MR. DRISCOLL: Was there a concerted effort after World War I to step on the brakes and slow the pace of the expansion of government? And if so, how did this movement gather steam and was it called, as we would call it today, conservatism, or did it go by some other name?
MS. SHLAES: Well, this is the great topic of interest to us because there they are like us. There had been a mess; there had been ruction. Right? There had been trouble, chaos. And no one knew how it would turn out. The federal government owed a lot of money. You know, imagine a government owing a billion or two billion going to twenty-eight billion. So the increase was at an outstanding rate. The numbers weren’t the same as now but the increase was large. And then the budget had expanded mightily too.
And people wondered whether — well, would the U.S. be a creditor or a debtor nation. It might — it had often been a debtor; now maybe it was a cred — well, you know, the permanent status of the U.S.’s superpower was not acknowledged in the same way, yet.
And what did they do? I think one answer you can look at is in the Harding-Coolidge campaign of 1920: “Normalcy.” And, Ed, what did you learn normalcy was in school? I learned it was something kind of dull, right? Like the — normalcy doesn’t sound elevated or wonderful and that was the Harding motto.
But what they meant by normalcy is not we should all be normal and cogs. Right? What they meant is the environment should be normal so that we can have fun and play with new ideas, which is something very different. Predictability, the reduction of uncertainty. Coolidge as a candidate even used the phrase “uncertainty” which you hear so much today and which is also the subject of Forgotten Man. It’s less uncertainty, please. He really — it’s a theme all the way to the end of his life. You can find it in his columns post-presidency. He spoke of uncertainty.
So wow, that’s very modern as well. He got at something we thought we just learned about, right? And their aim was to reduce uncertainty. To create normalcy so that business might do what it needs to do. Not necessarily only business but business.
And then the policy that followed — in general you can count the innovations of that period. They’re astounding.
MR. DRISCOLL: And it sounds like a very, very different mindset than FDR’s constant focus on what he dubbed “bold experimentation” on the economy?
MS. SHLAES: Right. But there were Progressives then. It was — it wasn’t as if everybody, you know, I kind of hear you sighing and saying, well, of course it was different then; people were for that. But there were Progressives who wanted, say, to nationalize water and power. Right? They were around, and you know that in 1924 they got seventeen percent of the vote. Like Ross Perot, they were a big presence. They were dividing the Republican Party or so it was thought. The Democrats were thinking of going to the left; Wilson had just made the Democrats progressive — Woodrow Wilson.
So in World War I, the government had shut down the stock market, New York — the stock market was in New York, so it was shut down in New York but the federal government was there in the background. And it had nationalized the chief means of transport, the railroad, and then denationalized it messily.
There were extreme interventions of the government, as in our recent period with the crisis. And nobody knew whether we could stop the Progressive march forward and yet Coolidge did stop it. He really did. Harding started and Coolidge did most of the work. He stopped it by — just by main force, by putting his thumb in the dike or, you know, you can think of different metaphors. I see him sort of in a blocking action. Or you’ve heard — you remember William Buckley used to talk about standing athwart history and –
MR. DRISCOLL: Uh-huh.
MS. SHLAES: — and yelling stop. Coolidge was a president, not a journalist. But I see him, too, as standing athwart history, yelling stop, and using his whole political tool kit to stop.
The number — you asked about budgets just to get back to the technical. What did they do? One thing they did was say we will restore certainty. We will narrow the parameters — narrow the possibilities, the unknown unknowns, right?
The second thing they did was they passed a budget law that made it possible for the president to budget. Before that it had sort of been with different committees just coming to the executive and he never got an overview and had not the staff either to get an overview, to have a real U.S. budget. That was the 1921 law which Harding signed. And they cut taxes.