Monday, February 5, 2007
Flashback: Conventional Wisdom: Harding Dumb, Coolidge Lazy, Mellon Cold Fish and Hoover Do-Nothing (Boy, if Only He Was ).
[Memoirs for my four kids and 13 grandchildren. NOTE: In this article I shall refer to the principal political players with the labels ascribed to them by liberal academe, popular historians and media which goes on via intellectual short-hand today].
Frances Catherine Roeser and her husband Harold Nicholas Roeser, married and living on the Northwest Side were the early beneficiaries of Republican prosperity following Woodrow Wilsons ill-conceived war and resultant heavy recession. Wilson ever since has been called an idealist and martyr because his Versailles treaty wasnt approved by the Senate and ranks high up on historians list of presidents. His ID and those of others in this article were made by popular writers and historians of the time and have stuck on ever since. This is a case where the journalists and historians H. L. Mencken, Arthur Schlesinger, Jr., Theodore H. White, Richard Hofstadter, William Allen White, Frederick Lewis Allen and a host of others actually did more than write historybut shaped it. Now that most people from that era are dead, the foregoing have indelibly impressed later generations with their liberal views in the same way Edmund Gibbon excoriated Christianity for the fall of the Roman empire, Herodotus who ridiculed the people the Persians conquered, Thucydides blasted Athens decadence. Mostly due to Schlesinger who wrote much fiction disguised as history, popular cameos have come to dominate.
Warren Harding, the president who is now ranked dead-last among all 41 as result of liberal academe and resultant mainstream media and dumb (soon to be supplanted by the liberals hated dumb George W. Bush), entered the 1920 elections calling for a return to normalcyimproper word usage for normality which caused the intellectuals to titter. But unlike the intelligentsia, Americans listened more attentively to substance than to bad grammar. Said Harding: I believe the tax burdens imposed for the war emergency must be revised to the needs of peace and in the interest of equity in the distribution of the burden. Not exactly ringing rhetoric but the idea came through. Harding won by the greatest landslide in the history of presidential elections up to that time, carrying with him no fewer than 303 Republicans in the House and winning control of the Senate.
Were there scandals under Harding? Did he have girl friends? Absolutely (no illegitimate children, though, as rumored because as medical records examined following his death, he was sterile: unable to have children in his own marriage although his wife had had one in her previous marriage). The scandals: Did they dwarf any scandals previously or since? Absolutely not and Harding neither benefited nor knew of the transgressions. But they were serious enough for any time.
The interior secretary, navy secretary were looting the government in the Teapot Dome affair which involved questionable leases at a naval petroleum reserve; the head of the newly-created veterans bureau couldnt account for millions of dollars of supplies lost or stolen. The interior secretary, a former senator, resigned and took a job with Sinclair Oil which he had assisted; the veterans bureau ex-head committed suicide. Harding found out that an assistant attorney general was peddling influence and confronted himwhereupon the assistant AG committed suicide. As an index of comparison, consider the scandals in the administration of Harry S. Truman, whom historians and media call great: remember that Truman has never ranked lower than sixth among all the presidents in history through surveys taken by major U. S. historians and Harding has always been either last or second to the last.
Under Truman, a scandal within the IRS for tax-fixing claimed the assistant attorney general for taxation and 106 IRS employees either fired or resigned. The U. S. attorney general named a special prosecutor who found too much corruption so the AG fired him; whereupon Truman fired the AG.
Of all his domestic scandals, Harding was unaware. Of all Trumans domestic scandals, Truman was aware of but one. The one: His best friend, General Harry Vaughan (an ex-Missouri national guard officer working in the White House) received kickbacks and gave the Trumans a deep freeze for the White House which they accepted. In some kind of return favor, Vaughan got a free trip to Europe after the war and returned with a bag-full of expensive perfumes he bought for his wife. On the way back, a wounded soldier was kicked off a government plane to make room for Vaughan. That doesnt matter because in the legend of history, Harry Truman is regarded as great. Harding was probably one of the most effective presidents ever on the economy and foreign relations although thanks to historians and the media he will forever be regarded as corrupt, sexually promiscuous and dumb.
