament to cut, and so he did. He finished the revolution that Harding started.

MR. THOMAS: There's a strong moral tone in this book. The first sentence of it, for those of you who have read it, is "Debt takes its toll," and is referring to I guess his great-grandfather. But there is a strong sense of Coolidge as a moral man exercising moral leadership. Talk to us a little bit about that, and bring it up to the present if you can, whether that's even possible today.

MS. SHLAES: Right. Well, the Coolidges made balancing the budget and also allowing the economy to grow – they didn't use "grow" as a transitive verb. You know, we don't grow plants. Plants grow. We create the environment for plants to grow, so that's – you know, when we talk about growth now. Everything was about this, and Coolidge didn't just say that happens over there. Even the Coolidge household was about these policies, so that when they got a gift from the mayor of Johannesburg in South Africa – it came by ship – two lion cubs, twins – twin lion cubs for the president, and they named them Budget Bureau and Tax Reduction. (Laughter.)

MR. THOMAS: Had to.

MS. SHLAES: Great name for your pets, right? And when I talked to – you know, when you talk to post-war economists about this, when you talk to the Republican Party about this, you talk to the Democratic Party about this, John F. Kennedy if he were here – the point was – and they fed them steak evenly, and you can see in the Library of Congress pictures of the steaks that were put out to lure the lion cubs. They grew. They grew evenly. And they didn't have a big old lion called Tax Cut and a little bitty runt cub called Budget Bureau. They always were supposed to weigh the same.

And Coolidge was making a point. He felt you couldn't cut the tax rates, even if you got more revenue, which you often did, without being sure you had an eye on the budget. And I like about Coolidge that he was profoundly uncomfortable with the responsibility of all this money. Do we all know people like this? And he wasn't so sure about what he was told about the tax cuts. He was told that if he cut the rate, he might get more revenue. And he didn't like that for two reasons.

One reason was, what if you didn't get the revenue and then you had a deficit and it was your responsibility, right? So that was bad. That was really bad. But even worse was the possibility that you did get the revenue. Well, then the Democrats or the other Republicans, those Progressives, might spend the money and make the government bigger. So there he was between two hard places with this concept of tax cuts and getting where more revenue, but the fact was – and that's just a different temperament from a modern politician of either party.

MR. THOMAS: Well, I mean, so Ronald Reagan may have put his portrait in the Cabinet room and all that, but he's not a supply-sider as we understand them in the modern sense. I mean, scientific taxation is the equivalent, but that's not the way his mind was working, right?

MS. SHLAES: Well, his mind – I didn't really say it well, but there was another factor, which I think is a supply-sider or a Democrat conservative, fiscally, might take up. I mean, he really believed in political trust. So if he squandered the money that came in from the tax cuts, which it did – statistics of income, you can see it right there – then the voters might not trust him and trust the presidency. And he saw his job as sustaining the presidency as office, and cleaning it up, because, as we recall, Harding tarnished it. Harding was a slob, just as Alice Roosevelt Longworth called him.

So Coolidge wanted to clean up that office, and he did by always sort of monitoring everything. And when the money didn't come in, well, he thought he might raise – he thought maybe we should have an auto tax. Why is that? Well, it's very close to what we needed the money for, which was highways. He didn't get as far as Eisenhower, your period, but, well, if we're going to get in the highway business at all, well, then an auto tax is the best kind of tax because the levy is close to the project for which the money will go. Well, that's closer to fee-for-service, less susceptible to corruption.

All these thoughts were going through his head. And I like that. I wouldn't say he's – I don't want to make it out that modern Republicans or modern tax-cutters of any party are so different that he would hate them, but he's just a slightly different animal. It warrants study. And this trust part is especially key. He did earn voter trust.

MR. THOMAS: We think of the 1920s as a pretty wild, loose time. We associate them really in some way more with Harding's behavior than with Coolidge's. Did Coolidge make an effort to affect American mores? Did he inveigh against loose living?

MS. SHLAES: Well, he was a pragmatist who believed in the rule of law. And the problem with Prohibition was people violated the rule of law all the time with Prohibition. It wasn't the alcohol that bugged him. It was the erosion of the rule of law because people got accustomed to going around the law. So that bothered him even more – Mellon used to write in these reports of the irritation because we had to spend so much on the Coast Guard to stop all the liquor coming in, right? You know, you imagine the Treasury secretary writing these.

They didn't like the Prohibition law because it got in the way of other projects, but they knew they had to sustain it. So in that area he was completely pragmatic, even vis-à-vis Prohibition, this being, I guess, the symbol of morality of that period. He didn't like false morality, and you can even see it in his stock purchases if you look closely, because we did have access to some of his, by themselves.

