Good afternoon. My name is eddie selassie. Im a coolidge of the class of 2021 and a freshman at Harvard University studying economics and our panel is session six. It is titled the results of coolidge policy, the roar of the 1920s economy moderating. This panel is john childs john childs is the chairman of j. W. Childs associates, a private Investment Firm focused on sciences, real estate and, Consumer Brand investments. Prior to forming his firm in 1995, mr. Childs was senior managing director of thomas lee company and prior to that he ran Capital Markets group of prudential insurance. Mr. Childs served our in the u. S. Army. Hes a trustee of the Coolidge Foundation and serves on numerous other corporate and boards. Please join me in welcoming mr. Childs and our panelists to the stage. Good. What do you want . Im going to put that there. Wheres. Yeah. Good have to be. Ill come down here. Yeah. Let start by thanking edie for that lovely introduction and then ill pat myself on the back. I was on the board of jurors that selected her to be a coolidge scholar, so probably, probably the smartest decision of my coolidge career. Anyway, were going to be talking about the roaring 20 something. But before we do, i would like to call for a roaring round of applause for amity, matt and paul lane and the rest of the staff whove done such a superb job in putting on this centennial celebration. All very good. Okay. You know, theres been a lot of talk by previous panelists about the importance of history and i pretty much agree with them. But one has to be careful about which history. One is talking about and im reminded of sort of a russian dont know whether youd call it an aphorism or witticism or what, but one russian talking to another saying, we know what our future. Our questions are all about what our past was. So if you were going learn from history, you need to understand what the past is. And i would say when it comes to the Roaring Twenties, there awful lot of myths that certainly i got when i was in school. And i imagine some of you did. Maybe not everyone. I hope not. But there are there are a lot of myths about what went on in the twenties, for instance. It was considered period of, you know, real frivolous, the kind of a figment of Scott Fitzgeralds imagination populated with flappers and bootleggers. And you name it i guess, stockbrokers. We cant leave them out anyway. And it is frequently dismissed in American History as a period of time we can brush over lightly so we can get to important things like the depression. I think, and i hope ill convince before were through that the two of each was actually one of the most transforming emotional periods in American History, was very important to, you know, to how we evolved. And as many as, you know, probably the biggest myth about the twenties is it led directly to the Great Depression. Well, you all have heard of fake news, right . Yeah. Well, this is fake history. So were going try and set the record straight. I have a terrific panel for doing that on my left, i have john allison, who is arguably the most successful banker of our time. He ran bbt bbmp for, what, 20 years . Yes. And took the assets from something under 5 billion to almost 200 billion in that period of time. So these. Yeah. Give him a round of the guy. And then ask him why i didnt tell you about the stock. Anyway but you know, here is a man who understands growth and how it happened. So its very appropriate to have him on a panel talking about the Roaring Twenties. We also have im sorry, John Cochrane it looks have improved since i turn to the and we also have John Cochrane who is a very distinguished and very important economist. I am not going to read all of johns list honors and accomplishments. We would you know, take up the rest of the time here because hes really a very distinguished economist. But is going to chime in on just how important the twenties were and some of the environment that created the twenties. And finally, we have Matthew Denhart who, as i think most of you know, is president of the Covid Foundation and, you know, he and amity have built this into a spectacular, id call it a juggernaut in, you know, american institutions today. And its just getting started. So, you know, one of the things i love about the Coolidge Foundation is the Scholarship Program was in that program. We start out with 30,000 applicants and each one of them has to re the autobiography. Correct me if im wrong, man of Calvin Coolidge and then write several essays about it. And in the sense you could say this is our subversive way of making that fake history gets crowded out by real history. So i think it you know, its a Great Program beyond just, you know, the obvious attributes of the program. Anyway, before i turn to my panelists who are terrific and i always said, you know, and when i was running a company, you know, dont hire people stupider than you are because just because youre afraid someone smarter, upstage you hire smart, because then you dont have to work as hard and theyll make you richer. And ive applied that that principle to the panel we have here today. So theyre going to be great and helping set the stage, if you will. Anyway, im not going to bore you with an enormous number of statistics, but i am going to give you some data points. So kind of, as i say, to set the stage for what went on in the Roaring Twenties. And lets start with what they called and those days gnp. John can probably explain how they to gdp. I cant. Other than it came earlier in the alphabet maybe well have gaap someday. I dont know. But anyway. But during the period of the twenties grew annually by a rate of 4. 