-President Calvin Coolidge's address to the American Society of Newspaper Editors, Washington D.C., January 25, 1925.
As President, Calvin Coolidge made his mark as a fiscal conservative. During his presidency the United States experienced the period of rapid economic growth. Coolidge trusted the administration's industrial policy in the hands of Secretary of Commerce Herbert Hoover, who was, at the time, perceived as a brilliant financial and economic manager. Hoover crafted government policy which was designed to promote business efficiency and develop the airline and radio industries. While his President was in favor of increased tariffs, Coolidge otherwise disliked regulation. He appointed commissioners to the Federal Trade Commission and the Interstate Commerce Commission who did little to restrict the activities of business. Some have criticized Coolidge as a follower of the laissez-faire philosophy. Coolidge's critics argue that this approach led to the Great Depression. But other Coolidge biographers like Robert Sobel and Amity Schlaes attribute this to Coolidge's beliefs about the roles of federal and state governments. They point out that as Governor of Massachusetts, Coolidge supported wages and hours of work legislation, he opposed child labor, he imposed economic controls during World War I, he favored safety measures in factories, and he supported worker representation on corporate boards. They argue that Coolidge did not support these measures while president because in that era, these things were considered the responsibilities of state and local governments.
Coolidge's taxation policy was one he shared with his Secretary of the Treasury, Andrew Mellon. He believed that taxes should be lower and fewer people should have to pay them. He had a Congress that agreed with him on this, and taxes were reduced in Coolidge's term. In addition to these tax cuts, Coolidge proposed reductions in federal expenditures and retiring some of the federal debt. To this end, the person that Coolidge worked most closely with was his budget director, General Herbert Mayhew Lord. It has been said that Coolidge met with Lord more than any other member of his administration.
Lord was second Director of the United States Bureau of the Budget (now the Office of Management and Budget). He had been appointed by Warren Harding and held the office from July 1, 1922 to May 31, 1929 during the administrations of Presidents Harding, Coolidge and Hoover. He came from Maine and had worked in the newspaper industry and had served as a Congressional aide. During the Spanish-American War, he joined the Army where he became a Major and Paymaster of Volunteers. During World War I, he managed the finances for the Quartermaster Corps and was eventually promoted to Director of Finance, controlling the approximately $24 billion appropriations for the War Department. He rose to the rank of Brigadier General before retiring on June 30, 1922, to accept the appointment as Director of the U.S. Bureau of the Budget. He succeeded the bureau's first director Charles G. Dawes, who was Coolidge's Vice-President.
Lord worked very closely with President Coolidge on cutting the federal government budget. The two men met on a weekly basis. Lord earned a reputation for strictness and creativity in cutting the budget as well as attention to detail. In one famous anecdote, Lord criticized the US Army for purchasing 200,000 new brooms when old ones were available. He instructed government departments to write fewer and shorter letters, and saved on transportation costs by using lighter official government paper. Lord and Coolidge succeeded in lowering the federal spending from around $3.2 billion in 1923 to $3.053 billion in 1924. Lord's efforts helped the federal government to run a surplus throughout Coolidge's tenrm as President, enabling significant reductions in the federal debt built up by previous administrations.
Coolidge's ideas were shared by the Republicans in Congress, and in 1924 Congress passed the Revenue Act of 1924, which reduced income tax rates and eliminated all income taxation for about two million people. They reduced taxes again by passing the Revenue Acts of 1926 and 1928, all the while continuing to keep spending down so as to reduce the overall federal debt. By 1927, only the richest 2% of taxpayers paid any federal income tax. Federal spending remained flat during Coolidge's administration, allowing one-fourth of the federal debt to be retired. Conversely, state and local governments saw considerable growth during this same period.
Upon completion of Coolidge's term, Lord remained as Budget Director under Herbert Hoover until 1929. Lord died the following year at the age of 70. Coolidge died 3 years later, on January 5, 1933 at the age of 60.