And one of the – one of the products he bought was Standard Brands, which was recommended by the Wall Street Journal as a good hedge against depression because Standard Brands was a sort of amalgamation of food stocks, including yeast, and people – well, people will buy food even in a depression, right, and Coolidge was hedging for the Depression. But he was also hedging – going long on yeast, which was what would be necessary when Prohibition ended. He knew all about beer. He had been of counsel to a brewery as a young man and he knew that beer was important to economic growth. (Laughter.)

MR. THOMAS: He sounds like a – he doesn't really sound like a politician. I mean, he sounds like sort of a normal New Englander maybe, but a normal – he doesn't sound like somebody who's out there caging votes, and yet he was a very successful politician.

MS. SHLAES: Well, in a way he was caging votes – that's a good question; thank you – more than we are because they didn't have radio most of his career, so he had to actually shake hands with everyone: I want your vote. I need your vote. Thank you. He couldn't just say it over the radio even until well after World War I. So that required a lot of shoe leather to do that.

But yes, you're right. He was a child of the period when senators were picked by state legislatures. He was moreover on the continuum of the republic than we're accustomed to today, less of a democrat – lower case "d" – and highly concerned with sustaining a balance there and keeping higher morals in the U.S. So the most crucial decision of his life was the one – he was enormously popular and the Republican Party was even more neurotic than it is today, and they wanted him to run in '28 because he was popular, and yet he chose not to run, famously.

And I'm sure, having looked at the papers – and you can read it right in his autobiography – that the main concern there was political corruption. He wrote: It's important to change officers from time to time. Power corrupts. Absolute power corrupts absolutely. He was acting like – and that was a moral decision that was very painful because, guess what? When you do something moral and upright and wander off by yourself, well, everyone doesn't always follow you, do they, right? You pat yourself on your sanctimonious back but it doesn't mean the crowd rewards you for doing that you think is right.

And his party wasn't grateful that he saved the presidency by sparing the office. They were angry because they thought they might lose the election. And they turned on him and he was alone in this moral decision not to run again. So it's interesting.

MR. THOMAS: I mean, can you imagine a modest, reticent, taciturn presidential candidate today? Is that even conceivable? (Laughter.)

MS. SHLAES: I do think it is. The times have to be a bit harder. Right now we're a bit anesthetized, for whatever reason, I think.

MR. THOMAS: But that's interesting. You think if things got harder and tougher, people might look to that time –

MS. SHLAES: We could have a thought experiment. We've all been just writing these columns because, unfortunately, Mrs. Thatcher passed away, right? And if you do a thought – I can see some people who are in the U.K. in the early '70s and may have met some Tories. And if you met the Tories in the early '70s, they didn't say, we want an "iron lady." They said, we want to be compassionate conservatives, didn't they, the Tory Party.

But, you know, there were some difficult events in the United Kingdom. The economy really had some terrible trouble, and suddenly the party developed an appetite from the lady who became, you know, Prime Minister Thatcher. So she was – that kind of figure was not attractive, right? He wasn't really like that, was he? So it depends a lot on the times. What seems important to me is that we appreciate that these models exist, so when the moment comes that we need another kind of candidate that we've at least thought about it, you know?

MR. THOMAS: I mean, it does – he came before the period you write about in "The Forgotten Man" when the welfare state is essentially created, the entitlement state. We've become – Western democracies have become pretty addicted to this state in which we have enormous entitlements and welfare benefits. It's hard for me to imagine modern democracies taking away those benefits and really truly cutting back, and yet it seems that maybe have to. I mean, are we permanently addicted to the welfare state, or is it possible to ratchet back?

MS. SHLAES: Well, eventually the dollar won't always rule. Eventually there will be a challenge to the United States and it will have to be like other countries that are a bit concerned about their currency, and then have to ratchet back in order to – right, in order to sustain. We just haven't reached that point yet.

MR. THOMAS: As long as we're the reserve currency we can keep printing money and just –

MS. SHLAES: As long as we're in this kind of – we're the important reserve – we have a vanity and a certain provincial aspect that we think we do what we choose because of our culture, but eventually there will be pressure enough – not this time there wasn't, but there will be – it was sort of perverse but eventually there will be a challenge to us, and then we'll have to be like other countries. You know, maybe we'll put our interest rate up and then we'll – you know, we'll think it through.

MR. THOMAS: Well, other countries aren't so eager to do it either.

MS. SHLAES: No.

