On “Government and Business”

November 21, 2013November 21, 2013 / gouverneurmorris / 3 Comments

Aerial view of Midtown Manhattan, May 1925. The Plaza Hotel is in the foreground. The Empire State Building would not be constructed until 1931.

When Calvin Coolidge accepted the invitation to address the Chamber of Commerce of the State of New York on November 19, 1925, he would speak to the oldest collaboration of entrepreneurs, merchants and businessmen in America. This Chamber, after all, preceded the Declaration of Independence by eight years. Coolidge came to the bustling hub of the nation’s commerce to stand before some of the most accomplished leaders of the marketplace. Not intimidated by either their presence or reputations, Coolidge was caught by the awe and admiration he felt for what New York represented: “the genius of the American spirit.” He observed, “We are met not only in the greatest American metropolis, but in the greater center of population and business that the world has ever known. If any one wishes to gauge the power which is represented by the genius of the American spirit, let him contemplate the wonders which have been wrought in this region in the short space of 200 years. Not only does it stand unequaled by any other place on earth, but it is impossible to conceive of any other place where it could be equaled.” It was all due to the exceptionalism of America’s design, Coolidge would go on to declare. It was no accident that economic freedom could achieve such heights. Such was inherent in recognizing and protecting the opportunity of each individual.

Whereas ancient empires had consolidated political and economic controls into one central government, America was different. New York was still “an imperial city, but it is not a seat of government. The empire over which it rules is not political, but commercial.” This separation was not only deliberate but wise to maintain, Coolidge continued. It was right that, especially in New York City, the government remain merely one tenant among many, not an authoritarian landlord.

He likened Washington and New York City to free-flowing streams which run parallel to one another without ever joining. Had that clear separation never been made, however, the results would have been disastrous not only for New York but for the commerce of the entire country. “When we contemplate the enormous power, autocratic and uncontrolled, which would have been created by joining the authority of government with the influence of business, we can better appreciate the wisdom of the fathers in their wise dispensation which made Washington the political center of the country and left New York to develop into its business center. They wrought mightily for freedom.” The opposite holds equally true today. When government grows, individual opportunity shrinks in proportion to it. For Coolidge, the advantages of keeping business separate from government were easily apparent and readily justified.

What was lacking between the economic world and the political world was not greater supervision but greater understanding between them. While Coolidge could accurately assert that were any contest to take place between the knowledge of business by government and government by business, government officials would win. Considering the profound experience of administration leaders like Andrew Mellon and S. Parker Gilbert at Treasury, Charles Evans Hughes at State and Herbert Lord at the Budget Bureau, including many others with backgrounds in monetary and commercial fields, Coolidge was not exaggerating. Back then, there were highly capable businessmen in government, not to obtain favors for cronies but to serve for the good of the entire country. These were men who understand both worlds and yet even they knew their personal and constitutional limits and respected them.

Coolidge then said, the “general welfare of our country could be very much advanced through a better knowledge by both of those parties of the multifold problems with which each has to deal.” Even so, Coolidge explained, “I should put an even stronger emphasis on the desirability of the largest possible independence between government and business. Each ought to be sovereign in its own sphere.” Washington was not be lord and master subjugating commerce to each bureaucratic whim. The throne of commerce was not to be usurped and co-opted by political power. Likewise, governance for the welfare of all was not salable to the ambitions of business interests.

The outcome, when either authority is supplanted, was clearly abhorrent to Coolidge. “When government comes unduly under the influence of business, the tendency is to develop an administration which closes the door of opportunity; becomes narrow and selfish in its outlook, and results in an oligarchy.” This is what makes the charge ring hollow that Coolidge blindly served “Big Business” at the expense of the country as a whole. Individual opportunity is measured in several ways but by every standard — from unemployment rates of 3.8 per cent to 4.5 per cent annual growth to any number of consumption statistics — the door of opportunity was wider than it had ever been before thanks to an unwavering commitment to keep limited government and commercial freedom separate. Coolidge did not stop there, noting the other “side of the coin,” “When government enters the field of business with its great resources, it has a tendency to extravagance and inefficiency, but, having the power to crush all competitors, likewise closes the door of opportunity and results in monopoly.” Through a “reasonable vigilance” by the people to “preserve their freedom” the threat was not serious then and can be thwarted now.

