Secretary of the Treasury Mellon, multimillionaire banker and master of the aluminum industry, dominated the administration’s domestic policy. Mellon set out to lower the taxes of the rich, reverse the low-tariff policies of the Wilson period, and reduce the national debt by cutting expenses and administrating the government more efficiently.
In principle his program had considerable merit. Tax rates designed to check consumer spending in time of war and to raise the huge sum needed to defeat the Central Powers were undoubtedly hampering economic expansion in the early 1920s. Certain industries that had sprung up in the United States during the Great War were suffering from German and Japanese competition now that the fighting had ended. Rigid regulation necessary during a national crisis could well be dispensed with in peacetime. And efficiency and economy in government are always desirable.
Yet Mellon carried his policies to unreasonable extremes. He proposed eliminating inheritance taxes and reducing the tax on high incomes by two-thirds, but he opposed lower rates for taxpayers earning less
Purinton, Big Ideas from Big Business at
Big oil's plans to drill in the Teapot Dome oil reserves led to a major scandal in the Harding administration. (See also Re-Viewing the Past, There Will Be Blood, pp. 668-669.)
Than $66,000 a year, apparently not realizing that economic expansion required greater mass consumption as well. Freeing the rich from “oppressive” taxation, he argued, would enable them to invest more in potentially productive enterprises, the success of which would create jobs for ordinary people. Little wonder that Mellon’s admirers called him the greatest secretary of the treasury since Alexander Hamilton.
Mellon succeeded in balancing the budget and reducing the national debt by an average of over $500 million a year. So committed were the Republican leaders to retrenchment that they even resisted the demands of veterans, organized in the politically potent American Legion, for an “adjusted compensation” bonus.
That the business community heartily approved the policies of Harding and Coolidge is not surprising. Both presidents were uncritical advocates of the business point of view. “We want less government in business and more business in government,” Harding pontificated, to which Coolidge added, “The business of the United States is business.” Harding and Coolidge used their power of appointment to convert regulatory bodies like the Interstate Commerce Commission (ICC) and the Federal Reserve Board into pro-business agencies that ceased almost entirely to restrict the activities of the industries they were supposed to be controlling. The ICC became almost the reverse of what it had been in the Progressive Era. The Federal Trade Commission, in the words of one bemused academic, seemed to be trying to commit hara-kiri.
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World History