9 . Now some, of you who paid close attention earlier, it sort of shocked me. Heard diana. It grew at a rate of three and a half percent or some such number. All i can tell you is when youre statistics and trying to make point, make sure you try. Choose the right base year. Anyway, i asked matt to see if we could find some kind of data on Median Household Income and how it progressed. Anyway things were so rudimentary there and you know, coolidge didnt want to gum up the government with a lot of useless agencies. So the best we could come up with was the rate of growth in per capita gnp, and during the twenties grew by 40 . And you can assume that is a proxy for. What Household Income did during that period. Anyway, another fairly dry statistic, but when you encounter all the time unemployment during that period, someone mentioned, you know, when we came out of world one in pretty bad shape with unemployment approaching 12 under coolidge in his administration, unemployment. To 3. 2 . You know, even lower than the employment rate that President Biden boasts about. And he doesnt mention that hes paying people not to work. So its a different era. Anyway, those the background. There are two other things that happened that id like to spend a little more time on and that is the to use and this is why i say it was a period in the twenties really gave birth to a 100 year love affair with the automobile bill at the start. The decade we produced and sold one and a half million automobile deals a year by end of the decade, that number was four and a half million. I say billion earlier. Millions. What im trying to say and you know, when you think about it, the population has roughly tripled. So the per capita consumption of automobiles wasnt very different from what it is today, which is extraordinary. And if you think about it, you know that kind of transformed what American Life was about. You know, we have become an Automotive Society and moved away from, thank god, a horse and buggy society. Let me point out one other thing that i think was of great importance in, you know, sort of the daily life we lead today. And its very easy to these things for granted. But during the twenties, american households were electrified. I mean, they got, you know, utility supplies. And at the beginning, the twenties only, 35 of american households had electric. Today, by the end of the twenties, that was almost 70 . And if you exclude farmers who are way away from the grid, it was almost 90 . So there were huge transformation. And i like to think of it as it was, the great battle of westinghouse with its resident genius, tesla and General Electric with its resident genius, steinman well, you all know the sequel to this story. Tesla has a car named after him, but for steinmetz. No one could figure out how someone would proudly say, i drive a spider map. So is hes been a little bit lost to history. You know, westinghouse and g. E. A phenomenal job. Im going to im going to tell you one little anecdote about g. E. And steinmetz in the twenties. My great grandfather happened to be chairman of g. E. So this is kind of a law, if you will, may be apocryphal, but well assume its not. So. My great grandfather goes to steinmetz after the election, he says. Steinhardt, who did you vote for . Stein you said, i voted for the republicans. And he said, steinhardt, i thought you were. I thought thats why you had to leave germany. Steinmetz i was until my salary went over 5,000 a year. So you know, the point would like to make beyond a funny story is that what was going on in the 20, the roaring boom, the optimism, you know, and the environment of the twenties was enough to to a dyed in the wool socialist to capitalism. So you know thats pretty neat. Anyway we talked about during that time the National Debt which coolidge inherited 25 billion reduced to 16 billion. The dow jones went from 63 to 381. And these all indices of the great thing and and people say well ben, what happened . Well, in fact, i actually did a calculation. If you had bought stock at hundred and 81 a share or if hed bought into the dow at that time. And if you just on until today, you would have compounded your money at about 5 a year. So it wasnt a disaster. Truthfully high might not be great. I wouldnt want to invest money quite at that rate, but it wasnt quite the disaster. Finally, let me just finish on this point. As i said earlier, one of the great myths, my opinion about the twenties is that it led, you know, more or less directly, maybe indirectly to the Great Depression. And i hope by the time were finished this panel, sometime in the next 60 minutes, we will be able to disabuse everyone in this room of that idea and show exactly what did contribute to the Great Depression and why the stock market crash in 29 wasnt merely a correction, which weve had a lot, but the prelude to a Great Depression. It wasnt the stock markets that caused it. And i wont give you any more hints, but we will talk to talk about it later. Anyway, i hope the stage is set down. Ill turn it over to you. Tell us how banking has. I thank you very much, koos, which is a term with a german that contrasts with both his primary predecessor, woodrow wilson, his immediate successors Herbert Hoover and Franklin Roosevelt, who was fast philosophy was not fully integrated. He had a clear of physical, philosophical press that drove most of his major. He was an advocate of individual rights, free markets and limited government. The finance won the us under wilson massively increased Government Spending and did at the same time the Federal Reserve significantly expanded the money, ultimately raising interest rates, effectively reducing health of the economy over many in the economy. Example, the