If the domestic scandals under Harding and Truman cancel out, what tips the balance against Truman are the internal security scandals. He was warned about Alger Hiss but kept him on until Hiss was fingered by Whittaker Chambers and later convicted of perjury. Probably more important was the fact that FBI director J. Edgar Hoover personally warned Truman that high-up treasury official Harry Dexter White was a Soviet spy. Instead of firing him, Truman promoted White to a high post at the International Monetary Fund.
After Truman left office, Soviet defector Igor Gouzenko disclosed that White (who died while at the IMF) had indeed been a spy. Truman acknowledged as a private citizen that keeping White in government was his biggest mistake. Daniel Patrick Moynihan, the Democratic senator, examined Trumans internal security files and declared that of all the presidents who served during the Cold War, Truman was most open to violation of internal security. However he still ranks as great. Popular history regards the unmarried J. Edgar Hoover, however, who warned of security risks as a tyrant, transvestite and homosexual because Hoover fired a good many FBI officials.
The dumb Harding moved swiftly to heal the demoralized and divided country he inherited from the idealistic, martyred Wilson. He signed peace treaties with the defeated Central powers; called a conference to limit world naval forces; he led the West not to further exploit China, to maintain the Open Door policy there. He ended the Red Scare in the U. S., pardoned 24 prisoners who had violated the espionage laws including Eugene V. Debs, the socialist candidate for president, expanded the merchant marine, set up a bureau of the budget under Evanstons Charlie Dawes which balanced the budget and mustered enough courage to veto a too-generous veterans bonus which would have sunk the small surplus in the treasury. He paid a lot of attention to improvement of conditions in the black community, further giving rise to the suspicion that he had a partial black heritage in his ancestry (which has been somewhat confirmed).
But the biggest accomplishment of the dumb Harding was the economy. When he came to office, the U. S. was in a serious recession due to the brilliant Ph.D Wilson; unemployment was at an unheard of 20%. The big reason it changed was due to the dumb Hardings choice of treasury secretarygenerally regarded as second only to Alexander Hamilton. Harding, as did Washington, picked a native genius on the economy which media have rated a cold fish and unsympathetic to the poor.
Hardings choice was Andrew Mellon, banker and third richest man in the world after John D. Rockefeller and Henry Ford. The press didnt like him because of his wealth and also because they said he was a cold fish and aloof. Originally from Pittsburgh, Mellon started a successful lumber business at 17, joined his fathers banking firm, T. Mellon & Sons two years later, took control of the firm at 27, helped organize Union Trust Company of Pittsburgh and branched out from banking into industrial activities, building a vast personal fortune from oil, steel, shipbuilding and construction. Dumb Harding and cold fish Mellon were a good team; lazy Coolidge and cold fish Mellon were even better.
In those years, economics was not a highly-rated academic study: businessmen and policy-makers dealt with it more by instinct and the seat of their pants. Dumb Harding, lazy Coolidge and cold fish Mellon, free-traders, were not the fathers of supply-side (dumb Harding and lazy Coolidge cut spending $1 for every $1 of tax reduction). They wanted to cut the tax rate to 25% and remove the excess profits tax as well. But enough Democrats and Republican root canal old guard members were still in the Senate during dumb Hardings first year to hold him to a cut in the personal bracket to 57% from 77% on incomes above $1 million and elimination of excess profits.
Prosperity started to perk but Republicans had not entirely thrown off the old protectionist urge from the 19th century. There was the Emergency Tariff Act of 1921 which supported agricultural interests in particular: a step that cant be defended by current economic theory. Called the Fordney-McCumber tariff, it set the highest rates in history, with tariffs on some products of up to 400% (both Fordney and McCumber were defeated in the midterm elections of 1922). But despite Fordney-McCumber, the Mellon-Harding tax cuts started to do the workthe GNP climbing from $69.6 billion in `21 to $74.1 billion in `22.
