EDUCATORS ’ PERSPECTIVE
The Personal Finances of Presidents , Part 4 : Calvin Coolidge
It is difficult to conceive a person finding himself in a situation which calls on him to maintain a position he cannot pay for . Any other course for me would have been cut short by the barnyard philosophy of my father , who would have contemptuously referred to such action as the senseless imitation of a fowl which was attempting to light higher than it could roost . There is no dignity quite so impressive , and no independence quite so important , as living within your means .
— Calvin Coolidge
July 4 , 2023 marked the 151st birthday of Calvin Coolidge . 100 years ago , on August 3 , 1923 , he became the 30th President of the United States . Coolidge was frugal with money and sparing with words , but there was much more to the man who assumed the presidency upon the death of Warren Harding . Among other things , he was the presidential poster child for the prudent management of personal finances .
During his political life , Coolidge conscientiously made himself an example for his constituents as he pursued the dual goals of lowering taxes and reducing government spending . Cost cutting and budgeting were regular practices in Coolidge ’ s life . As President , he scoured the federal government for potential savings and was ridiculed for his policy that allowed only one pencil to be issued at a time ; if the pencil was not used down to the eraser , government workers were required to return it . The Coolidge administration also discouraged excessive correspondence . A card distributed to the desks of Department of Agriculture clerks read :
Government Correspondence Costs 26 ¢ per letter . Help Reduce the Cost . Write Fewer Letters . Write Briefer Letters .
Portrait of Calvin Coolidge , 1919 .
There were no lengths to which the President would not go to reduce spending at the federal level . Coolidge kept a close eye on the White House budget and often clashed with housekeepers and other staffers as he sought to curb spending . Since he practiced what he preached to the American people about reduced spending , staff protests left him unfazed .
Coolidge ’ s father instilled thrifty habits in his son at an early age . Vermont ’ s rocky soil yielded little monetary reward and frustrated the hopes and dreams of many New Englanders . John Coolidge understood that his meager assets would grow only with careful husbanding . Nevertheless , the elder Coolidge gladly invested in his son by financing his education and continuing to send money to him as late as 1908 after Coolidge ’ s second child , Calvin , Jr ., was born .
For most of his adult life , Coolidge rented a duplex in Northampton , MA . He and his wife Grace returned to this humble abode at the end of his presidency in 1929 for a short time , but they soon realized it did not meet the needs of a former President . In early 1930 , Coolidge purchased a 12-room house known as the Beeches on acreage in a nicer part of town . He paid $ 45,000 cash for the property . The new home boasted a tennis court , a swimming pool and much needed privacy .
Modern financial planners might look askance at Coolidge ’ s late life purchase of a first home , but it was actually a wise financial decision for the time . Today , most mortgages are amortized loans that slowly pay off the principal of the loan and leave the owner of the mortgage in full possession of the house after the last payment has been made . Additionally , interest paid on a mortgage is tax deductible , as it has been since the introduction of the federal income tax in 1913 . Coolidge , of course , could not have benefited from the income tax deduction until at least 1913 and then only if he made enough money to be subject to the tax . 1
Most home loans prior to the 1930s were short-term , interest-only loans , which had to be renegotiated at maturity in order to avoid a huge balloon payment of the entire principal of the loan . Oftentimes the new loan was renegotiated at a higher rate of interest . Since those who borrowed to purchase a home were usually unable to pay down the principal on their interestonly loans , they were no better off than a renter . In Well Worth Saving , authors Fishback , Rose and Snowden point out that , “ Mortgages were not used nearly so widely in 1920 as they are today . Only 41 % of the nation ’ s non-farm housing units were owner-occupied in that year , and only 40 % of those properties were
8 FINANCIAL HISTORY | Summer 2023 | www . MoAF . org