As Coolidge stood before Chamber President Ecker and those comprising the organization, he took the occasion to define what he meant by “business.” His exposition should put an end to the long-cherished claim that he “worshiped ‘Big Business’ ” (i.e., rich corporations) at the expense of the “little guy” (the small business operator, the single entrepreneur or the blue-collar worker). On the contrary, to Coolidge, business meant everything Americans do. He did not see a series of groups in conflict: labor versus capital, industry versus agriculture, creditor versus debtor. Instead he saw a symbiotic collaboration made possible when opportunity is maximized, where all serve and are served.

He said, “I have used the word in its all-inclusive sense to denote alike the employer and employee, the production of agriculture and industry, the distribution of transportation and commerce, and the service of finance and banking. It is the work of the world.” Capitalism was not institutionalized selfishness; “it rests on a higher law. True business represents the mutual organized effort of society to minister to the economic requirements of civilization. It is an effort by which men provide for the material needs of each other. While it is not an end in itself, it is the important means for the attainment of a supreme end. It rests squarely on the law of service. It has for its main reliance truth and faith and justice.”

Those gathered in downtown Manhattan that day could have expected Coolidge to roll out grand assurances of preferential treatment by his Administration. Perhaps some of those present thought he would validate an unqualified laissez-faire policy, where government would, with a wink and nod, ignore any future abuses by corporations. They would both be disappointed. Coolidge ventured into the controversial territory of the purpose for government involvement in business. He rejected the “autocratic practice abroad of directly supporting and financing business projects.” The socialist approach where government subsidized particular entities it favored would have no place here in normal, every day America. Solyndra would have never obtained a dime under Coolidge. Stimulus appropriations, especially those benefiting winners and losers based on political alliances, would have been a betrayal of government’s proper purpose.

The emergency of the moment did not preclude the rule that America was to nurture free markets. Coolidge laid out his policy, “we have rather held to a democratic policy of cherishing the general structure of business while holding its avenues open to the widest competition, in order that its opportunities and its benefits might be given the broadest possible participation.” To Coolidge, government was not nor should it be participant in the “game.” Government was to encourage an environment of friendliness, not hostility, to the fullest involvement of everyone, letting the market decide success and failure. The government, enforcing the law to prevent monopolies and place standards of regulation on transportation and trade was not to assume powers belonging to business, it was “to have business remain business. We are politically free people and must be an economically free people.” The welfare of all the people is given to the national government, not to an independent commission or trade association. Government cannot farm out that responsibility if opportunity for everyone is to be maximized.

Coolidge was no blind believer in government power, as he made plain next, “It is notorious that where the government is bad, business is bad.” The protection of property and the enforcement of lawful order is government’s first and most essential contribution to business. Even these necessary functions have been misapplied and “run into excesses…Regulation has often become restriction, and inspection has too frequently been little less than obstruction.”

Recalling the experiences of the recent past, Coolidge noted that long after informed public opinion corrected the abuses by those taking advantage of economic freedom to abuse others, an unwarranted prejudice remained. That widespread public prejudice becoming enshrined in legislation ended up doing far more harm than good to economic opportunity. “It is this misconception and misapplication, disturbing and wasteful in their results, which the National Government is attempting to avoid.” Coolidge neither nursed a prejudice against business to conscientiously correct abuses nor did he subscribe to an unquestioned confidence in government to right all wrongs.

The lesson of history was not to grasp for greater regulatory countermeasures but to keep faith in the American people, who corrected the abuses without legislation in the past and could be trusted to do so with continued vigilance into the future. The answer was not to be found by looking to government to “fix” business. The answer is found in the public upholding common standards for just dealing.