Dumb Harding died in 1923, the year Harold and Frances married. But prosperity was just beginning to get underway, thanks to lazy Calvin Coolidge who succeeded Harding and kept on cold fish Mellon as treasury secretary. It was during Coolidges presidency when I was born in 1928. Just as Harding was seen by the liberal intelligentsia and media as dumb. Coolidge was viewed by them as lazy and Hoover the bright guy in the wings: neither Dem (who worked for Wilson) nor Republican (commerce secretary for Harding-Coolidge) but an independent who fed starving Europe in World War I. Even FDR had wanted Hoover to run as a Democrat. Thats because Hoover was highly inclined to use federal power to solve social problems. That was before he got the title of do nothing.
Under lazy Coolidge and cold fish Mellon, Mellons tax cut dream of 25% was finally achieved and the bull market was underway. The New York Times index of industrial share prices moved up from 90 to 106 and by December, 1924 was at 134, moving up to 245 in 1926; GNP grew from $69.6 billion to $103.1 billion and the U. S. became the wealthiest nation relative to the rest of the world. And tax cuts were the reason, sharply reducing income and inheritance taxes, abolishing the gift tax and most of the excise taxes from World War I, freeing up funds for private investment. The Dow-Jones doubled from 191 in early 1928 to 381 in September, 1929; under him the GNP rose from $69.6 billion to $103.1 billion. Coolidge vetoed the idea of government supporting farm prices.
With dumb Harding and lazy Coolidge, cold fish Mellon was savior of the economy. But he had crossed swords with Hardings and Coolidges secretary of commerce, the supporter of business regulation, Herbert Hoover, a dangerous thing to do. Example: As commerce secretary, Hoover hatched countless schemes to fix airline routes and regulate the infant industry of radio, dam the Colorado river and many other things. Mellon was incensed. He wanted a pro-business administration, not a regulated one. Hoover retorted: We have long since abandoned the laissez-faire of the 18th century. That got Mellon very mad and Hoover madder.
Coolidge decided not to run for reelection in 1928 and kept his hands off a successor. The progressives of the GOP wanted Hoover to run for president in 1928 as did the Democrats (including FDR). Why? He was for business regulation, had been famous because he had been Wilsons Food Czar and had fed the hungry Europeans. He was enthusiastic about using government to fight poverty, rectify injustice and wanted to exert government power in a wide range of fields, despite his later reputation by academe and the media as a do-nothing. Coolidge didnt like him, called him the wonder boy. But he kept his hands off the process.
Mellon and Hoover quarreled angrily and at length over Hoovers fondness for protectionism. Behind the scenes Mellon worked against Hoover, fought against his rise as heir apparent to the presidency. But he couldnt stop Hoovers rise. Surpluses rolled in under dumb Harding and lazy Coolidge and cold fish Mellon wanted to use them as an argument for further tax reductions in 1929; so did lazy Coolidge. Not Hoover who was the GOPs anointed heir for president. Hoover wasnt a tax cut man but wanted to support a larger government, particularly to use the federal government to help agriculture.
Before he left office, Coolidge made a prophecy. Theyre going to elect that superman, Hoover, he said. But he wont spend enough. Then the Democrats will come in and spend money like water. But they dont know anything about money. Then they will want me to come back and save some money for them [in 1936]. But I wont do it.
Which is exactly what happened. After Hoovers defeat in 1932, Republicans begged Coolidge to come back and run in 1936, to return the country to the prosperity he had built. But Coolidge died early, at only 61 in 1933. Lazy Coolidge had been a star scholar, brilliant lawyer, gifted Massachusetts lawmaker, lieutenant governor, outstanding governor of Massachusetts, vice president of the United States and president who put the economy on a fast track, retiring at the height of his popularity and started another career as a magazine commentator. Some lazy-bones.
One again, conventional wisdom holds Herbert Hoover was a do-nothing president. Boy, if only he were a do-nothing! Do nothing heir presumptive Hoover worried that the labor-intensive farmer was being wiped out by falling farm prices. With the Republican party adjusting to a new leader who would be the nominee in 1928, do-nothing Hoover sought to adjust the imbalance in wealth between the farm and city by raising the protective tariff on foreign agricultural products. He said: we have had a protective tariff on foreign farm commodities and still have had prosperity; why worry?
