Coolidge

by Robert Sobel

  The speeches read well, but almost all are devoid of originality. Seldom did Coolidge say anything contentious or bold. But it did happen. On August 2, 1922, he was in Wellesley Hills to deliver an address at an industrial conference. In it he spoke of the need for more worker ownership of shares in the companies at which they were employed. “In the ideal industry, each individual would become an owner, an operator, and a manager, a master and a servant, a ruler and a subject. Thus, there would be established a system of true industrial democracy.” He continued:In very many industries this is already taking place. Employees are encouraged to purchase stock in the corporation and are provided with credit facilities for such purpose. This gives them ownership. They are encouraged to make suggestions for the better conduct of the business. They are requested to apply their inventive ability in the various mechanical operations. Through trade-unions and shop committees they have a large share in the determination of wages and conditions of labor…. This gives them management. Thus industrial democracy is being gradually developed.

  Ideas of this kind were being bandied about by some economists and sociologists, who were deemed “advanced,” if not radical. Secretary of Commerce Hoover presented a version of this concept later on. After World War II, New York Stock Exchange (NYSE) Chairman Keith Funston gave it another rendering as “People’s Capitalism,” a weapon in the struggle against communism. This, however, was not Coolidge’s approach. Rather, he asked his audience to consider that “people are not created for the benefit of industry, but industry is created for the benefit of people.” Coolidge espoused these ideas while in the Massachusetts legislature, and he echoed them in Washington. In this respect, at least, he was not turning more conservative. It hardly was the kind of sentiment expected from the man who was supposed to have believed that the business of America was business.

  Eight days later Coolidge was in San Francisco to deliver before the American Bar Association a speech dealing with “The Limitations of Law,” in which he told the assembled attorneys, many of whom doubtless worked in the corporate sector, “The spirit of reform is altogether encouraging. The organized effort and insistent desire for an equitable distribution of the rewards of industry, for a wider justice, for a more consistent righteousness in human affairs, is one of the most stimulating and hopeful signs of the present era.” He praised progressive efforts to bring government closer to the people. “The outcome of this doctrine has been the adoption of the direct primary, the direct election of the United States senators, the curtailment of the powers of the Speaker of the House, and a constant agitation for breaking down the authority of decisions of the courts.”

  His political philosophy came through in other speeches as well. In one before an Amherst Alumni Dinner shortly after the 1920 election, he spoke out, as he often did, on the relationship between the desire for wealth and the need for civilization. The former is acceptable, he seemed to say, so long as it furthers the latter:We believe in maintaining modern civilization for the protection and support of free governments, and the development of our economic welfare. We claim they are sound and minister in the best way to human welfare. The great test of an institution is its ability to perpetuate itself. It seems fairly plain that whether or not these institutions can survive without the aid of higher education, without it they haven’t a chance. We justify the greater and greater accumulation of capital because we believe that therefrom flows the support of all science, art, learning, and the charities which minister to the humanities of life, all carrying their beneficent effect to the people as a whole. Unless this is measurably true our system of civilization ought to stand condemned. It is to be condemned, anyway, unless it possesses the ability to perpetuate itself.

  In the process of delivering these speeches Coolidge not only introduced himself to politicians in all sections, but also received a tutorial on the complexities of the nation. This reinforced the impressions he received from dealing with senators and other officials in Washington. He took his role as understudy seriously, and his experiences as vice president provided Coolidge with a depth of understanding that would have been missing had he received the 1920 presidential nomination and been elected. In this, as in many other areas, Coolidge was fortunate.

  Dining out, presiding over the Senate, attending cabinet meetings, dedications, and other miscellaneous activities—all of this still left time on Coolidge’s hands, and he despised leisure. So he read a lot, especially newspapers, perused official documents, studied legislation, and in the process became well informed regarding the business of government. He was at his desk even when Congress was not in session, but this does not mean he was wired into what was happening in Washington. Coolidge lacked access to the movers and shakers of the city. True enough, he spoke with them, but they did not confide in the vice president. He also wrote for magazines, which gave him an outlet, enabled him to organize his thinking, and provided the Coolidges with additional funds—and throughout his life, Coolidge would save all he could. If Harding had ever truly meant to use Coolidge as some kind of unofficial assistant and confidant, he soon dropped the idea. So Coolidge often sat in his office, alone but not lonely. He enjoyed looking out the window and thinking.

  As Coolidge sat on the sidelines, the Harding administration veered from political and diplomatic accomplishments to scandal-ridden distraction. Among the most important of Harding’s achievements was in helping to heal the demoralized and divided country he had inherited from Wilson. Peace treaties were signed with the Central Powers, and Harding supported Borah’s call for a conference to limit naval forces. The resulting Washington Naval Conference convened on November 12, 1921. In his address to the delegates, Secretary Hughes asked for the wholesale scrapping of capital ships—battleships and cruisers—and a halt to their construction. One observer noted that Hughes proposed to sink more British ships than its enemies had ever done. It ended with an agreement to scrap approximately 40 percent of the capital ships then sailing or in the process of being built. The western powers then pledged not to expand further into China, to maintain the Open Door Policy there, and to continue the status quo in the Pacific.

