By ROBERT MERRY
'Debt takes its Toll.' Thus does Amity Shlaes begin her biography of Calvin Coolidge, the laconic, flinty-faced New Englander who became America's 30th president upon the death of Warren Harding in 1923 and then captured the office in his own right in 1924. Ms. Shlaes, the author of a best-selling history of the Great Depression, "The Forgotten Man" (2007), issues her debt admonition in the course of introducing Oliver Coolidge, a brother of Silent Cal's great-grandfather, who went to jail in 1849 because he couldn't pay a $29.48 debt to a neighbor. She then glides briskly from Oliver's plight to the problem of government debt, particularly when it reaches proportions that threaten the public fisc and undermine national confidence. "There have been times," Ms. Shlaes writes in the introduction to "Coolidge," "when debt pinned down the United States as it once pinned down Oliver.''
By Amity Shlaes
Harper, 565 pages, $35
Calvin Coolidge lived in such a time—as do we. At the end of World War I, the national debt stood at $27 billion, nine times its level before the war. But Coolidge, and Harding as well, slashed the country's credit obligation to just $17.65 billion. They did it by cutting taxes, generating economic growth and, in the process, flooding federal coffers with surplus dollars. This accomplishment merits attention today, with the national debt exceeding $16 trillion—more than 70% of gross domestic product. If that number hits 90%, some economists warn, it will squeeze the national economy inexorably.
And if that crisis hits, the country will face a binary choice. It can return to a free-market system of lower taxes, smaller government and the curtailment of the Federal Reserve's promiscuous fiat monetary policies—in short, abandoning Keynesian sensibilities and the trend toward European-style social democratic governance. Or it can opt for what energy-industry executive Jay Zawatsky has called "increasing financial repression"—further federal spending and intrusion into the economy, rising tax rates on the wealthy, ever greater federal debt financed by Fed money creation and, eventually, rising inflation.
To understand the first option, it is necessary to understand the 1920s. And we can't understand the 1920s without peering into the life and politics of Calvin Coolidge—"principally a man of work," as Ms. Shlaes describes him, "a minimalist president, an economic general of budgeting and tax cuts." Her biography is thus both timely and important.
Coolidge was born in 1872 in Plymouth Notch, Vt., where folks frowned on showy talk and artifice. Its physical and cultural center was the country store, run by Calvin's father, John, who also farmed and served in the Vermont legislature. Young red-haired Calvin was a quiet lad—and painfully shy. He "found it agonizing to meet even the adults who entered his parents' front rooms,'' Ms. Shlaes writes. But in that austere environment he learned the skills needed "for the eternal combat with the landscape." Life was harsh in that place and time: His mother died when Calvin was 12, his sister six years later.
At the Black River Academy, a boarding school in Ludlow, Vt., young Calvin posted mediocre grades initially and demonstrated little skill for athletics or the arts of social advancement. He loved to read, and legend had it that he devoured every book in the school library. By graduation he had managed to boost his marks to a respectable level, demonstrating a characteristic trait: He was a slow starter, disoriented in new situations but increasingly impressive as he gained comfort with his surroundings.
The pattern repeated itself at Amherst College. "I think I must be very home-sick,'' he wrote his father after his arrival on campus, "my hand trembles so I can't write so any one can read it.'' But over time he advanced academically and socially. "I am confident," he later wrote home, "I have gained a power of grappling with problems that will stand by me all my life.'' By graduation he had opted for a legal career, with an inclination toward politics.
After an apprenticeship, he joined a law firm in Northampton, Mass., where locals warmed to his terseness of expression (they didn't like being billed for long-winded advice) and his skill settling disputes without litigation. Small-town legal work didn't make him rich, but it gave him a base for political pursuits. In 1898, at age 26, he became a city councilman and thereafter interspersed his legal practice with ever-higher electoral positions—city solicitor, clerk of courts, state representative, Northampton mayor, state senator, Senate president, lieutenant governor. In 1918, at age 46, he was elected Massachusetts governor.
Along the way he gained a wife, Grace Goodhue, a pert and lovely graduate of the University of Vermont. A Coolidge exchange with Grace's father reflects the spare mode of New England expression: "Up here on some law business, Mr. Coolidge?'' "Come to see about marrying Grace.''
When the couple married in 1905, the wife of one friend observed, "I don't see how that sulky red-haired little man ever won that pretty, charming woman.'' Living simply, the Coolidges avoided debt, renting their home to avoid even the burden of a mortgage. "Coolidge,'' writes Ms. Shlaes, "did not like to be beholden to bankers or anyone else.''