But prosperity happened despite the tariff, not because of it. While protectionism had some rationale when the U.S. was a small debtor nation as under Jefferson and the revenue from the tariff paid for legitimate government services, it was far different now with the country the most powerful creditor in the world. Farmers were having trouble making a living because there were too many of them. Unlike dumb Harding and lazy Coolidge, Hoover couldnt leave things alone. The opposite of do nothing.
Heir apparent Hoover wanted protectionism and no tax cut. Cold fish Mellon warned him against protectionism, saying the rest of the world had borrowed an additional $11.8 billion from private U.S. sources between 1919 and 1929. Cold fish Mellon said a high tariff would cause our export trade to suffer; countries could not permanently buy from the U.S. unless they were permitted to sell to us and the more we restricted the importation of goods from them through higher tariffs, the more we would reduce the possibility of our exporting to them. Do nothing Hoover didnt appreciate that many U.S. citizens had invested their money in foreign enterprisesinvestments ranging between $12.5 billion to $14.5 billion. And do nothing Hoover wanted actionfast.
As the election of 1928 loomed, with do nothing Hoover the GOP nominee, U. S. business was worried that America would be flooded with cheap European goods; portions of Europe were still destroyed from World War I, had huge debt and unemployment. Hoover kept mum about the issue and was elected. In those days there was a long time between election in early November and inaugurationthe following March 4 a time lazy Coolidge was a lame duck and do nothing Hoover was the bright genius waiting to step into the spotlight.
As president-presumptive, do nothing Hoover couldnt fire cold fish Mellon because Mellon was too popular but they fought a lot. Do nothing Hoover wanted to apply protectionism and have no tax cut so he could shore up the money for federal projects like business regulationdefending protectionism by saying the rest of the world had borrowed an additional $11.8 billion from private U. S. sources since 1919 and our jobs were fleeing. Cold fish Mellon said: listen, a high tariff will cause our export trade to suffer; countries cant permanently buy from us unless they are permitted to sell to us and the more we restrict the importation of goods through higher tariffs the higher the risk that we will reduce the possibility of our exporting to them. Do nothing Hoover didnt agree. Cold fish Mellon said: you dont appreciate the fact that many of our citizens have invested their money in foreign enterprisesinvestments ranging from $12.5 billion to $14.5 billion. Do nothing Hoover was not impressed.
Cold fish Mellon said: we should have a tax cut in 1928; do nothing Hoover, president-elect, said not when I have to run for president because I want the government to have the money to do more things. Cold fish Mellon went to lazy President Coolidge and asked for help. Lazy Coolidge went to do nothing Hoover and said, You should listen to Mellon. Hes the guy who helped turn around the economy! Do nothing Hoover said nope; I know what Im doing. Lazy Coolidge went back to cold fish Mellon and said, Andrew, I cant do anything with him and hes the next president. Let the boy wonder call the shots. Hes got all the answers. Cold fish Mellon groaned. To the day of his death he faulted Coolidge for not forcing a tax cut.
Cold fish Mellon wouldnt give up. He privately arranged some bankers to go to do nothing Hoover and tell him: Mr. President-elect, U. S. investors in foreign enterprises will suffer if restrictive duties are increased because it will make it more difficult for their foreign debtors to pay them the interest they owe. Do nothing Hoover was unimpressed but was still mum on whether hed support a tariff hike. When do nothing Hoover got sworn in, on March 4, 1929 Congress set to work on a new tariff. He was still mum. He asked cold fish Mellon to stay on as treasury secretary but they didnt get along.
By the 25th the bad news was that they were going to pass a stiff tariff, named after Smoot and Hawley. Do nothing President Hoover still mum on the issue. A decline started as the news got out. By October 21 the finishing touches were placed on a high tariff bill was written in the Senate Finance committee. Do nothing Hoover still mum. The New York Times had the imminent passage of the high tariff on its front page on October 28. 1929. One day later was Black Tuesday, the stock market crash, October 29, 1929.