  The Red Scare ended, and Harding did what he could to ease the remaining fear and suspicion. He surprised the country by pardoning twenty-four prisoners who had violated the wartime espionage laws. One of these was Eugene V. Debs, whom Harding invited to the White House. “Well, I have heard so damned much about you,” he said to the surprised Socialist leader, shaking his hand and leading him into the White House. When Debs emerged he told reporters, “Mr. Harding appears to me to be a kind gentleman. We understand each other perfectly.”

  Other than that, Harding did not veer far from the agenda he had established in his address to Congress. In his first two years in office Harding signed a restrictive immigration law, approved an act to expand the merchant marine, and another creating the Bureau of the Budget, to which he named General Charles G. Dawes the first director. The Veterans Bureau was created; a series of acts was passed designed to alleviate stress on farmers; and Harding vetoed a measure to provide veterans with large bonuses. He supported Secretary of the Treasury Mellon’s plan for tax reduction, but opposition from farm and other interests was too strong to overcome, and little was done in the 1921 bill. He favored a treaty with Colombia designed to heal the rift between that country and the United States resulting from Roosevelt’s support of the Panamanian Revolution—the United States would pay Colombia $25 million and apologize.

  Harding supported and helped pass an emergency tariff that increased rates substantially on agricultural goods to protect American farmers. Then he worked for and lobbied successfully for the permanent Fordney–McCumber Tariff of 1922, which retained the high tariffs on agricultural products. The tariff issue would be an important matter for the rest of his administration and into the Coolidge and Hoover administrations. The party consistently favored protectionism for workers, businessmen, and farmers. Later the Republican president
s would be charged with being advocates of business and opponents of the farmer. All three presidents attempted to set the record straight on this matter, usually unsuccessfully.

  During the campaign Harding had talked about the desirability of an “association of nations”; nothing more was heard of this, but the Republicans in the Senate—who were astonished at Harding’s independence—rejected his recommendation that the United States join the World Court. There were other indications that Harding wanted to be more than a puppet of the bosses. In 1922 he urged U.S. Steel CEO Elbert Gary, an old friend, to change the twelve-hour workday and seven-day workweek at his company to eight hours and six days. Gary rejected the appeal, but Harding persisted, pushing other industries, as well. In the end Gary bowed, and the reform went into effect in 1923. As several Harding biographers have pointed out, Harding grew in his time in office.

  When Harding came to office, the nation was in the midst of its post–World War I recession and stock market slump. As it turned out, the recession was short, but it was deep, and of course Americans had no idea how long it would last. Little wonder that Wilson was so unpopular with the general public. Economic fears now compounded the disillusion with the war. In 1919–1920 there were more than thirty thousand bankruptcies, almost half-a-million farm foreclosures, and five million unemployed workers. On June 12, when Harding–Coolidge were nominated, the Dow-Jones Industrial Average closed at 78.93. On Election Day in November, it was at 85.23, primarily because Wall Street expected that Harding’s election would be good for business.

  In January 1921, as Harding organized his administration, the unemployment rate stood at 20 percent. The GNP, which had reached a record peak of $88.9 billion in 1920, dropped to $74 billion in 1921. The recovery began in late 1921, although this was not recognized for several months.

  In this period in which governmental actions to alleviate economic distress were all but nonexistent, the Harding policies had next to nothing to do with the recovery, and Harding did not take credit for it. Wages fell, prices declined, and in time the consumers returned and business investment picked up. He did something that was new in American history, however. In September 1921 Harding called a Conference on Unemployment, to be headed by Hoover, “to consider relief for four or five million unemployed resulting from the business slump of 1921.” Out of this came plans for what to do if and when the country underwent another economic calamity.

  The Republicans lost ground in the 1922 congressional elections, which was not too surprising for an off-year election, but retained control of both houses of Congress. Among the departed were Porter McCumber in the Senate and Joseph Fordney in the House—the men who gave their names to the tariff would not return. Lodge won, but at the age of seventy-two, with the League issue out of the way, he was a spent force, and would die in 1924. Knox and Penrose died within months of one another in 1921, and this too left a leadership gap.

  The fact that the Republicans retained Congress masked one of the most important political developments of the decade: the emergence of a cohesive farm bloc in the Senate, along with the victory of farmer representatives in the House and midwestern states’ races. The depression and the distress in the midwestern farms were largely responsible for the emergence of this group. Actually, the bloc first appeared in 1921, with a meeting of twelve midwestern farm state senators called by Senator William Kenyon of Iowa, and others soon joined. A similar bloc assembled in the House but wasn’t as well organized or as effective. The bloc transcended party lines, functioning as a party within the parties, or even as a legislative third party on issues relating to farmers. The bloc formed alliances with others as well. The elections of 1922 swept a number of members of this contingent into office. As these generally progressive politicians replaced more moderate and conservative members of Congress, they all but guaranteed that farm legislation would be on the front burner for as long as the bloc existed—and President Coolidge would certainly deal with this powerful group.