As a politician, Coolidge came under the sway of the Republican progressive movement, personified with dramatic flair by Theodore Roosevelt. In the state Senate, Coolidge voted for women's suffrage, a state income tax, a minimum wage for female workers and salary increases for teachers. Like Roosevelt, he calculated that Republicans could thwart Democratic inroads on such causes by pre-empting them.
But Coolidge soon began to question progressivism, including Roosevelt's resolve to regulate railroad rates through his Hepburn Act. He saw that railroads, though rich and powerful, operated on the margin. As Ms. Shlaes explains: "The blow Roosevelt had struck to reduce the power of the railroads might be crippling them instead.'' And by undermining the profitability of cross-country shipping, the act undermined U.S. trade with China and Japan.
Coolidge was struck by the radicalism of some labor leaders when, as a state senator, he helped broker an employment agreement between woolen workers and their managers. In a letter he wrote that the leaders of the Industrial Workers of the World, the famed Wobblies, were "socialists and anarchists'' bent on destroying "all authority, whether of any church or government.''
As Massachusetts governor in 1919, Coolidge gained widespread fame when Boston policemen went on strike, unleashing looting, property destruction and street thuggery. A crippling general strike loomed, and violence was on the rise. A watchful nation feared spreading lawlessness. After trying a conciliatory approach, Coolidge turned implacably decisive. Working through the police chief, he fired the striking policemen and moved to restore order by calling in steel-helmeted state guardsmen. "There is no right to strike against the public safety,'' he declared, "by anybody, anywhere, any time.''
Ms. Shlaes's story, constructed as a kind of chronological diary, has a disjointed quality, as descriptions of powerful events that generate mounting reader interest get interrupted by less consequential matters that break the narrative. This is not a biography for those in search of gripping drama. But the research is exhaustive, and the political and economic analysis sound. These aspects come to the fore especially in the concluding sections of the book, as the White House comes into view.
In 1920, Coolidge emerged as the running mate to Republican presidential candidate Warren Harding, an intellectually lethargic man who nonetheless understood the need to remake the GOP into a more conservative party and move the country in a new direction. President Woodrow Wilson's postwar economy was in free fall, and the country needed a new economic philosophy to get beyond the Wilson mess.
Harding's watchword was "normalcy''—meaning, as Ms. Shlaes describes it, "low taxes, tariffs, less central government, and stability.'' He won in a landslide, a clear repudiation of Wilson's progressive policies, and quickly moved, at the counsel of Treasury Secretary Andrew Mellon, to cut taxes and restore the economy. The aim, says Ms. Shlaes: "to retire debt, not to expand it.''
The new direction was well-established by August 1923, when Harding died unexpectedly at age 57, most likely from congestive heart failure. But Mellon believed the new president could generate continuing economic growth through greater application of a "scientific taxation'' concept—"supply side'' economics, in today's parlance—designed to generate economic activity, and federal revenue, by reducing top marginal tax rates. In Coolidge's time, as today, the concept stirred widespread skepticism.
Coolidge sent to Congress a "scientific taxation" bill that he hoped to get passed before he faced the voters in 1924—proposing to lower the top tax rate to 30% or even 25% from 50% (it had been 77% when Harding took office). The party establishment in Congress watered it down, leaving the top tax rate at 43.5% and directing most of the tax relief to middle-income Americans. Though disappointed, Coolidge signed the bill with a resolve to revisit the matter after his election, in which he defeated Democratic candidate John W. Davis by a decisive margin.
He eventually got the top rate down to 25%. The GDP soared, increasing by 25% during the Harding-Coolidge years. The result, coupled with fiscal austerity, was a nation flush with tax receipts—surpluses of $100 million in 1925, $375 million in 1926 and nearly $600 million the next year.
The Coolidge years represent the country's most distilled experiment in supply-side economics—and the doctrine's most conspicuous success. That success is the central Coolidge legacy, brought home with telling authority in Ms. Shlaes's work. This book's time is propitious. As the nation faces a looming economic crisis wrought in large measure by mounting public debt, the Coolidge experiment offers insights into what an alternative course might look like. Ms. Shlaes has given us a detailed examination of that alternative course.
Mr. Merry, editor of the National Interest, is the author of "Where They Stand: The American Presidents in the Eyes of Voters and Historians."
A version of this article appeared February 9, 2013, on page C5 in the U.S. edition of The Wall Street Journal, with the headline: Calvin Coolidge for President.