Seeing the return of prosperity and unprecedented expansion of opportunity, Coolidge seized the occasion to enumerate the additional ways government reinforces business. First, a policy of economy provides the “only method of regeneration.” Pairing tax reduction and protective tariff rates releases pent-up capital and gives production the incentive to produce. Second, a policy pursuing the elimination of waste in the use of resources protects the “smaller units of business,” the producer, the wage earner and the consumer. The previous five years, Coolidge praised, could lay claim to many successes on the part of business allowed to find solutions, instead of government mandating actions. By offering a cooperative environment in which to work, government fostered freer business.

The regulation of corporations twenty years before had served its purpose, now this shift for government and business was no less important. The collaboration underway was producing a real and solid progress. One need only see the improvement of living standards, the increase in affluence and the free movement of capital to perceive its success. This was not all, however. Debt was liquidating while taxes were coming down. Wages were actually going up while prices were actually coming down. These were results everyone could see. “The wage earner receives more, while the dollar of the consumer will purchase more,” Coolidge told the Chamber. “It must be maintained” because more work remained to be done. Business still had much to do and government needed to keep policy consistent so progress continued.

All of these advancements were not merely the simple give and take of a market transaction. They contained great moral and spiritual implications, not only for America but for the rest of the world. America had just saved Europe from “complete collapse,” Coolidge reminded his audience. “It ought everywhere to be welcomed with rejoicing and considered as a part of the good fortune of the entire world that such an economic reservoir exists here which can be made available in case of need.” Government economy then pertains as much to foreign policy as to domestic good. It was no less imperative in the settling of foreign war debts. “Peace,” Coolidge would say, “rests to a great extent upon justice, but it is very difficult for the public mind to divorce justice from economic opportunity.” Our political affairs cannot attain righteous ends without preserving the freedom of the marketplace.

As Coolidge neared the close of his remarks, he urged his listeners of the great expectations placed on America, within man’s work in this world. “The working out of these problems of regulation, Government economy, the elimination of waste in the use of man effort and materials, conservation and the proper investment of our savings both at home and abroad, is all a part of the mighty task which was imposed upon mankind of subduing the earth. America must either perform her full share in the accomplishment of this great world destiny or fail.”

Then Coolidge pressed the point home that all of our efforts, all of our relations must rest on “a system of law.” It is upon law, the reasonable and orderly appeal to higher standards that success will continue. Reflecting on George Washington, President Coolidge derived his closing inspiration in what the future held. As Washington did, “[w]e must meet our perils; we must encounter our dangers; we must make our sacrifices, or history will recount that the works of [George] Washington have failed. I do not believe the future is to be dismayed by that record. The truth and faith and justice of the ancient days have not departed from us.”

On Bureaucracy and Functional Government

September 23, 2013September 23, 2013 / gouverneurmorris / Leave a comment

When President Coolidge spoke to those gathered at the illustrious College of William and Mary in 1926, he reminded his listeners of what makes government function. For government to work, it must be local and accountable. Established by the earliest arrivals from the Old World, the experiences with bureaucratic authority taught the colonists that government centralized (and thereby removed from the problems it attempts to fix) never works. For this reason, as government advanced from colonial to state forms, bureaucracies had no part in the drafting, passage or implementation of state constitutions, laws and standards.

It was up to the towns, cities, counties and ultimately states to make government function. It is the cradle of true states’ rights and the basis for a genuine national unity. The one-size-fits-all approach always succumbs to its own inherent weaknesses. In the process of forming their own governments, Americans learned how liberty is only possible when the ability to make decisions is preserved at the local and personal level. Anything more and government, even in the name of compassion and efficiency, becomes inhuman, destructive and incompetent — the murderer of what Coolidge earlier called an individual’s “self-direction,” known also as freedom.

Experience has actually proven, so that Coolidge could truthfully say, “No method of procedure has ever been devised by which liberty could be divorced from local self-government. No plan of centralization has ever been adopted which did not result in bureaucracy, tyranny, inflexibility, reaction, and decline.” Liberty and local self-government cannot be separated as with a clinical incision to the body politic. This is why transforming government into the expansive, all-encompassing State it is today, whatever the intentions, always kills the liberty exercised by the individual.

