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Friday, September 23, 2022

What Calvin Coolidge’s ‘Common Sense’ Vetoes of Two Farm Bills Can Teach about Price Controls

'Silent Cal' knew enough history to understand that government meddling in prices is a losing proposition with a centuries-old track record.

Image credit: Library of congress

America’s 30th president, Calvin Coolidge, is often referred to as “Silent Cal” but that’s in one sense a misnomer. Though he was typically taciturn at social events (dinners, receptions and the like), he still holds the record for presidential news conferences. He held an annual average of 73 during his 5-1/2 years in office. Whenever he spoke or wrote, he wasted no words; he said what he meant and meant what he said.

A better nickname would be Common Sense Cal. Few chief executives ever demonstrated more of that virtue than he did.

The centennial of Coolidge’s assuming the presidency upon the unexpected death of Warren Harding will occur next August. In the run-up to that anniversary, I intend to honor this remarkably good and smart man with a series of articles, adding to the collection cited in the list below this one.

Coolidge’s common sense characterized what he stopped or stymied as much as what he signed or supported. “It is much more important to kill a bad bill than to pass a good one,” he once opined, as noted in this short video by Coolidge authority Amity Shlaes. One of the best examples are his 1927 and 1928 vetoes of the McNary-Haugen Farm Relief Act.

You read that right. He vetoed it twice. He killed the bill in February 1927. Congress didn’t get the message and sent it to him again in May 1928. He sent it back the second time with what a New York Times story termed “a message containing language so vigorous as to produce amazement,” conjuring up images of a man “writing the message with a thick-volumed thesaurus beside him, the book opened at the page containing expressions synonymous with condemnation.”

What was in the bill? McNary-Haugen was an agriculture-focused monstrosity. It was a plan to raise the prices of certain farm commodities by requiring the government to buy large quantities of certain, politically-favored produce at artificially high prices and then get rid of it overseas at a loss. It called for price controls, a new tax or “fee,” and a huge bureaucracy to ostensibly “help” American agriculture.

Coolidge was sympathetic to the plight of beleaguered farmers, but he was adamant that this sort of federal action was not the answer. He was right, not because he was a PhD economist (he wasn’t) but because he knew the difference between common sense and nonsense. Let’s take a closer look at what he wrote in his vetoes.

McNary-Haugen, Coolidge argued, would rob Peter to pay Paul. Growers of cotton, corn, rice, swine, tobacco and wheat would be subsidized at the expense of growers of everything else. It brings to mind these words of a later president, Ronald Reagan: “The nine most terrifying words in the English language are: ‘I’m from the government and I’m here to help.’” In the words of Coolidge,

This measure provides specifically for the payment by the federal board of all losses, costs and charges of packers, millers, cotton spinners, or other processors who are operating under contract with the board. It contemplates that the packers may be commissioned by the Government to buy hogs enough to create a near scarcity in this country, slaughter the hogs, sell the pork products abroad at a loss, and have their losses, costs and charges made good out of the pockets of farm taxpayers.

That, to Common Sense Cal, was unconstitutional, destructive, discriminatory, uneconomic, and just plain nuts. The tax to be assessed by a Federal Farm Board struck him as especially bad:

As a direct tax on certain of the vital necessaries of life it represents the most vicious form of taxation. Its real effect is an employment of the coercive powers of Government to the end that certain special groups of farmers and processors may profit temporarily at the expense of other farmers and of the community at large.

Coolidge knew enough history to understand that government meddling in prices is a losing proposition with a centuries-old track record:

Nothing is more certain than that such price fixing would upset the normal exchange relationship existing in the open market and that it would finally have to be extended to cover a multitude of other goods and services. Government price fixing, once started, has no justice and no end. It is an economic folly from which this country has every right to be spared.

Coolidge knew enough economics to understand that if government paid higher-than-market prices for farm products, it would encourage the very surplus that had already depressed prices:

To expect to increase prices and then to maintain them on a higher level by means of a plan which must of necessity increase production while decreasing consumption is to fly in the face of an economic law as well established as any law of nature. Experience shows that high prices in any given year mean greater acreage the next year.

Coolidge knew enough political science to understand that concentrating enormous power over the economy is a surefire formula for arbitrary mischief and tyranny:

A board of twelve men are granted almost unlimited control of the agricultural industry and can not only fix the price which the producers of five commodities shall receive for their goods, but can also fix the price which the consumers of the country shall pay for these commodities…There could be no appeal from the arbitrary decision of these men, who would be under constant pressure from their constituents to push prices as high as possible. To expect moderation under these circumstances is to disregard experience and credit human nature with qualities it does not possess.

Coolidge knew enough about government to understand that generalities on paper and actual implementation are two very different matters:

The administrative difficulties involved are sufficient to wreck the plan. No matter how simple an economic conception may be, its application on a large scale in the modern world is attended by infinite complexities and difficulties. The principle underlying this bill, whether fallacious or not, is simple and easy to state; but no one has outlined in definite and detailed terms how the principle is to be carried out in practice. How can the board be expected to carry out after the enactment of the law what cannot even be described prior to its passage?… We must be careful in trying to help the farmer not to jeopardize the whole agriculture industry by subjecting it to the tyranny of bureaucratic regulation and control.

Coolidge knew enough about the normal course of things to understand that mischief begets more mischief unless nipped in the bud at the start:

There is no reason why other industries—copper, coal, lumber, textiles and others—in every occasional difficulty should not receive the same treatment by the Government. Such action would establish bureaucracy on such a scale as to dominate not only the economic life but the moral, social and political future of our people.

For all the right reasons, Coolidge eviscerated McNary-Haugen. He called it “cruelly deceptive” and fraught with “mismanagement and prodigious tax burdens,” a “constant danger of corruption,” and “swarms of inspectors and other regulatory officials [to be] let loose throughout the land.” The New York Times story on his second veto of the bill stated that his message read as though the “silent” president were shouting, “Where did you get such an idea?!”

Where did Coolidge get the intellectual heft and political honesty to reject so eloquently what most members of Congress had approved? From his deep reservoir of common sense.

Merriam-Webster’s Dictionary defines common sense as “sound and prudent judgment based on a simple perception of the situation or facts.” This simple but profoundly wise Vermont farmer who became President possessed common sense in bushels. To spurn most of what short term-focused, special interest-pleasing congressman do, that’s really all one needs.

For More on Coolidge, See:

The Text of Coolidge’s Veto of McNary-Haugen

Calvin Coolidge’s Inaugural Address Warned of the Dangers of Legalized Larceny by Lawrence W. Reed

Cal and the Big Cal-Amity by Lawrence W. Reed

Meet the Only U.S. President Born on the 4th of July by Lawrence W. Reed

Clinton vs Cleveland and Coolidge on Taxes by Lawrence W. Reed

Sometimes, Contested Conventions Get It Right by Lawrence W. Reed

Andrew Mellon: Unleashing Wealth Creators by Lawrence W. Reed

  • Lawrence W. Reed is FEE's President Emeritus, having previously served for nearly 11 years as FEE’s president (2008-2019). He is also FEE's Humphreys Family Senior Fellow and Ron Manners Global Ambassador for Liberty. His Facebook page is here and his personal website is