MR. THOMAS: I mean, I can't say that Europe – Europe has done some, but they seem to be backing off, and in fact I would say Paul Krugman is winning the argument these days, you know, against austerity, and Europe seems to be backing off on it, and certainly you aren't hearing a lot of arguments here for it. It seems to me the tide is going the other way right now.

MS. SHLAES: Krugman is a long way from Coolidge. (Laughter.) I'm not going to rise to – necessarily rise to that, right? I'm just kidding. I'm sorry about that one. But it's easy to win when we have such low interest rates, so there's a certain circularity to it.

MR. THOMAS: Right.

MS. SHLAES: And when companies have been waiting to grow for a long time.

MR. THOMAS: So what's the scenario that brings the day when we have to face –

MS. SHLAES: Well, honestly I don't think I could go farther than that. I just have observed over time, and some of us have, that things change quickly in countries, and then all of a sudden a different model shows up. I actually brought a document with me because this is the Council on Foreign Relations and I wanted you to know that Coolidge had relations with the Council on Foreign Relations. In 1922, at the very – if you don't mind me –

MR. THOMAS: Please.

MS. SHLAES: – at the very beginning of its existence, because his cousin, Archibald, was editor of Foreign Affairs. (Laughter.) And Archibald went to Harvard and Coolidge went to Amherst. And Archibald was a very fine person, also involved with the Harvard library and so on. And Coolidge was just a swamp Coolidge, from the point of view of the Boston Coolidges. There was a whole thing going on which branched the family you were in, and the Boston Coolidges were related to Thomas Jefferson and they thought they were very fine. But there was an interaction between the two of them.

The first thing I wanted you to know, when Coolidge became the candidate for vice president, the foreign newspapers had to react, and of course they had never heard of any Coolidge but Archibald Coolidge, and so they wrote – I found the Berliner Tageblatt wrote, "Through the victory of the Republican ticket, Archibald Coolidge has been elected vice president of the United States." (Laughter.) Imagine how old Calvin from Vermont and Amherst felt that.

And Calvin, because we're at the CFR, I wanted to let you know that when he became a vice presidential candidate, he decided to study foreign policy. He was regarded as a great provincial, right? Only Massachusetts all his life. He never went abroad until Canada, right, until he was president. And he wrote to Archibald for advice, because Archibald was a high and mighty, again, professor. But he knew that Archibald talked a lot, and Coolidge, you know, didn't like to talk a lot.

So he said – this is what he wrote to his cousin, who hadn't been very nice to him before, right – too famous, the cousin: "You are familiar with Europe, European subjects, which I am not. So I wish to ask you if the following statement would be correct. Perhaps you can indicate by writing yes or no" – (laughter) – "and returning it to me." So here's the statement. Here's the Coolidge-to-Coolidge question, the statement: "The great powers of Europe made a treaty for neutralization of Belgium, under which they agreed not to violate Belgian territory by invasion before World War I." And I believe that the Harvard cousin could not refrain and wrote many paragraphs back about the neutral status of Belgian in diplomatic history.

That gives you a feel for him. He wasn't anti-intellectual at all, but I think he posed too – there's an act here as anti-intellectual vis-à-vis – you know, vis-à-vis some others, and I like that very much about him. It makes me laugh.

MR. THOMAS: On foreign affairs he was a little naïve about international law, yes? I mean –

MS. SHLAES: So I'm wondering what you think about that because –

MR. THOMAS: I think he was naïve about international law.

MS. SHLAES: So I was hoping there would be someone here from Ethiopia, because what happened was he stewarded the Kellogg-Briand Pact all the way through, right? And he achieved what Wilson did not, which is he got an international treaty through the Senate with great effort, working with Kellogg, who also read the law. Kellogg was from Minnesota, right? But this pact outlawing war was naïve, right, incredibly naïve because it provided cover to bullies like Mussolini.

And one of the things that I noticed that was very compelling was the prince regent, I guess he was, the young man leader, not yet the total leader, of Abyssinia-Ethiopia was the man who would become Haile Selassie. And he sent Coolidge a giant gold shield, you know, sort of a sign of tribal respect: I send you the most valuable thing I have, with lots of precious stones in it. And Coolidge sent back four law books. (Laughter.) And that was definitely – they said a – wait, a "swordless sheath" is what the treaty was.

But that gives you an idea of who he was. He really, rather like Wilson, believed in international law. And some treaties – and we can see now that that was naïve. I agree with you.

MR. THOMAS: He was sort of a flinty, tough guy in some ways, so I'm sort of surprised that he was as dreamy as he was about the efficacy of international law.

MS. SHLAES: I think anyone who greeted the troops when they came home from World War I, one-third of them was disabled. They were missing legs. There were no antibiotics. There were no beautiful prostheses. They couldn't do Wounded Warrior. You know, there was none of this culture. And the troops came home and they were disabled and their wives didn't work.

