Chicago. Draft memo of a program to rebuild the department of economics by T.W. Schultz, 1956

 

The following draft memo by T. W. Schultz outlines the serious faculty replacement needs of the University of Chicago department of economics in the mid-1950s. Particularly noteworthy, aside from the impressive list of lost faculty, is the appended table listing the sponsored research/3rd party funders of the economics department at that time. One also sees that the department had been authorized to make offers to Kenneth Arrow, Robert Solow and Arthur F. Burns. So much for the best-laid plans of mice and men. A better historian of economics than I might spin a counterfactual tale of a post-Cowles Chicago with Arrow and Solow on the faculty.

Regarding the ICA Chile Enterprise: Economic Research Center, Schultz wrote “The Chilean enterprise will give us a fine ‘laboratory’ in which to test ourselves in the area of economic development– a major new field in economics.” This reminds me of the old Cold-War Eastern European joke about whether Marx and Engels were scientists (“No, real scientists would have tried their experiments on rats first”). What a “fine ‘laboratory'” for testing oneself!

_________________________

A Program of Rebuilding the Department of Economics
(first draft, private and confidential – T. W. Schultz, May 22, 1956)

Your Department of Economics has been passing through a crisis. Whether it would survive as a first rate department has been seriously in doubt, with one adversity following another as was the case up until last year. It is now clear, however, that we have achieved a turning point in that we can rebuild and attain the objective which is worth striving for – an outstanding faculty in economics.

The crisis came upon us as a consequence of a combination of things: (1) the department, along with others in the University, had been denied access to undergraduate students of the University who might want to become economists; (2) Viner left for Princeton, Lange for Poland, Yntema for Ford and Douglas for the Senate; (3) the Industrial Relations Center drained off some of our talent and when it jammed, Harbison left for Princeton; (4) Mr. Cowles’ arbitrary decision to shift “his” Commission to Yale was a major blow; (5) Nef been transferring his talents to the Committee on Social Thought, and (6) add to all these the retirement of Knight.

Meanwhile, there were several external developments which did not reduce our difficulties: (1) a number of strong (new) economic centers were being established – at Stanford, Johns Hopkins, Yale, Vanderbilt, M.I.T. and with public funds at Michigan and Minnesota; (2) our salaries were falling behind seriously relative to some of the other places, and (3) recruiting of established, highly competent economists became all but impossible given the crisis that was upon us and the (then) low repute of the University neighborhood.

The ever present danger of the past few years has been that we would be in the judgment of competent colleagues elsewhere, in the beliefs of oncoming graduate students and in the eyes of the major foundations – not recover our high standing but instead sing to a second or even a third-rate department and in the process lose the (internal) capacity to recruit and rebuild.

We now have achieved a turning point distinctly in our favor.

The major efforts which have contributed most have been as follows:

1. We have taken full advantage of our unique organization in combining real research with graduate instruction. Our research and instruction workshops are the result. The Rockefeller Foundation gave us three grants along the way – agricultural economics, money and public finance – to test this approach and advanced graduate work. The Ford Foundation has now financed our workshops with $200,000 (eight 5-year grant) (our proposal of January 1956 to The Ford Foundation states the theory and argues the case for this approach on the basis of the experiences we have already accumulated).
2. We set out aggressively to recruit outstanding younger economists. The workshops were a big aid to us in doing this; so was the financial support of the University. We had the ability to “spot them”. We now have the best group of talented young economists, age 30 and less, to be found anywhere. This achievement is rapidly becoming known to others in keen “competition” is already upon us as a consequence.
3. We need urgently to run up a lightning rod, a (rotating) professorship with a salary second to none, to attract talent and make it clear we were in business and would pay for the best. The Ford Foundation took favorably to the idea. (Thought so well of it that they will do the same for 3 other privately supported Universities – Columbia, Harvard and Yale!)
   The $500,000 endowment grant from them for a rotating research professorship is our reward.
4. The foundations have given us a strong vote of confidence: grants and funds received by the Department of Economics during 1955-56 now total $1,220,000. (A statement listing these is attached).
5. The marked turn for the better in the number and the quality of students applying for scholarships and fellowships is, also, an affirmative indication.
6. The Economics Research Center is filling a large gap in providing computing, publishing and related research facilities which was formally a function of the Cowles Commission.
7. The Chilean enterprise will give us a fine “laboratory” in which to test ourselves in the area of economic development – a major new field in economics.

