The reconstruction of European and Japanese capitalism became the primary goal of U.S. foreign policy after WWI. During the Harding Administration ....

... Secretary of Commerce Herbert Hoover, Secretary of State Charles Evans Hughes, and other influential planners took for granted that European economic recovery was essential for the expansion of American exports. 'The prosperity of the United States,' Hughes declared in 1921, 'largely depends upon economic settlements which may be made in Europe' - which required, of course, that the Bolshevist beast be slain, as the President had proclaimed.

... European (and Japanese) access to Third World markets and raw materials was an essential component of the general strategic planning, and a necessary condition for fulfillment of the general purposes of the Marshall Plan: to 'benefit the American economy,' to 'redress the European balance of power' in favor of U.S. allies (state and class), and to 'enhance American national security,' where 'national security' is understood as 'control of raw materials, industrial infrastructure, skilled manpower, and military bases.' - from Chomsky's 'Deterring Democracy' (Chapter 1, 'Cold War, Fact and Fantasy') [1]

So it could be said, as Chomsky does, that foreign policy after WWII 'recapitulated' foreign policy after WWII - or, conversely, that the foreign policy of the Harding, Coolidge and Hoover years was the forerunner of Cold War foreign policy. In some ways what happened earlier was a trial run, in some ways it actually laid important foundations for what was to come. In any case, many of the key players in the former era turn up again in the latter (see below).

On the domestic scene, Senator Albert B. Fall, from New Mexico, became Harding's Secretary of Interior in 1921. An opponent of conservation and an advocate for the interests of oil companies, 'Fall quickly moved to open the naval [oil] reserves to private exploitation.' [2]

At the urging of his Secretary of the Interior, Albert Fall, and his Secretary of the Navy, Edwin Denby, President Harding signed an executive order in May 1921 transferring jurisdiction over naval oil reserves to the Department of the Interior. The next year Fall granted oil leases over the Elk Hills reserve in California and the Tea Pot Dome reserve in Wyoming to private oil companies, without public notice or competitive bidding. After Harding’s death it transpired that Fall had accepted bribes of at least US$400,000 from these companies, a vast sum of money at the time. The next occupant of the Oval Office, President Coolidge, sacked Harding’s Attorney-General, Harry M. Daugherty, for failing to prosecute any of the guilty participants. Daugherty’s replacement, Attorney-General Harlan Fiske Stone, promptly purged the Bureau of Investigation (now the FBI), later writing "When I became attorney-general, the Bureau of Investigation was...in exceedingly bad odour...The head of the Bureau...had himself participated in serious infractions of the law and obstructions of justice". Fall was imprisoned and Denby resigned, and Tea Pot Dome became the posthumous hallmark of Harding’s era. [3]

A self-help plan for the very rich was also implemented, by the Secretary of the Treasury:

During the presidencies of Harding and Coolidge in the twenties, the Secretary of the Treasury was Andrew Mellon, one of the richest men in America. [The Mellon industrial, oil and banking fortune now finances the Sarah Mellon Scaife Foundation, which funds Neocon projects * ] In 1923, Congress was presented with the 'Mellon Plan , calling for what looked like a general reduction of income taxes, except that the top income brackets would have their tax rates lowered from 50 per cent to 25 per cent, while the lowest-income group would have theirs lowered from 4 percent to 3 percent. A few Congressmen from working-class districts spoke against the bill, like William P. Connery of Massachusetts:

I am not going to have my people who work in the shoe factories of Lynn and in the mills in Lawrence and the leather industry of Peabody, in these days of so-called Republican prosperity when they are working but three days in the week think that I am in accord with the provisions of this bill. When I see a provision in this Mellon tax bill which is going to save Mr. Mellon himself $800,000 on his income tax and his brother $600,000 on his, I cannot give it my support."

- from Howard Zinn: [4]

Where did the money for the tax cuts come from? Federal spending was drastically decreased during both the Harding Administration and the Coolidge Administration. See: [5]

It would be stating the obvious to say that this domestic fiscal policy is not unlike the current tax policy of George W. Bush. But what may not be so obvious at first glance is the fact that the relationship between the Bush and Mellon families, and the family of Averill Harriman - who was at the center of this social matrix of wealth and power, and a kingpin in the creation of the 'Cold War' - is rooted back here, in the early part of the 20th century:

Paul Mellon was the leading heir to the Mellon fortune, and a long-time neighbor of Averell Harriman's in Middleburg, Virginia, as well as Jupiter Island, Florida. Paul's father, Andrew Mellon, U.S. Treasury Secretary 1921-32 [during the Harding Administration, the Coolidge Administration, and the Hoover Administrations], had approved the transactions of Harriman, Pryor and Bush with the Warburgs and the Nazis. Paul Mellon's son-in-law, David K.E. Bruce, worked in Prescott Bush's W.A. Harriman & Co. during the late 1920s; was head of the London branch of U.S. intelligence during World War II; and was Averell Harriman's Assistant Secretary of Commerce in 1947-48 [in the Truman Administration]. Mellon family money and participation would be instrumental in many domestic U.S. projects of the new Central Intelligence Agency. - from "George Bush: The Unauthorized Biography" [6]

The Secretary of Agriculture during the Harding Administration was Henry C. Wallace, a Republican founder of the American Farm Bureau. He continues to hold that post in the Coolidge Administration. His son, Henry A. Wallace, a progressive, becomes Secretary of Agriculture and then Vice President in the Franklin Roosevelt Administration. Wallace's left-wing views made him increasingly unpopular in the Democratic Party during the Roosevelt years and Roosevelt eventually dropped him as his running mate in 1944. Harry Truman became Vice President in Roosevelt's third term, and Wallace was appointed to the post of Secretary of Commerce. When Roosevelt died and Truman became President, Wallace continued in that that position for a short time, but was forced to resign in 1946 when he incurred the wrath of James Byrnes and (Secretary of Defense) Robert Forrestal by calling for an end to the Cold War.[3]

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