Amity Shlaes is out with her latest book, Coolidge, a new take on the controversial presidency of Calvin Coolidge. Conservatives love Silent Cal, giving him full credit for the Roaring Twenties. Liberals hate him, believing his free market policies caused the Great Depression. Shlaes falls firmly in the former camp. Personally, I think he’s partly responsible for both. That’s because the Roaring Twenties and the Great Depression were caused by the same thing…rapid expansion of the money supply.
From mid-1921 to mid-1929, the money supply grew 61.8%, with much of that coming during Coolidge’s terms in office. All that money fueled a boom as businesses raced to invest it (aka the Roaring 20s). Eventually, too much money chased too few worthy investments. Poor businesses failed. The economy crashed and the money supply contracted. The Federal Reserve, just like today, mistakenly tried to reinflate the bubble in 1932 only to find itself unable to do so.
Still, Coolidge wasn’t a bad president. He cut the national debt and reduced tax rates. He avoided wars in Latin America. For more on Calvin Coolidge, see this interview with Amity Shlaes conducted by Ed Driscoll at PJ Media:
MR. DRISCOLL: The Forgotten Man helped to place FDR into context by focusing on many personal histories of the 1930s, beyond the palace intrigue of Capitol Hill. These days, whatever collective history we have of the 1920s seems to come from The Great Gatsby, The Untouchables,and TV shows like HBO’s Boardwalk Empire. How badly do people today misremember the decade of the 1920s ?
MS. SHLAES: We really misremember it and then you want to ask why. So Forgotten Man was about the misremembering of the 1930s. Coolidge is about the misremembering of the 1920s.
So the cliches you describe, and they’re fun and amusing, are that it was all a lie or about guns and alcohol, something illegal and contraband, corruption resulting from prohibition. Or it was all a lie; Gatsby wasn’t real wealth. He was an illusion. He was a shimmer in a champagne glass. Right?
So when you go back and look at the ’20s — this is the era of Coolidge, you see a lot of real growth. Things we would envy, we wish we could have, such as employment was often below five percent. When you wanted a job you got one. Wages rose in real terms. Not a lot but consistently. You can go back and look at that, even for unskilled workers. Well, what else — interest rates were pretty low. The budget was in surplus. We didn’t have a deficit. The federal debt was huge from World War I. We were bringing it down reliably…
(See the rest at PJ Media)