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Published online by Cambridge University Press: 11 June 2012
As the American economy, for the second time since the end of World War II, seemed about to falter in late 1953, the nation watched closely to see what economic policy the first Republican administration in twenty years would adopt. A new factor was the Council of Economic Advisers, whose professional economists, mild conservatives though they were, had long since adopted Keynesian compensatory spending as the new orthodoxy. Government spending was increased very moderately and once again the severe postwar downturn that Americans had been expecting for nearly a decade failed to develop. The credit went to Keynesianism and the Council but, as Professor Engelbourg emphasizes, whether another policy or no policy at all would have produced different results, is beyond our knowing.
1 Friedman, Milton and Schwartz, Anna Jacobson, A Monetary History of the United States 1867–1960 (Princeton, 1963), 614.Google Scholar
2 Neil H. Jacoby, “A Memoire on Service as a Member or the Council of Economic Advisers to President Eisenhower, 1953–1955 and as United States Representative in the Economic and Social Council of the United Nations, 1957” Jacoby Papers, Boston University, Boston, Mass., 5. Schriftgiesser, Karl, Business Comes of Age: The Story of the Committee for Economic Development and Its Impact upon the Economic Policies of the United States, 1942–1960 (New York, 1960), 62–64.Google Scholar
3 Labor's Day (International Typographical Union), August 26, 1953.
* The unfortunate disappearance of Stewart's papers make him something of a shadowy figure, a fact that may tend to exaggerate the role of Jacoby and understate the role of Stewart. The latter was a generation older than his colleagues on the Council and died in 1958 shortly after completing his service.
4 Jacoby, “Memoire,” 20, Jacoby Papers.
5 Economic Report of the President, 1954, 50.
6 Adams, Sherman, Firsthand Report; The Story of the Eisenhower Administration (New York, 1956), 156Google Scholar; Donovan, Robert J., Eisenhower: The Inside Story (New York, 1956), 165, 210–211Google Scholar; Eisenhower, Dwight D., Mandate for Change 1953–1956: The White House Years (New York, 1963), 304Google Scholar; Flash, Edward S. Jr, Economic Advice and Presidential Leadership: The Council of Economic Advisers (New York, 1965), 115Google Scholar, quoting an interview with Arthur F. Burns.
7 It has erroneously been stated by Flash, Economic Advice and Presidential Leadership, 170, that the Advisory Board on Economic Growth and Stability recorded no minutes. A file, although perhaps not complete, exists in the Jacoby Papers. There is a virtually complete file in the Burns Papers at the Eisenhower Library.
8 Douglas, Paul H., Economy in the National Government (Chicago, 1952), 253–254.Google Scholar
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10 NHJ, “Notes on ‘Reorganizing the Council of Economic Advisers’ by Hood, Ronald G., Political Science Quarterly, 49 (September 1954)Google Scholar,” Box 5, #26, Jacoby Papers.
11 Dexter M. Keezer to Gabriel Hauge, March 10, 1963, Box 1, #1, Jacoby Papers. Flash, Economic Advice and Presidential Leadership, 111, quoting A. F. Burns, Business Cycle Research and the Needs of Our Times, 33rd Annual Report, National Bureau of Economic Research, 1953.
12 Phone call, Arthur F. Burns to NHJ, April 13, 1953, Box 1, #1, Jacoby Papers. Flash, Economic Advice and Presidential Leadership, 111.
13 New York Times, May 27, 1953, p. 44. Jacoby, Neil H., “Chief Factors in Business Outlook,” Commercial and Financial Chronicle, 177 (June 4, 1953), 2417.Google Scholar
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15 Minutes, ABEGS, July 23, 1953, Box 2, #5, Jacoby Papers. No author, undated “Administrative Flexibility in Public Works,” Box 2, #7, Jacoby Papers.
16 Flash, Economic Advice and Presidential Leadership, 113, 159>-160. Minutes, ABEGS, July 16, 1953, Box 2, #5, Jacoby Papers. Flash, Economic Advice and Presidential Leadership, 113.
17 Ibid., 106; Jacoby, Neil H., Can Prosperity Be Sustained? Policies for Full Employment and Full Production without Price Inflation in a Free Economy (New York, 1956), 33.Google Scholar Minutes, ABEGS, August 13, 1953, Box 2, #5, Jacoby Papers.
18 Minutes, ABEGS, August 16, 1953, Box 2, #5, Jacoby Papers. Jacoby, Can Prosperity be Sustained?, 33.
19 Jacoby, “Memoire,” 74, Jacoby Papers.
20 Notes from NHJ to AFB, September 21, 1953, Box 2, #7, Jacoby Papers.
21 Memo, Shere, Lusher, Achinstein, Saulnier, and Jacoby, “Counter-Depression Measures to be Taken by the Administration at the Present Time,” September 23, 1963, Box 2, #7, Jacoby Papers.