It was incredibly grim and painful. And Coolidge as governor had to go out in the little craft and talk in the megaphone and say, welcome back to America, to these lice-ridden, wounded people. Anyone who experienced World War I close-hand was grossed out by it forever. It just was so awful. So that made them dreamy and insane in their effort to prevent war.

MR. THOMAS: We're going to turn to the members in a moment here, but let me just ask you, what is the lesson that – and I know this from trying to do similar things. This is a dangerous game to play. But what is the lesson you want us to take from today from Calvin Coolidge?

MS. SHLAES: Two things. Just that there are other models of leader. A low-key delegating leader can succeed also politically. He was, as I say, enormously popular. He had more votes – there were huge numbers of Progressives in 1924 when he was forced to run for president, and he won the election with an absolute majority, with more votes than the Democrats and the Progressives combined. The Progressives had 17 percent, like Ross Perot or something. Nonetheless, he took Coolidge running on austerity, wearing the red letter on his breast of A, won. And he would have won again in '28.

So, one, austerity can win, even when progressive movement is strong, and also that austerity as economic policy on the part of the government can co-exist with or even foster prosperity. So we tend to say, oh, austerity – there's another book out this month, austerity is terrible, right – that it can co-exist with or foster prosperity if the government becomes smaller and holds back. So thank you for asking.

MR. THOMAS: OK, I'd like to invite the members to join our conversation. A reminder: The meeting's on the record, and to please wait for the microphone and speak directly into it. Stand and state your affiliation, as you all know these rules. And please limit yourself to one question, and keep it concise to allow others to ask questions as well. So who would like to ask a question? Don't be shy. Sir.

Q: Tim Ferguson with Forbes, a former colleague of Amity's. Congratulations on the book.

A question about the politics of the severe farm downturn that occurred during Coolidge's presidency. I'm just curious, within a Republican Party that was traditionally strong in the farm belt, what effect that had. Was there at that time no expectation that there would be federal bailouts of any kind?

MS. SHLAES: Thank you for the question, Tim.

We know there was a depression for farmers in the '20s. Everybody else didn't have a depression, more or less, but the farmers – prices low, especially at the beginning. They had terrible problems with mortgages. Coolidge came from a farming town, nominally farming, because later the agricultural – you know, some New Deal authority went to his town and found that not a single acre of Plymouth Notch was truly arable.

So he came from a farming place that was always failing and where half the people had left. And his father ran a cooperative cheese factory. So what is a cheese factory in a time before refrigeration? It's sort of an exercise in desperation. You can't refrigerate your milk and your train doesn't come to your town, so you make cheese, which is less perishable, and send it, what, by cart to Boston.

So he knew very well of the hardship of agriculture. He lived it. He had in his pocket several hundred acres he never mentioned. You know, background family money, right? And yet he was hard on farming in the following way: He believed in federal subsidy for co-ops like his father's, but he didn't want to create a giant international system where you might subsidize farmers to export, which is what the complicated McNary-Haugen law. Let's see: Take it overseas, sell it for lower prices, dump – you know, he really didn't like that. He vetoed those laws twice. And people were astounded that he would do it.

And he had a key ally in that, Tim, in California. It's the reason for the friendship. It was Herbert Hoover, because Hoover was of California. He went to college there. He was in the first pioneer class of Tim's college, Stanford, but he didn't like ag subsidy. And so without Hoover I don't think it would have been easy for Coolidge to battle the Republican progressives. Remember, many of the Republicans of the West were for farming subsidy. It wasn't just – this wasn't Democrat versus Republican.

And the two things I'd say about it is that Coolidge was very tough to veto McNary-Haugen, the big bill. And there's a famous story where Mr. Cooper from one of the farm boards – there were those then too – came to see him and blah, blah, blah, the farm has been suffering and – well, Coolidge said: Farmers never have made much money. I don't suppose they ever will. (Laughter.) I don't suppose there's much we can do about it. Very tough.

What was the – was he – (inaudible)? Not at all. What he believed was probably most people who live on farms should move into the town. And you can see he made a very great conciliatory trip to the Dakotas in '27 basically to shake the hands of all the farmers who were moving into the town. And there's a famous story where he went to greet a famer and talk about this and that, and it turned out that the farmer wasn't a farmer anymore; he was an automobile salesman.

Coolidge believed in the mobility of people, and that the economy was shifting. It wasn't that he hated farmers. He just thought probably also more people might move to the city and farming might happen with fewer farmers. So that's all there in that, so the background. And the South Dakotans loved him. That was interesting. And that was – many of them understood what he was trying to do. Their affection for independence vied with their need for subsidy, in their breasts.