The most adept planners fail not because someone disrupts the plan from its certain success nor because the plan can only work with the right kind of people in charge. The plan fails because it is inherently flawed. It attempts to liberate humanity by denying its humanness. Forced to conform to an unrealistic set of approved behaviors, government is stripped of any human quality, turning what is supposed to be the humane agency of free individuals, the “expression of the life” by a sovereign people, into “a cold, impersonal machine.” No longer the personal involvement of individuals deciding their own affairs, government perverts to infinite layers of “expert practitioners.” An unaccountable and reckless bureaucracy takes the place of local self-determination, giving and taking away freedom with the draft of every new form and the sweep of every expert’s pen.

We see states are no longer allowed to diverge from total conformity to Federal specifications, however mundane the state matter. This administration has made clear it will sue any state refusing to march in step with the arbitrary and selective enforcement of law it exemplifies. We watch as counties, boroughs and parishes are threatened to accept designated “Federal” money or else be cut off from future “favor.” We look while cities, towns, and villages are told to adopt a complete overhaul of zoning regulations by the Housing and Urban Development Department in Washington. We then stand aghast as Washington invades our most personal decisions of child-raising, employment, education, health care, retirement, and, through the institutionalization of political correctness, what we are allowed to say in political opposition and believe in religious conviction.

Coolidge, addressing the issues of housing, food, wages, hours, conditions, justice and opportunity, placed the power for addressing all these with the welfare of all the people in his state squarely where it belonged, where the laws properly placed them — with the people themselves. It is they who bear the burdens of government, who pay its costs and activate its provisions. It was for the people of Massachusetts to decide these details of their lives because they comprised its government from little Monroe to Beacon Hill. What Coolidge said of Massachusetts could be said of governments everywhere across this Union, “Our government belongs to the people. Our property belongs to the people. It is distributed. They own it. The taxes are paid by the people. They bear the burden. The benefits of government must accrue to the people. Not to one class, but to all classes, to all the people. The functions, the power, the sovereignty of the government, must be kept where they have been placed by the Constitution and laws of the people.”

The power of these truths, the “rules of action” originating from the people from whom governments are constituted, are what make bureaucracies such an affront to civilization everywhere. Lifting power out of the hands of the people directly concerned with a given issue, bureaucracies clog the proper function of government by setting up “the pretense of having authority over everybody and being responsible to nobody.” It is the assumption of control without an equal measure of responsibility that makes a bureaucracy so destructive of local self-government and, inseparably, individual freedom. Coolidge put it in even clearer terms, “Of all forms of government, those administered by bureaus are about the least satisfactory to an enlightened and progressive people. Being irresponsible they become autocratic, and being autocratic they resist all development. Unless bureaucracy is constantly resisted it breaks down representative government and overwhelms democracy.”

There are definite issues the Federal government is simply, even at its best, not equipped to handle, being “too far away to be informed of local needs, too inaccessible to be responsive to local conditions.” It has proven unworthy of few things, yet it is still given many more to manage. As Coolidge said, “It does not follow that because something ought to be done the National Government ought to do it.” Liberty diminishes in proportion to increasingly centralized control. Where freedom is concerned, it actually is a zero-sum game.

The solution, as Coolidge analyzed this problem, remains the same now. The states can help end or irreversibly enable the dysfunction of government by bureaucracy. The rights held by states are not given them to never use just as they are not given to abuse those to whom they are accountable, the people of each state. If they are unfaithful in the exercise of delegated powers, the Federal Government is thereby invited to step in and get involved. The willing weakness of local and state government only encourages the intrusion of Federal controls.

This danger provoked President Coolidge not to absorb power, but to restore the correct balance between the people, the states and national government. He did so consistently. By vetoing the double attempts to socialize American agriculture, chopping down the Federal outlay for flood aid, cutting and cutting again the size of the Federal budget, paying down the nation’s $20 billion debt, reducing tax rates across the board and fighting the Congressional urge to spend each year’s growing surplus, Coolidge left the recipe that works when Washington is governed responsibly. It remained for the states and local decision-makers to follow that constructive lead. Far too often they did not do so, working instead against Coolidge’s program.