There remains, however, much to be done. We must, above all, not lose the upward momentum which is now working in our favor.

Faculty and University Financial Support

To have and to hold a first rate faculty in economics now requires between $225,000 and $250,000 of University funds a year.

To have a major faculty means offering instruction and doing research in 8 to 10 fields. Up until two years ago we came close to satisfying the standard in our graduate instruction. We then had 11 (and just prior to that, 12) professors on indefinite tenure.

Then, Koopmans and Marschak were off to Yale, Harbison to Princeton and Knight did reach 70. And, then there were 7. On top of these “woes” came the serious illness of Metzler which greatly curtailed his role; and, Nef having virtually left economics. Thus, only 5 were really active in economics with Wallis carrying many other professional burdens. Meanwhile we added only one – Harberger was given tenured this year.

Accordingly at the indefinite tenure level we are down to about one-half of what is required to have a major faculty. Fortunately, several younger men have entered and have been doing work of very high quality.

It should be said that the Deans and the Chancellor have stood by, prepared to help us rebuild.

Major appointments were authorized – Arrow, Stigler, Solow and others. We still are hoping that Arthur F. Burns will come.

The resignations and the retirement, however, did necessarily reduce sharply the amount of financial support from the University.

In rebuilding, at least five additional tenure positions will be required:

1. Labor economics (from within)
2. Trade cycle (we hope it will be Arthur F. Burns, already authorized).
3. Money
4. Econometrics and mathematical economics.
5. Business organization
6. Consumption economics (when Miss Reid retires; next 3 years we shall have the extra strength of Dr. D. Brady with finances from The Rockefeller Foundation)
7. International trade (pending Metzler’s recovery)
8. Economic development.

The faculty and the University financial support recommended is as follows:

Tenured positions (for individuals fully committed to economics).

1. 1. Now in the harness

6: Friedman, Johnson, Harberger, Hamilton (Metzler), Wallis (Nef), Schultz

1. 2. To be added

5: Burns pending, (labor), (money), and two other fields, most likely econometrics and business organization

 

Budget: 11 [tenured positions]	$165,000
Metzler and Nef	$15,000
	$180,000
III. Supplementary non-tenure faculty	$45,000
Altogether	$225,000

 

Outside Financial Support for the Department of Economics

Grants	Amount of grant	Available 1956-57
A. Received during 1955-56.
1.     Sears Roebuck Fellowships	$4,000	$4,000
2.     National Science Foundation (2 years)	$13,000	$6,500
3.     Conservation Foundation (2 years)	$33,000	$16,500
4.     Rockefeller Foundation: consumption economics (3 years)	$45,000	$15,000
5.     American Enterprise (2 years)	$17,250	$8,625
6.     Ford Foundation: research and instructional workshops (5 years)	$200,000	$30,000
7.     Earhart Fellowships.	$6,000	$6,000
8.     S.S.R.C. Student Grants	$5,000	$5,000
9.     Ford Foundation: 3 pre-doctoral grants	$10,200	$10,200
10.  Ford Foundation: faculty research grant (Hamilton)	$12,500	$8,000
11.  ICA Chile Enterprise: Economic Research Center Fellowships, research support (3 yrs)	$375,000	$125,000
12.  Ford Foundation: endowment for rotating research professor	$500,000	$25,000
13.  Rockefeller Foundation: Latin America (Ballesteros)	$5,000	$5,000
Sub-totals	$1,225,950	$264,825
B. Received prior to 1955-56 where funds are available for 1956-57.
1.     Rockefeller Foundation: workshop in money (3 years with one year to go)	$50,000	$20,000
2.     Rockefeller Foundation: workshop in public finance (3 years with one year to go)	$50,000	$20,000
3.     Resources for the Future (3 years with one year to go)	$67,000	$27,000
4.     Russian Agriculture (2 years with one to go)	$47,000	$22,000
B sub-totals	$214,000	$89,000
A and B totals	$1,439,950	$353,825

 

Source:  University of Chicago Archives. Department of Economics Records. Box 42, Folder 8.

Image Source: 1944 photo of T.W. Schultz from University of Chicago Photographic Archive, apf1-07479, Special Collections Research Center, University of Chicago Library. Cf. Wikimedia Commons, same portrait (dated 1944) from Library of Congress.