MR. THOMAS: Sir.

Q: Hi, I'm Steve Mariotti from the Network for Teaching Entrepreneurship. I love this book.

MS. SHLAES: Thank you.

Q: I met you the other night.

I wanted to know, was there any connection between Coolidge and the Austrian economists like von Mises? And was he aware of that literature?

MS. SHLAES: Well, I think in the 1920s Friedrich von Hayek was washing dishes somewhere between here and 14^th Street, right? And Mises was just, what, a little bitty economist at NYU that didn't even get to be a big, full member of the department, did he, because he was a little too strange for whoever was at NYU, and he wasn't at Columbia, was he?

So when nothing – so they weren't forces yet themselves. And as some people know, the first book I ever read about Coolidge was deeply critical of him, and it wasn't a left-wing book or a centrist book or even a Samuelson book. It was Murray Rothbard. And he took from Benjamin Anderson, because they thought Coolidge was inflationist. They really hit him hard for inflation, which is a little confusing because the prices weren't going up in the '20s except for sometimes real estate and later stocks. But it wasn't even. So this is this question of is a bubble just a bubble in one sector or is it reflecting overall inflation, or what was it?

But what Austrians care about that Coolidge cares about deeply is this small businessman, or the person who is an entrepreneur. And he was very supportive of Mellon, who was a wild entrepreneurial theorist and created this whole institution, which was then novel, the Mellon Institute, what we now know as Carnegie Mellon, where he had this idea, if you put scientists somewhere, then businesses can come with their problems and then maybe the scientists will solve them and they'll get paid money, and then there will be patents.

And it was sort of right. You know, if you go look at the rate of patenting in the Mellon Institute, it's phenomenal. And they did all these kinds of things while they kind of worked on what would become penicillin, and they got it wrong but someone else – blah, blah, blah. You know, you name it; that stuff happened.

So I think what Coolidge was is a kind of sage New Englander who was supportive of that spirit. And as evidenced in that ag story, he understood creative destruction and change and was comfortable with it. So, yeah.

MR. THOMAS: Right there.

Q: Thank you. Hi. Minky Worden. I'm at Human Rights Watch. And I'm afraid I haven't had a chance to read the book yet because my husband has been hogging it. (Laughter.) I couldn't help but think his comments about farmers today would have gone very viral on the Internet very fast.

Can you give us an idea of which contemporary politicians share some of the same values as Coolidge? Sorry to put you on the spot.

MS. SHLAES: That's so loaded, though. Oh, thank you, Minky, for that question, though. (Laughter.) That's so loaded. I think any politician who – I see to the left, in the corner of my eye, Dean Cooley of NYU, who might – I was thinking might amplify the entrepreneurial question. So any politician who thinks about economics in a new way and doesn't just look at aggregates or monetary – Milton Friedman was not Coolidge's person. Just as Coolidge wasn't a neocon in foreign policy, he wasn't a monetarist either. He would have said this is credit.

So if you hear someone talk about trust and banking and very small business, that would be more the Coolidge end of it. It's public already because he's on the jacket of the book, but Paul Ryan cares about – has the temperament of President Coolidge, which is the one who will always, you know, look at the numbers, even firing the housekeeper and so on. So that's very, very interesting to see. I'm wondering about – I've heard Mr. Cruz, Senator Cruz, talk about "debt first," which is unusual for a politician, particularly in this quarter, right? Everything seems sort of rosy now. But I do think anyone, including Democrats, is capable of doing what Minky asked. Thank you.

There's Dean Cooley.

Q: Hi. Tom Cooley from NYU.

Amity, to what extent do you think Coolidge's success was at least in part because he was fortunate enough to be pursuing this program at a time of great technological innovation, that he was lucky in a sense that he was in that spot when there was this wave of innovation, electrification, mechanical agriculture and so on?

MS. SHLAES: Tom, I do – I should mention this is the co-host of a wonderful conference we had here, which was burning hot, right, a few years ago on the – it was called the Second Look conference. And we looked at the 1930s, and Tom presented a paper and others did, what really happened in the 1930s. And we looked at labor price and a lot of other things like that. Professor O'Hanyon (ph) was here.

Of course he was lucky. There were a lot of ideas. But you want to look at what made – when do ideas happen? Some of this is timing, right? So war was gone, so that meant the ideas could be developed, right? Edison had already – the assembly line started in 1913, for example, but when could we get some fabulous productivity gains from it in the '20s? If you look at the productivity gain data, right, it's so glorious, not only labor but also capital.