Local self-government cannot afford, fiscally, politically, morally, to shirk its duty a moment longer. The states cannot emulate the direction they took in the 1920s and 30s. It must be the sovereign people, through their municipal, county and state governments, who stand when no one else seems willing to stand. The alternative will hasten only more of the same disastrous consequences ahead for us already.

The way lit by Coolidge forward, back toward progress and justice, requires courage but it is the only way. It means robustly asserting local and state authority, dragging Washington back to its limited and lawful sphere of responsibilities. “I want to see the policy adopted by the States of discharging their public functions so faithfully that instead of an extension on the part of the Federal Government there can be a contraction.” The march back toward a government of the people and away from central bureaucracy starts where all good governance begins — at the local level.

On Agriculture

June 24, 2013June 27, 2013 / gouverneurmorris / Leave a comment

Born of hardy farming stock, Calvin Coolidge knew firsthand the costs and difficulties of such an investment. With the vote against passage of the Federal Agriculture Reform and Risk Management Act (H.R. 1947), roles have certainly reversed from the days when the President, not Congress, was acting to restrain federal spending as the best help government could render.

President Coolidge would veto both McNary-Haugen farm relief bills for their mechanisms to fix prices artificially, instead of letting the market decide value. The equalization fee of both pieces of legislation encouraged a special favor to one segment of the country — farmers — a device Coolidge never supported toward anyone, regardless of the form of their contributions to commerce. He held that constructive economy, not spending to compensate farmers for overproduction or veterans for their incalculable sacrifice, was for the benefit of all alike. Lobbyists, like George N. Peek who pressed Congress for “farm parity, as Gilbert C. Fite termed it, should not dissuade legislators from this commitment to represent the interests of all their constituents.

What was conspicuously missing in the legislation of McNary-Haugen, who were both Republicans (a fact that did not hold any weight with President Coolidge), was a recognition of what farmers can do for themselves. The haste for government to spare people (voters) from the consequences of certain choices was no less acute then as it is now. It was the President, in two powerfully written veto messages, who reminded the large and influential farm bloc of some obvious truths when it came to farmers. Farming has always and will ever be a supremely difficult task. No law can take all the risk or uncertainty out of working with the land.

Farmers can still help alleviate some of the difficulties they face by altering how they operate instead of running to Washington for help. For instance, farmers can diversify the crops they grow. By cultivating a variety of foods, the farmer is expanding the scope of yield without overproducing any one commodity. The farmer, as Coolidge would write in his daily column after the Presidency, best helps the soil — the center of the farmer’s world — and himself, when he expands into greater self-sufficiency in both crops and stock. Making an unpopular but glaringly simple observation, Coolidge saw the solution to overproduction (be it wheat, cotton or any other item on the market) was producing less in single-crop operations by broadening into different areas of agriculture.

In areas, particularly those in the West, creating discord between farmers, ranchers and consumers, co-operatives instead of government price-manipulation schemes could be an answer. Coolidge saw better results possible when farmers voluntarily collaborated, as used to be the case in rural communities, to form co-operatives that deploy their own efforts to improve efficiency, find markets for their produce and enable local problems to be resolved by the people directly involved. Government would not do any favors helping reward overproduction, prop-up higher export rates or rescue farmers from hard times. President Coolidge, through articulating reminders of the obvious, spelled out a way farmers can escape the many unintended consequences that follow when government gets involved. Many farmers wanted the assistance in spite of what it meant for the rest of the country. Coolidge knew he could point the way to self-reliance applied to the problems facing agriculture, but it would only succeed if farmer’s made it work for themselves.

It is thanks to the resolve and foresight of President Coolidge that farmers were spared the loss of their independence from Washington’s management, at least for the rest of his administration, while constructive economy continued for everyone. It is a reminder that we are much more capable of effecting solutions to our own problems than we may realize. At its heart, Coolidge’s reasons for vetoing these bills were grounded in a confidence that we, as free men and women, possess all the abilities we need to “work out our own salvation,” as he would put it. Therein lies greater potential for success than any of us imagine.