Now in the public mind, a change of images. Now do nothing Hoover interfered wrongly in business once again. He called the CEOs of the major businesses together and to give their employees higher wageshigher wages at a time when business was declining, thus making it tougher for businesses to hire more people. Business agreed to his request. Thus do nothing Hoover believed high wages were the cause of prosperity rather than a reflection of prosperity. Thats about as dumb a view of the economy as is possible to have.
There was only one hope from once more cold fish Mellonthat do nothing Hoover would turn around and veto Smoot-Hawley. Cold fish Mellon fought like a tiger; but do nothing Hoover wanted to sign it. The legislation moved slowly through the committee process before its eventual passage in June, 1930. To show how blind Hoover was about conditions, a group of clergy and bankers came to him asking for more public works projects to fight unemployment. He said: Gentlemen, you have come 60 days too late. The Depression is over! They looked at each other dumbfounded.
On June 16, do nothing Hoover finally broke his silence on the tariff and said he would sign it for two reasonsone to get higher duties on agricultural imports to aid farmers and another to get a strengthened tariff commission with power to adjust import duties by 50%. The cloud of protectionism overhung the economy, from first debate to passage. The bill caused country after country to take retaliatory action against the U. S., the stock market sank even lower, the Dow-Jones hit rock bottom.
To show how unfair political life can be, the news media made cold fish Andrew Mellon a goat for the Depression, not understanding that he fought the signing of Smoot-Hawley all the way. Now heres where we view the weird idiosyncrasies of the human condition. Hoover demanded a tax increase in 1931 because he yielded to the liberals cry that multi-millionaires werent carrying their load. Incredibly, after a lifetime of following the right economic prescription, Mellon, genius of the economic recovery, went along! So do nothing Hoover and cold fish Mellon provided the largest peacetime tax hike in U.S. history, moving up the rates on highest incomes from 25 to 63%.
The tax hike during a Depression put the finishing touch to the disaster. Why did Mellon go along? We simply dont know. One thought was that he wanted to cap his career as Ambassador to the Court of St. James where his Scottish and northern Ireland ancestors had come from and where is English-born wife wanted to wind up their public years and could only get Hoover to name him there if he changed course and went for a tax hike. Accordingly, Hoover appointed Mellon to that post in 1932, the year of his defeat for reelection.
Having raised taxes and worsening things incredibly, do nothing Hoover vastly increased federal spending on public works projects, anticipating the New Deal. Do nothing Hoover never learned. Before the New Deal came, Hoover tried it. As his term ended in 1932, he said: We might have done nothing. That would have been utter ruin. Instead, we met the situation with proposals to private business and Congress of the most gigantic program of economic defense and counterattack every in the history of the republic. If only Hoover had truly been a do nothingbut he wasnt.
Believe it or not, Harold and Frances Roeser who fared very well in the 20s didnt do so badly in the Depression. Since I had been around since `28, Frances stayed home but never forgot about J. Walter Thompson. Harold saw his business slip away next to nothing as a salesman for a German steamship line, but he ingeniously concluded that the one group of people who had money for travel were guess who? An inert army of Catholics, still largely immigrants, with ties to Europe and the old religious shrinesnot so much laymen Catholics as the many thousands in the monasteries.
Incredible. With 20 million Catholics in the U. S., there was a fertile undeveloped field for European travel despite the Depression. Who had the money to travel? He deduced this: Catholic monasteries which sent their theologians, abbots and preachers to Rome and Lourdes for pilgrimages. So he devised a Catholic travel and pilgrimage business and traveled the country lining up monks, priests, bishops, cardinals and some wealthy Catholic laymen the Cuneos, the Galvins, the OShaughnesseys, the OMalleys, the Riordans, the benefactors of Notre Dame, the Notre Dame priests for European tripsto Rome, to attend papal audiences, to visit the shrines and sites of apparitions.