What else happened in the '20s, because – in addition to peace, we cut the capital gains tax. And more importantly, it was uncertain how capital would be treated and whether it was subject to the income tax at income tax rates, which going into the '20s were 70 (percent), or whether it was not taxable at all, kind of a European notion, and they kind of established, well, it's going to be 12 (percent).

Well, that was an enormous liberation from – and ended what they called in that era a capital strike. The capital was less nervous. That was part of normalcy. So those are two factors. So you have luck, OK, and then you have environmental factors that reduce your concern.

But third of all – and this is what's so intensely modern and surprising to me about Coolidge – he really liked networks. He would have understood Facebook. He would have been working on that math trying to figure out which node, you know, with the higher mathematicians, because Vermont was covered with railroads. And Tom is from Vermont I think originally, right?

OK, so it's a sea place covered with railroads, even though the hills and the grades and the different – but the one place the railroad chose not to go was his town. It went to Rutland. It went to Ludlow, where Okemo is now. It went to Woodstock, right? It didn't go to Plymouth Notch, and Plymouth Notch died because of it.

So he saw the incredibly high price of not being in a network, of not being – and he got all obsessed with them. He's one of those boys who played with trains, definitely. And so he moves to North Hampton and they had trolleys, and his wife is on the floor building trolleys with – their boys all have cars. His wife spent her whole, you know – well, five or six years on the floor building trains with the kids, and Coolidge spent – meantime was off doing the politics of trolley finance.

Oh, North Hampton was connected to Hadley, which was connected to – which was connected to Amherst and the trolley. And he got his father to invest in trolley stock, which was a bad idea, because he so believed – and so then very late in his life he liked things like that go. He didn't drive himself, he was too preoccupied, but he liked things that go and he got very much obsessed with aviation.

So insofar as you have a president who understands the potential of innovation to completely transform something, he had that, which is unusual for someone who's basically a lawyer-politician, isn't it? And I like that very much about him.

His proudest moment ever I think – and it's the high point of the book – is when his little village, as I said where nobody went, the dying Plymouth Notch, Charles Lindberg kindly overflew it and dropped down a note: To the town of Plymouth from Charles Lindberg. He was already famous, Lindberg. And that was – he got – that was like the only connect. The connection that you always long for suddenly – even commerce could connect even Plymouth Notch. So I find that non-luck. I find that wisdom, right? Thank you.

MR. THOMAS: Sir?

Q: Roger Louis, National History Center and University of Texas.

Amity, I thought one of the most interesting parts of the book were Coolidge's reflection, his thoughts after he ceased to be president. On the changing political circumstances and economy would you comment?

MS. SHLAES: Well, I'm very glad to see you and very proud of the University of Texas. The Bush Center is very proud of the University of Texas, even though we are affiliated with SMU. And I'm especially glad to see you because I am the mother of a young man who is graduating from UT in a day or two. So I'll just say that.

So wait, now I'm – the question was, what did he do after the presidency when the letdown – well, it's not always given to us – I think I wrote this – to be appreciated for what we did in our retirement, is it? Well, maybe what we did is appreciated but after we pass. And that's the sort of challenge of retirement, to find utility in that time absent appreciation.

And the presidency is a vanity machine, right? It serves one nonstop. Coolidge wrote this. You know, yes, people are saying how great you are every second of your day. They're lying their heads off to tell you. (Laughter.) And even someone who's not a narcissist is sort of forced into the narcissistic mode, right: I am great. Everyone says I'm great. And it's all about me all the time, because – so recovering from the presidency is probably worse that recovering from being a talk show host. (Laughter.) I mean, it's very, very difficult.

And he had his difficulties handling it, and he did it in two ways. One way, he needed a routine. And he got a routine because he got a column, and the column was enormously successful. He made more money than he ever dreamed of, twice of three times as much as he made as president. And it embarrassed him after a while how much he made. And he bought a house and that was about it. That was enough. So that was one good thing. I mean, when you have a little sorrow you need a routine first, even before – it might not be a perfect routine, but a routine, and the column was his routine. And Mr. Beavey (ph) came and so on.

And the second thing he did was kept his mouth shut. Very difficult. Well, do you prefer Ryan or Cruz, right? You know, do you prefer – what do you think about – let's talk – no, right, which I think reflects great discipline.

And the one thing that I very much admire, I will say, about President Bush and his association with the Bush Center, is he really doesn't say what he thinks about what President Obama is doing. He's really quite supportive. And you can see how incredibly hard that must be after the presidency, if you're still sentient. And when Hoover – (laughter) – Hoover was going to be nominated, Coolidge arranged – I mean you should have elective surgery or something at each of these moments. You just don't have to be conscious, so you don't say anything.

