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Monday, November 30, 2009

We Could Use A Man Like Warren Harding Again

Some common sense from the Mises Institute:

The economic situation in 1920 was grim. By that year unemployment had jumped from 4 percent to nearly 12 percent, and GNP declined 17 percent. No wonder, then, that Secretary of Commerce Herbert Hoover — falsely characterized as a supporter of laissez-faire economics — urged President Harding to consider an array of interventions to turn the economy around. Hoover was ignored. Instead of "fiscal stimulus," Harding cut the government's budget nearly in half between 1920 and 1922. 
The rest of Harding's approach was equally laissez-faire. Tax rates were slashed for all income groups. The national debt was reduced by one-third. The Federal Reserve's activity, moreover, was hardly noticeable. As one economic historian puts it, "Despite the severity of the contraction, the Fed did not move to use its powers to turn the money supply around and fight the contraction."[2] By the late summer of 1921, signs of recovery were already visible. The following year, unemployment was back down to 6.7 percent and it was only 2.4 percent by 1923.
Naturally such an approach is heretical today. Harding himself is held up as a ridiculous figure. The White House bio of Harding can be best described as sniffy. Harding was not completely laissez-faire. He raised the tariff to protect domestic industry and curtailed immigration. On the balance, however, he was for smaller government. 

Posted by Richard Anderson on November 30, 2009 | Permalink


Harding was a horrible president, maybe the worst. He was inducted in the KKK during his short period in office. That ought to end any respect for him. If you're looking for a better, more palatable figure, look for Calvin Coolidge.

Posted by: Zebulon Pike | 2009-11-30 1:45:51 PM


What does that have to do with his handling of the economy? This post wasn't about whether Harding was a good president overall or not.

The real point is that the first time the U.S. attempted monetary and fiscal intervention, there was a great depression.

Posted by: Charles | 2009-11-30 2:32:50 PM

"If you're looking for a better, more palatable figure, look for Calvin Coolidge."

palatable? these are presidents, not Hors d'oeuvres.

Posted by: Cid the cidious | 2009-11-30 5:28:51 PM

Harding was noted for his support of Civil Rights, including support for anti-lynching legislation. At the time black Americans voted overwhelmingly Republican, Harding's party.

The accusation that he was inducted into the Klan is based on the death bed confession of one klansman. According to him Harding rewarded him and others with license plates that allowed them to run red lights. There is no other solid proof. It's a myth that persists because of the willingness of some to believe the absurd.

Posted by: Publius | 2009-11-30 5:53:09 PM

Harding was a horrible president, maybe the worst. He was inducted in the KKK during his short period in office.
Posted by: the black racist Zebulon Punk | 2009-11-30 1:45:51 PM

Complete and utter bullshit. The allegation made by Wyn Craig Wade, who is a psychologist not a historian, has been disproven so many times only assholes like Punk believe it. Punk like his mentor Hedy Fry see the klan everywhere.

Posted by: The Stig | 2009-11-30 5:55:35 PM

Someone reads Wikipedia.

Harding, a good Republican, spoke out in favor of African American voting rights. That is far more than any white Ontarian ever did for people of color. If they could, only white British protestants could vote or hold office. This would simply install the status quo, which explains why Ontario is in bad shape.

I recommend that white Ontarians be denied the vote and place non-whites into all elected and appointed offices. This is the best way to bring change to the most static, insular society on Earth.

Posted by: Zebulon Pike | 2009-11-30 7:42:04 PM

OK Zeb. You try Wikipedia now. George Brown.

Posted by: Publius | 2009-11-30 7:50:16 PM

Is that a figure from Canada's (i.e. Ontario) "history"?

I see now: he exploited the abolitionist cause to garner black support - but they could not vote. Cold-blooded!

He supported free trade - okay, that's good.

He supported an appointed senate so that the rich white people would always be in charge. Even worse.

He was an anti-Catholic, anti-French bigot. Just like Toronto today.

And I thought your "history" was boring. You people are pathetic.

Posted by: Zebulon Pike | 2009-11-30 8:05:14 PM

Publius, you do have quite a way with words, "sniffy" is exactly right. Who writes these things?

Posted by: Kalim Kassam | 2009-12-01 1:05:43 AM

This is incredible. Publius posts a very relevant article about how a completely laissez-faire response from a president was successful only a decade before the depression, and ZP turns the issue into race.

Posted by: Charles | 2009-12-01 7:12:41 AM

Surely one can do better than Harding. Coolidge. Hoover. Reagan.

Posted by: Zebulon Pike | 2009-12-01 7:29:49 AM

Actually we can't do better. The America of 1920-1 faced a very similar crisis to the America of today and 1929-30. Coolidge maintained the prosperity of America, which Harding had established.

Hoover was a progressive statist who turned a correction into a full blown crisis, which was then exploited by FDR. The mess Reagan inherited wasn't as grave as the situations in 1920 or 1930. The first two crises were "panics" much like 2008. The Carter years were economic death by regulatory strangulation and stagflation. A slow and quiet death.

Harding is mocked by the intellectual classes - as he was at the time see F. Scott Fitzgerald's The Vegetable - for being an idiot and non-entity. Just as Reagan was mocked as an amiable idiot. Harding wasn't of Reagan's stature, but his brief term in office showed prudence in fiscal policy and justice in race relations (however limited it seems in retrospect).

On a side note, George Brown was not an anti-Catholic or anti-French bigot. This is a Tory smear that was placed on Brown and the Liberal Party until Laurier became leader. I could go on at great length on this point, let me suffice by noting that one of Brown's pallbearers, and long time political allies, was A.A. Dorion, the leader of the Rouges (French Canadian Classical Liberals). The one government Brown was able to form had a majority of Catholic ministers.

Posted by: Publius | 2009-12-01 8:10:02 AM


The point is that the U.S., during the 1920 - 21 depression, did nothing. It didn't employ fiscal stimulus. It also let interest rates rise and did not inflate the money supply as Friedman later prescribed. And it worked. Bad investments were liquidated and the economy came roaring back.

You can't use Coolidge as an example because he was not involved in those decisions. You certainly can't use Hoover because he was a disaster. It is ridiculous to use Reagan to make the point as well for reasons that should be obvious.

Posted by: Charles | 2009-12-01 9:15:48 AM

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