His boss, a German Protestant, said: Aach, Harold! Church people go to Europe in a Depression? Youre crazy! Nobody, Catholics or not, will travel now! He was far wrong as he later acknowledged. The anomaly: with the U.S. mired in depression, people would be praying more and many would be, as Geoffrey Chaucer had written in the 14th century Middle English: than longen folk to goon on pilgrimages? The `30s were a particularly good time for Harold and Frances. J. Walter Thompson wanted her to come back but, she said, she waited five years to have a baby and now that I was here, she was staying home. In retrospect: thanks, Mom. All the while, Father traveled to U. S. monasteries as a salesmanand an impressive one he wasin the heart of the Depression signing up monks for trips to Rome and the foreign shrines.
Which is how I got to St. Johns in Minnesotaa Benedictine monastery which was sending a whole detachment of its young seminarians to study at Monte Cassino in Italy. Father arrived at St. Johns, in the heart of a dense forest, in the midst of a snowstorm. He signed up 40 Benedictine German priests to go to Rome and Germany on the German steamship linerthe equivalent of a years work, all in one swoop. He was snowed in so he stayed at the monastery for two days during a blizzard, eating with the German monks and regaling them with stories in authentic German.
When he left, the abbot asked if there was anything he could do for him(in addition to signing up 40 to go to Europe!). Father said, yes, I have a kid whom I would like to send here. The abbot said: send him along. How old is he? Father said: one year old. Well, said the abbot, if Im still alive when he graduates from high school, you have my agreement that hes accepted. The abbot was still alive; I was accepted and the rest iswell, not exactly history but my history.
And what happened to cold fish Andrew Mellon who moved from hated third richest man in the world to hero of the resurrected economy, reducing the national debt, slashed federal expenditures by $1 billion, hiking employment and spurring prosperity to an unheralded degree to goat for the Depression until he weakened to political ambition and called for a tax hike to get named ambassador? He served one year as ambassador to Britain, returned, was sued by the FDR Justice Department for income tax evasion so he got a new name, crook. It so happened he had hired a number of tax attorneys privately to figure out how he could take the right deductions to save money and keep it from Uncle Sam. A demagogic congressman named Wright Patman of Texas who hated bankers led the drive to send Mellon to jail.
The feds pressed forward to empanel a grand jurybut to FDRs sorrow, it declined to produce an indictment. Then started a two-year Justice Department civil action against the old man. FDR vowed to get him if it took his entire length in office. The courts found Mellon innocentbut the finding came several months after his death.
Oh yes, in addition to saying the economy, after he returned to private life, the cold fish and suspected crook gave birth to three concepts that grew to giant proportions, becoming the Aluminum Company of America (Alcoa), built the Carborundum Company, launched an entire industry through his help given to Heinrich Koppers who invented coke ovens that transformed industrial waste into useable products such as gas, tar and sulfur.
And one more thing. His art collection became the National Gallery of Art in Washington, D. C. which he not only donated by provided $10 million besides (worth at least $100 million today)and who founded what is now the American Red Cross. Ask why someone that dedicated to public service, talented in business creation and generous in philanthropy was prosecuted and persecuted by the federal government whose economy he saved. But thats how we repay success and dedicated public service in this country. Thats the story of cold fish-crook Andrew Mellon. And the injustice hasnt stopped with him. Witness: the idealistic, martyred Woodrow Wilson, dumb Harding, lazy Coolidge and do-nothing Hoover which go along with compassionate FDR, the great Harry Truman.
Its because starting with academe and moving to mainstream medias conventional wisdom, reputations are demolished or builtnot by error originally but by original liberal design and by honest error through innocent, uneducated transmittal to later generations. Thats one reason why, children, this memoir is being written. Instead of playing golf in Florida (which I dont know how to play and cant afford anyhow) I am passing it on to you and hope once you study this on your own, you will do the same to your progeny. Thats why Im boring everybody else on this web-site, just so it rings clearly for you. If it does nothing more than make you take another look at the so-called heroes and villains of our history and change labels around to where they really belong, itll be worth it.
Life moves on and next: more about Harold and Frances.