Coolidge was hoping to be in a holiday place where there was no radio or electricity when Hoover won the Republican nomination so he wouldn't say anything, but his wife was sick and that plan was ruined, and he actually had to be available to reporters when someone he didn't like was nominated for his job. And he still managed to shut up, which is hard. (Laughter.)

MR. THOMAS: He wrote in his autobiography, "It is difficult for men in high office to avoid the malady of self-delusion. They are always surrounded by worshippers. They are constantly and for the most part sincerely assured of their greatness." (Laughter.)

Sir.

Q: Hi. I'm Eddie Fishman, Foreign Affairs magazine, I guess a former colleague of Archibald Coolidge.

MS. : Microphone.

Q: Oh, sorry. My question relates to the Great Depression, which I guess was sort of referenced in the last question. I mean, I guess it sort of broke out quite soon after Coolidge left office, so I'm just curious what responsibility if any do you think that Coolidge bears for the economic collapse of 1929. And if not, who can you blame it on if not Coolidge?

MS. SHLAES: Oh, thank you.

Well, if I were like Coolidge I would answer with my monosyllable, right? No. Not – right? (Laughter.) But every president has some responsibility for what follows him, right? "The Forgotten Man" is a history of the 1930s, so in "Forgotten Man," which is the first book, to which this book is the prequel, I think – there was a crash.

In Coolidge's career there were six or seven crashes. His life about correlates to the experience of the Dow. The Dow Jones Industrial Average starts in the 1890s. He saw crashes. They went 30 percent. They went more. It never happened that a Great Depression of 10 years in Coolidge experience followed a stock market crash – market crash, and then it fluctuated back up.

So he expected the market to crash but he didn't think it was the president's job – he was profoundly uncomfortable with a high market. But he didn't believe it was the president's job to manage the stock market. We had no SEC at that time, and it was New York State or the Martin Act or something. I mean, what laws did we have? And the self-government of our stock exchange friends, the brethren who were in charge of that. And everyone did not have stocks in '29, contra myth. If you go back and look, I think 10 percent of Americans held stocks. It wasn't 50 (percent).

And so he expected the stock market to crash. He didn't expect the Depression to follow. He wouldn't have believed the Depression was caused by the crash. He would have been right. The crash was caused by a number of things – excuse me, the Depression was caused by a number of things, starting with the crash and then we had a big monetary event. We had international events written about by Mr. Kindleberger, for example.

What we've looked at as well is general mode of intervention. There's a beautiful new index created by Mr. Davis of the University of Chicago, with Mr. Baker and Bloom of Stanford, which looks at policy uncertainty as causing depressions or delaying recovery, and they identify, through their new metric that '32, Hoover was very much to blame with his call for general action, the perpetuation of the downturn, particularly the stock low, which was '32, right? I'm feeling a little nervous having Dean Cooley here, but I believe the Dow hit its low of 41 in 1932. So they, with this great new metric they created, pinpoint Hoover, and I sort of intuitively would do that too.

If you look at the Depression over the years, another thing I've worked on, and systematically scholars like Harold Cole and Lee Ohanian have worked on is whether the labor price made the Depression worse, specifically whether forcing wages up in the name of what we would call Keynesianism or politics caused employers not to hire or rehire. And that goes very well with, you know, nice work if you can get it, or our own memory of that period, which is that it was OK if you had a job but it was very, very hard to get one, especially in the later '30s. So there you would start with Hoover's exhortation to employers not to let wages go down in the autumn of '29, which is very different from other recessions when wages were allowed to go down but people got to keep their job.

And then you'd follow it with a lot of laws that we had, whether Hoover and then Roosevelt, to prop labor price wages up – Davis-Bacon Act and then National Recovery Administration, and then of course Wagner Act, minimum wage and so on. So, I mean, there are many, many factors but I don't blame Coolidge.

MR. THOMAS: If you could hang on for a mic one second.

Q: Thank you, Amity. I'm Padma Desai, Columbia University. You said that he was president for 67 months, and when he left, the federal government was smaller. But, I mean, when he left, the economy was prospering. Would you say that there is an inverse relationship between the state of the American economy and the size of the federal government? For example, now the economy is not doing well, right? So the size of the federal government can be and perhaps should be bigger? I mean, I sound like a Democrat but –

MS. SHLAES: It's OK. (Laughter.) I think –

Q: Do you think that is that kind of a relationship, that when the economy is doing well, prospering, the size of the federal government can be smaller?

MS. SHLAES: It doesn't need the federal government.

Q: Yeah.