22 Ibid.
23 Arthur F. Burns and Neil H. Jacoby, “Memorandum,” to Auxiliary Staff, Advisory Board on Economic Growth and Stability and Members of the Staff, Council of Economic Advisers, September 29, 1963, Box 2, #10, Jacoby Papers.
24 Minutes, ABEGS, October 1, 1953, October 15, 1963, Box 2, #5, Jacoby Papers.
25 NHJ to AFB, November 2, 1953, Box 4, #17, Jacoby Papers. Jacoby referred to “Effect of Change in Economic Activity on the Federal Budget, Fiscal Year 1954–1955” by David W. Lusher, October 22, 1953.
26 Minutes, ABEGS, November 5, 1953, Box 2, #5, Jacoby Papers.
27 New York Times, November 8, 1953, p. 1; November 19, 1953, p. 1. Minutes, ABEGS, December 19, 1953, Box 2, #5, Jacoby Papers. Minutes, ABEGS, February 11, 1954, Box 2, #5, Jacoby Papers.
28 Economic Report of the President, 1954, p. 113. NHJ to AFB and Walter W. Stewart (hereafter referred to as WWS), February 19, 1954, Box 2, #8, Jacoby Papers.
29 Lewis, Wilfred Jr., Federal Fiscal Policy in the Postwar Recessions (Washington, D.C., 1962), 159.Google Scholar Edwin G. Nourse to Arthur F. Burns, February 6, 1954, Box 4, General Correspondence – Incoming, 1953–54, Papers of Arthur F. Burns, Eisenhower Library, Abilene, Kansas. New York Times, February 18, 1954, p. 1.
30 Asher Achinstein to the Council, February 26, 1954, Box 2, #7, Jacoby Papers.
31 New York Times, March 2, 1954, p. 49. NHJ, Draft, “Debt Management During Calendar Year 1954,” Box 2, #7, Jacoby Papers. Minutes, ABEGS, March 4, 1954, March 11, 1954, Box 2, #5, Jacoby Papers.
32 Minutes, ABEGS, March 11, 1954, Box 2, #5, Jacoby Papers.
33 Donovan, Eisenhower, 216–217. R. J. Saulnier to Council Members, March 19, 1954, Box 3, #16, Jacoby Papers.
34 NHJ to Burns and Stewart, February 28, 1954, Box 26, Records of the Office of the Council of Economic Advisers, 1953–1961, Chronological File, January – June 1954, Eisenhower Library. Robinson Newcomb to AFB, March 24, 1954, Box 2, #7, Jacoby Papers.
35 NHJ, “Administrative Measures Currently Available to the Federal Government Assuming an Accelerating Economic Decline During 1964,” March 24, 1954, Box 2, #7, Jacoby Papers.
36 AFB, Marginal Annotation on Memorandum from Joseph Dodge, Director, Bureau of the Budget, to Sherman Adams, January 19, 1954 and forwarded by Adams to Burns for comment, Box 10, Economic Report, 1954, Comments on; Records of the Office of the Council of Econmic Advisers, Eisenhower Library. NHJ, “Notes on Samuel Cohn's Discussion of Federal Expenditure Flexibility,” March 25, 1954, Box 2, #7, Jacoby Papers.
37 Donovan, Eisenhower, 217. Seymour Harris to Sherman Adams, March 29, 1954, Box 558, Official Files 114, Economics, 1954 (2), Eisenhower Library. (Sherman Adams forewarded Harris's letter to Burns.)
38 Collis Stocking to the Council, March 31, 1954, Box 2, #7, Jacoby Papers.
39 Minutes, ABEGS, April 8, 1954, Box 2, #5, Jacoby Papers. Minutes, ABEGS, April 1, 1954, Box 2, #5 Jacoby Papers.
40 Jacoby, “Memoire,” 87. D. W. Lusher to NHJ, March 24, 1954, Box 2, #7, Jacoby Papers; I. H. Siegel to NHJ, “Non-Legislative, Non-Spending Measures,” April 1, 1954, Box 2, #7, Jacoby Papers. Draft by NHJ, March 31, 1964, presented to the Cabinet, April 2, 1954, Box 2, #7, Jacoby Papers. I. H. Siegel to NHJ, “Non-Legislative, Non-Spending Measures,” April 1, 1954, Box 2, #7, Jacoby Papers. Minutes, ABEGS, April 1, 1954, Box 2, #5, Jacoby Papers.
41 Minutes, ABEGS, April 1, 1954, Box 2, #5, Jacoby Papers.
42 Donovan, Eisenhower, 218; Eisenhower, Mandate for Change, 306. Louis Shere to CouncU, April 6, 1954, Box 3, #16, Jacoby Papers. R. J. Saulnier to NHJ, April 8, 1954, Box 2, #7, Jacoby Papers. Memoranda by Louis Shere to the Council, April 6, 1954, Robinson Newcomb to NHJ, April 7, 1954, Asher Achinstein to NHJ, April 8, 1954, Collis Stocking to Council, April 8, 1954, J. S. Bragdon, April 12, 1954, William H. Nicholls, no date, Robinson Newcomb, April 15, 1954, Box 3, #16, Jacoby Papers.