Railroad Industry was national large. Coolidge understood that it was his responsibility it lead to restoring the principle underlying a free society. He led a tremendous effort to deregulate the economy reduce government debt. Reduce government and cut taxes. The strategy unleashed american entrepreneurs and american and led to a period innovation, creativity and the combined created a significant improvement in economic wellbeing for practically everyone. The list of advances in 1920s is pretty amazing. There was dramatic increase in automobile ownership, huge expansion of the roads system. Radio became available, broadening the individuals of the world, electrical disc tribulation was created, expanding opportunities for many different types of Home Appliances and support. Industrial development, the telephone were being installed at a rapid pace and the list goes on. Coolidge coolidges principle of individual liberty free markets. And then the government created an incredible improvement in the quality of life. Unfortunately, what is taught most schools, therefore a commonly held belief is that the Roaring Twenties led the Great Depression. This is not true. It was a radical change in policy by hoover and Franklin Roosevelt that both created the great Great Depression and extended duration cure, which is principles of good government, were attacked by hoover and then roosevelt. There was a huge increase taxes massive increase regulation and government interfere dances in many business activity. If coolidges principles had not been violated is highly unlikely that we would have ever had the Great Depression and we probably wouldnt have had world war two. I want to speak a personal perspective with potentially help the students here, which i have you as the audience i really want to focus on to turn q which is principles his understandings and to a productive and moral life. In my career i have experienced a significant of reducing regular actions as coolidge did, and this destructive negative increasing regulation is hoover did a joint b me t in 1971. At that time it was a small eastern North Carolina farm bank. I want to tell you a story because this would do and thats what i would. Im their storyteller at the beginning of the great there was a run on banks because of fear that banks would all go broke oh the b t time had a deposit ratio was a local post office oh when the bank run started customers use just the withdrawal money the bank and put it in open savings accounts at the post office. The post, fortunately, would bring the money to baby baby and tease door and deposit it in the post office account. The and teller would count out the money slowly and it was running out, even doing. But fortunately about lunchtime the Federal Reserves break structure showed up and the guard slowly unload loaded all the the money bags of money into the bank vault for all to see seeing. The bank had plenty of money the customers went home when a few later roosevelt ordered all to close because so many were failing the board and ignored the claiming that they didnt get it, which is extremely unlikely. Leaving tea was one of the very few banks that stayed open all the way through the depression this independence characteristic was built into the culture of the bank. When i joined it. I became c chairman and ceo in 1989 and was in this role for 20 years during tenure b, b and t grew become the 10th largest bank in the us we had 20 consecutive years record earnings and were in the top percent of banks in the world in overall performance, we were competing with much larger financial institutions, yet we were consistently gaining market share. We had far lowest employee turnover and the best customer retention of any bank. We invested far more in employee education than our competitors. We operate the baby and universities were employees had the opportunity to match after their responsibilities and earn promotion since we had a very small advertising budget but spent far more education than our competitors because we had how we trained employees we operate a very decentralized set of Community Banks who had a much higher level of Decision Making party in our competitors which was a foundation for customer relationships. Our organization was driven by a clearly defined set of values. Our values were expressed differently. Underlying these values, coolidges concepts of individual rights, free markets and living the gummer government. When i joined the banking industry, it was highly regulated, slow and had limited profitability. It was also a very fragmented industry. During the late 1970s to pay off debt from the vietnam war. The Federal Reserve significantly, the money supply one more time, leading rapid inflation, causing many small and savings and loans fail in order to fix problems when, the regulators come to help you. Youre in trouble the fix the problems they. Made. Regulators encourage savings in loans to expand their commercial lending portfolio. Remember, they had finance houses traditionally and where they had no expertise, which led to massive overbuilding that created a crash in real estate markets and many small banks and thrifts failed in the early 1990s in order to encourage healthy banks like bp and ti to make, there was a major reduction in regulations giving banks opportunities, make acquisitions, expand their product offer and open markets exactly what coolidges underlying philosophy support. Unfortunately in the mid 2000s parties the regulators encouraged banks make subprime to raise the percentage of individual firms houses. Clearly a Hoover Roosevelt strategy right. Many of the buyers could not afford the houses and the subprime home market collaps