MS. SHLAES: Well, there is that argument. He wouldn't have necessarily – Coolidge was complicated and he wouldn't have said no government ever. He might have said – he was basically a state progressive. So he was a federalist, so he would have said the state of Massachusetts should provide the soldier pensions. Well, they did, many, many states. Or the state of Massachusetts should have deposit insurance, and they did.

In my own experience, sometimes smaller government promotes recovery, but politically we often tend to get bigger government come to the rescue, and sometimes government rescue is helpful. Sometimes government projects are helpful. Evan here wrote about Eisenhower. We know that sometimes infrastructure additions like highways are a good move by the federal government. So it's not as black and white or party political as one might think.

MR. THOMAS: Sir.

Q: Hi. I'm Greg Kuparich (ph). I'm from – yeah, his –

MS. SHLAES: It's Roger's colleague.

Q: Yeah, I'm from GW Law School. I'm afraid I haven't read the book yet but it is on the top of my post-exam reading list. (Laughter.)

I just wanted to ask if you thought that if Coolidge had been elected in '28 – or I guess more importantly, if he had lived into the '30s, if he had been able to arrest the slide of the United States into really hard-core isolationism – because it's always seemed to be to me a hallmark of his foreign policy, the Dawes Plan, the Washington Naval Treaties and everything going on in Asia – that there was an implied guarantee on the part of the United States that they would essentially back up this settlement plan which they were not a party to but that they were deeply interested in.

Because it really does – or do you think that the scale of the financial collapse would have essentially meant that we, you know, turned inward and basically let the rest of the world go on to their own devices, no matter whether or not he had been elected in '28 or if he had lived, you know, into the 1930s and '40s.

MS. SHLAES: That's a great question and a complicated one. So would he have gone over to Europe and eased credit? What could he have done that you're imagining?

MR. THOMAS: Well, really if – essentially if he had – because despite the sort of popular opinion of isolationism in the '20s, the entire thrust of his foreign policy, which this place is actually a direct response to, was making sure that America remained engaged with Europe and with especially Japan and with China but not actually putting, say, American troops or fleets right there. And I know that when FDR came in, despite his sort of later presence in World War II, his administration, for the first two administrations, was probably the most isolationist in U.S. history.

MS. SHLAES: Right. Well, you think of FDR – I mean, we know the story not just from Lee Cott's (ph) book, but also from John Brooks before, or from other accounts of the great London monetary conference where we just did whatever the heck we wanted the whole time, where FDR, he was sort of like sending missiles from his boat over to London, and Ramsay McDonald got all upset, right, and Shalimar Shoch (ph) said: What the heck? It's OK for the Nazis – for me to be with the Nazis because these American people are so unpredictable. I'm shortening it. But, yeah, if that's what you're referring to.

Coolidge isn't perfect, so you have a certain solicitousness on his part. If you look at his calendar you'll see it's one meeting after another with the Japanese ambassador. The president of the Tokyo University is, oh, it's got to be lunch. He's very good at understanding that the presidency was much about relations with people. He went to Cuba, and I chronicle that. So that's for it.

Mellon – one reason we were so easy with credit here was not because Mellon, you know, was crazy or because Montagu Norman had a romantic relationship with Benjamin Strong, but because they thought, well, it's easier to forgive loans – excuse me, to ease terms in Europe than to let Europe default. That was basically Mellon's policy: Well, let's ease up a bit. They were like Bernanke with homeowners, right? Let's ease up a bit, and then they'll recover and then they'll honor credit in the future, and markets will – et cetera.

So that was sort of the good part that I got to know. The bad part is that tariffs don't go with that, do they? Do they, right? And Coolidge didn't sign the great tariffs but the presidents before and after him did. And those were kind of thumbing – nose-thumbing gestures, sort of like what Roosevelt did – I had never thought about this; thank you – Roosevelt did that the – it's like, we don't care about you. We have to have tariffs.

And Coolidge could have done more to reduce tariffs. The president had some executive discretion, and he didn't really ever – you know, if you want to say what are the worst things about Coolidge, he was occasionally really mean to his wife and he supported tariffs. (Laughter.) You could get some bad marital snapshots. So those are the two.

So I don't give him an A on that, but I was interested to see the extent to which they worked with, you know, credit and all that in the deep hope that Europe would recover and be a better partner in future. And if you look at Kellogg-Briand, it's called Kellogg-Briand because we want to conciliate with France and we want to get them back on a payment schedule, and so we're engaging them on this quasi-silly exercise.

MR. THOMAS: Anybody else? Well, let's stay for cocktails. Thank you very much.

MS. SHLAES: Thank you very much too. (Applause.)

(END)