43 NHJ to AFB and WWS, “Monetary Policy in the Current Situation,” April 7, 1954, Box 2, #7, Jacoby Papers. Jacoby, “Memoire,” 74–75; Abearn, Daniel S., Federal Reserve Policy Reappraised, 1951–1959 (New York, 1963), 106–108, 340.Google Scholar
44 Donovan, Eisenhower, 218. Neil H. Jacoby to Earl J. Miller, April 20, 1954, Box 26, Chronological File, January – June 1954; Records of the Office of the Council of Economic Advisers, Eisenhower Library.
45 Stein, Herbert, Fiscal Revolution in America (Chicago, 1969), 294.Google Scholar
46 Flash, Economic Advice and Presidential Leadership, 122, quoting Arthur Burns, interview with author. Neil H. Jacoby, “The President, the Constitution, and Governmental Guidance of the Economy,” A Contribution to the Conference on Presidential Powers held at The Center for the Study of Democratic Institutions, Santa Barbara, Calif., Sept. 11–17, 1970, pp. 19–21; Jacoby, Neil H., “The President, the Constitution, and the Economist in Economic Stabilization,” History of Political Economy, 3 (Fall, 1971), 407–409.CrossRefGoogle Scholar
* Burns's memory provides another version of this event. “I certainly never said such a thing to Eisenhower whom I knew intimately and saw with great frequency. Jacoby may have said this to me, but if he did, I simply do not recall it.” Arthur F. Burns to author, February 23, 1976.
47 Jacoby, “Memoire,” 83, Jacoby Papers.
** Burns offers a somewhat different version: “The Council differed with the Treasury in various details concerning the scale and character of a tax reduction, but we were not really far apart. Nor did I have any differences with the President in this whole area.” Arthur F. Burns to author, February 23, 1976.
48 Donovan, Eisenhower, 218–219; New York Times, April 8, 1954, pp. 1, 47. Economic Report of the President, 1955, p. 112. Jacoby, “Memoire,” 61–62, 140, Jacoby Papers.
49 Clarence D. Long, May 13, 1954, Box 2, #7, Jacoby Papers.
50 “Statement of the Executive Board of the United Steel Workers of America,” April 5, 1954; NHJ, Draft, May 13, 1964, “Comment on ‘A Proposal for Full Employment, Production, Confidence,’” United Steel Workers, April 5, 1954, Box 2, #7, Jacoby Papers.
51 Minutes, ABEGS, May 15, 1954, Box 2, #5, Jacoby Papers. Lewis, Federal Fiscal Policy, 157.
52 Lewis, Federal Fiscal Policy, 169. Donovan, Eisenhower, 219.
53 Lewis, Federal Fiscal Policy, 165. Donovan, Eisenhower, 220. Walter W. Stewart to Arthur F. Burns and Neil H. Jacoby, “Sound Principles vs. Flexible Policies,” July 22, 1954, Box 12, Economic Report, 1955, Staff Suggestions, Papers of Arthur F. Burns, Eisenhower Library.
54 Minutes, ABEGS, June 3, 1954, Box 2, #5, Jacoby Papers.
55 New York Times, June 9, 1954, p. 1. Minutes, ABEGS, June 10, 1954, Box 2, #5, Jacoby Papers.
56 NHJ, “Immediately Desirable Administrative Actions to Stimulate the Economy,” June 10, 1954, April 6, 1954, Box 2, #7, Jacoby Papers. Donovan, Eisenhower, 221. Diary Entry, June 11, 1954, Diary Series, Papers of James C. Hagerty, Eisenhower Library.
57 Donovan, Eisenhower, 222. NHJ, Draft, “An Evaluation of Federal Actions Since Mid-1953 to Promote a Prosperous Economy,” August 6, 1964, Box 5, #27, Jacoby Papers. Hagerty Diary, August 6, 1954, Eisenhower Library. New York Times, August 12, 1954, p. 8, and August 15, 1954, p. 30.
58 New York Times, October 19, 1954, p. 17. Neil H. Jacoby, “An Evaluation of Federal Actions Since Mid-1953 to Promote a Prosperous Economy,” October 23, 1954, Box 558, Official File, Economics, 1954 (3), Eisenhower Library. Minutes, ABEGS, November 4, 1954, Box 2, #5, Jacoby Papers. Arthur F. Burns, November 19, 1964, Box 15, Economic Indicators, Material for Revision, Papers of Arthur F. Burns, Eisenhower Library.
59 Gordon, Robert Aaron, Economic Instability and Growth: The American Record (New York, 1974), 11.Google Scholar
60 Economic Report of the President, 1955, p. 18.
61 Jacoby, Can Prosperity Be Sustained?, 39.
62 Economic Report of the President, 1966, p. 173; Burns, Arthur F., “Heller's ‘New Dimensions of Political Economy,’” National Banking Review, 4 (June 1967), 374Google Scholar; Stein, Fiscal Revolution in America, 299.