  Many historians, and particularly those who consider Harding an abject failure, believe his administration was beholden to the large economic interests. They point to the influence peddling that took place under his watch, but they have overblown the case against Harding. Recall that fat cat donors supported Wood and even Lowden in the campaign for the Republican nomination, while Harding contributors were far smaller fry. Certainly, Harding–Coolidge supporters were not divorced from economic forces, but businessmen supported the Republican ticket for a variety of historic and economic reasons and would have supported any Republican to the right of Hiram Johnson.

  One of the issues that Harding’s critics cite as a sign that he was beholden to big business was the matter of Muscle Shoals, an industrial complex on the Tennessee River, built during the war to extract nitrogen from the air by means of the cyanamide process. The cost of the facility, which comprised two large plants and the partially completed Wilson Dam, was in excess of $100 million. Other dams in the area were in the planning stage when the war ended. During the Wilson administration a special House committee investigated the situation and recommended abandoning the facility. Accordingly, the House refused to authorize additional appropriations for Muscle Shoals, and the government decided to sell it to private interests. This was not unusual; sales of surpluses and properties the government no longer needed occurred after both world wars.

  A group of progressive senators, headed by George Norris of Nebraska, had visions of the people of the region receiving inexpensive power from the Wilson and other dams, and so they wanted the government to keep Muscle Shoals. Given the political atmosphere of the time—Harding had been elected on a platform calling for cutbacks in government—it was unlikely that Congress would approve and the president would sign a measure putting Washington in the power business. Nonetheless, on April 10, 1922, Norris introduced a bill for a government facility, “for the purpose, first, of supplying explosives in time of war, and, second, fertilizer in time of peace.” Excess power, he said, could be sold to states, counties, and municipalities in the area.

  When Harding took office, Secretary of War John Weeks had asked for bids for the complex, and the highest came from industrialist Henry Ford on July 8, 1921. Ford offered to pay $5 million and pledged to sell nitrate fertilizer to farmers in the region for a profit of 8 percent, lower than the traditional margin. Many groups encouraged Ford, including the American Farm Bureau, the American Federation of Labor, the Grange, and prominent farm newspapers. A majority of the congressmen and senators from the region supported the sale, while opponents were progressives from other parts of the country, such as Governor Gifford Pinchot of Pennsylvania. The National Fertilizer Association, whose members would have had to compete with Ford if the offer were accepted, asserted the scrap value of the plants would be more than $8 million, so the Ford offer was far too low. Nonetheless, the House Military Affairs Committee approved of the offer as a chance to cut back on unneeded expenses.

  True enough, Ford’s offer was far below the costs incurred by the government; he was trying to get in on a good deal. But government surpluses usually sold for pennies on the dollar, and Ford’s bid was, after all, the highest offer. Nevertheless, with Norris leading the charge, a senatorial committee rejected the Ford offer by a vote of 9 to 7. The issue remained, and would reappear during the Coolidge administration. The attempted sale of Muscle Shoals was not, however, a Harding toss-off to big business.

  By then Harding must have realized that his hope of relying upon the “best brains” wouldn’t do. He had learned to trust and rely upon some cabinet members—Mellon, Hughes, and Hoover in particular— but there were differences of opinion with others. More important, two members of the cabinet and other members of the administration were involved with corrupt practices.

  While some individuals in the Harding administration were dishonorable, the president himself, except for one questionable transaction, was not. When he sold his newspaper, the Marion Star, for $550,000 to
two newspapermen, Louis Brush and Roy Moore, charges of bribery were brought against the two. Brush and Moore, however, argued the newspaper was worth that amount because Harding had agreed to write for it after he left the White House. They won the case, and received $100,000 in damages.

  The serious corruption in the Harding administration involved Secretary of the Interior Albert Fall, Secretary of the Navy Edwin Denby, and Director of the Veterans Administration Charles Forbes, and all evidence indicates the president was shocked to learn what they were doing. Fall and Denby were looting the government in what came to be known as the “Teapot Dome Affair,” which involved questionable leasing practices at the naval petroleum reserve; Forbes looted the Veterans Bureau.

  The first hint of trouble came on February 1, 1923, when Charles Cramer, counsel for the Veterans Bureau, resigned abruptly. By itself this wasn’t considered unusual, but then the White House announced a reorganization of the Bureau, and this was surprising. The unraveling of the “Harding Scandals” had begun.

  On February 12 the Senate ordered an investigation of the Veterans Bureau, and three days later Charles Forbes resigned his post; he couldn’t account for hundreds of millions of dollars of supplies lost or stolen. It was clear he was selling government supplies and pocketing the proceeds. On learning of this Harding summoned Forbes to the White House and demanded his resignation, but allowed him to leave the country.

  Fall resigned “for personal reasons,” and took a well-paid position with the Harry Sinclair oil interests, which he was later found guilty of improperly assisting. On March 14, Cramer, who was afterward revealed to have been involved with Forbes in irregularities in the awarding of hospital sites, shot himself in the head. Harding confronted Jess Smith, one of Harry Daugherty’s assistants, with evidence of peddling influence, whereupon Smith committed suicide on May 29. Daugherty was charged with corrupt practices, and was the subject of an impeachment attempt by the Senate in 1922; he was exonerated, but clouds of corruption remained over his head.