Jacob M. Farley recently discovered the history of Calvin Coolidge’s presidency and the economic policies he pursued to such good effect in the 1920s (although Herbert Hoover’s energetic turn as Commerce Secretary for Harding and Coolidge strongly indicated that the benign laissez faire approach would be changed once Coolidge left the Oval Office):

Calvin Coolidge, Governor of Massachusetts, 1919.
Photo by Notman Studio, Boston, restored by Adam Cuerden via Wikimedia Commons.

In the pantheon of American presidents, Calvin Coolidge, or “Silent Cal”, often plays the role of the overlooked extra in the corner of history’s grand narrative. I can attest to this, as my first real exposure to him occurred recently during a visit to a museum whilst travelling in the US. Having spent some time since then reading up on everything Cal-related, I’ve become increasingly convinced that there’s a compelling case to be made that Coolidge’s approach to governance, particularly his economic policies, should be dusted off and revisited, not just for historical curiosity but as a lodestar for free marketeers far and wide.

Before I go any further, let’s set the scene of Coolidge’s era. The 1920s is often remembered for jazz, flappers, and the stock market’s dizzying heights. But beneath the cultural tumult, Coolidge was busy orchestrating what can quite fairly be called a symphony of minimalistic governance. His philosophy was profoundly simple: government should do less, not more.

Whilst this may seem extraordinarily mundane to you, consider that this wasn’t simply cheap talk on the campaign trail designed to get a nod of approval from over-50s. His ideas weren’t born out of laziness or disinterest but from a profound belief in the efficacy of the market’s invisible hand over the visible, often clumsy, hand of government intervention.

Coolidge’s administration slashed taxes like a bootlegger cuts whiskey – to make the good times flow more freely, notably through the Revenue Acts of 1924 and 1926. This wasn’t just about giving the rich a break; it was about stimulating economic activity by leaving more money in the pockets of Americans. By leaving more money in the pockets of Americans, he was essentially saying, “Here’s your allowance, now go make some noise at the stock market”.

The result? A crescendo of consumer spending, industrial growth, and a stock market that seemed to reach for the stars.

Coolidge believed in setting the rules of the game and then letting the players play. This isn’t to say there was no regulation, but rather, it was about not over-regulating, about allowing businesses to innovate, expand, and yes, even fail, without the government always having its finger on the scale. Imagine if the conductor only pointed out the tempo and let the musicians interpret it – that was Coolidge’s regulatory approach.

Under Coolidge, the U.S. economy boomed. Unemployment dipped to levels we can only dream of today, and real GDP growth was robust. If the economy were a piece of music, it was hitting all the right notes. But here’s where the narrative often shifts to a sombre tone – the Great Depression. While Coolidge left office before the market crashed, the seeds of economic disaster were arguably sown in the very success of the 1920s, exacerbated by policies that followed his term, particularly those of the Federal Reserve.

This is where the story of Coolidge’s economic policy gets nuanced. The Federal Reserve, relatively new on the scene, played its own tune by the late 1920s. Its policies, intended to stabilise the economy, are often critiqued for contributing to the eventual bust. Coolidge’s hands-off approach might have been a wise nod to market self-correction, but the Fed’s actions, flooding the number of dollars in circulation to stimulate the market’s trajectory in a way they deemed desirable, led to an artificially manufactured drunkenness, leading to a nasty hangover – The Great Depression.

After Coolidge, the economy didn’t just crash; it was like the Charleston dancer tripped over its own feet.

There had been a brief, nasty recession following the end of the First World War, but Harding and Coolidge responded not by muscular government action but by letting the market sort things out. Hoover, as Coolidge’s successor, was not cut from that cloth. Hoover was a believer in the progressive big-government approach to just about everything and his attempts to respond after the 1929 crash absolutely made things much, much worse. Later historians have chosen to forget Hoover’s actual policies and pretend that he followed Coolidge’s lead (most historians over the next couple of generations were pro-Roosevelt, so portraying Hoover as a conservative non-interventionist allowed them to contrast that with Roosevelt’s even more centralizing, interventionist policies).