Tag: Friedman

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Chicago Economist Market Economists

Chicago. Marschak on potential hires for department, 1946

 

In his magnificent article about the departmental politics behind the appointment of Milton Friedman at the University of Chicago in 1946, David Mitch refers in passing to a February 1946 memo written to the Chancellor and President of the University by Vice-President Rueben G. Gustavson in which the Vice-President reports on a discussion he had with Jacob Marschak about various economists being considered for appointment.

Mitch’s online Appendix to his article provides an excellent selection of archival artifacts to which the transcription of the Gustavson memo below may be added. In this memo it looks like we are observing active lobbying (at least providing his “spin”) on Marschak’s part rather than a senior faculty member summoned by an administrator to provide deep background on prospective hires.

It is worth noting that the names of five future Nobel prize winners in economics can be found in a single 1946 memo. It is also interesting that the last two candidates mentioned in the memo, namely Lloyd Metzler and Milton Friedman, were the only two to turn out to become permanent acquisitions of the department.

 

See: David Mitch, “A Year of Transition: Faculty Recruiting at Chicago in 1946,” Journal of Political Economy 124, no. 6 (December 2016): 1714-1734. [working paper version (ungated)]

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Biographical Note of Rueben Gilbert Gustavson

Rueben Gilbert Gustavson was born (April 6, 1892-February 24, 1974) to Swedish immigrants James and Hildegard Gustavson. As a young man Gustavson developed a strong belief in moral responsibility to others. After a childhood injury made following in his father’s footsteps as a carpenter impossible he attended high school where he excelled in his studies. In deference to his father’s wish he learn practical skills Gustavson took courses in typing and stenography. These classes enabled Reuben to gain employment with Colorado and Southern Railroad where he became secretary to the auditor. The monies Gustavson earned working at the railroad enabled him to enroll in at the University of Denver, DU. After obtaining his bachelor’s degree DU Gustavson decided to pursue a master’s degree in chemistry. He received his MS in chemistry in 1917 and briefly became a chemist at the Great Western Sugar Company. He accepted an offer to teach at the Colorado Agricultural College in Fort Collins but became disillusioned when told that as a professor he could not teach and conduct research. Gustavson returned to DU where he remained for the next seventeen years. During that time he spent summer breaks working toward his PhD at the University of Chicago. Initially, specializing in radioactivity the loss of his advisor enabled him to change to biochemistry. Gustavson received his PhD in 1925 and taught at the University of Chicago during the 1929-30 academic year. A disagreement over what Gustavson felt were unethical practices involving student athletes led to him leaving DU. University of Colorado President, George Norlin, invited Gustavson to join the faculty as a professor of chemistry. He was appointed chairman of the chemistry department and remained in that position from 1937-42. In 1942 the Dean of the Graduate School became ill and Gustavson was chosen as a temporary replacement but when the dean died the position became permanent. Now involved in the academic administration of the university Gustavson was chosen to substitute for the new president of the University of Colorado, Robert L. Stearns, during World War II. Stearns was commissioned as an officer in the Army Air Corps. Gustavson accepted the position with the understanding that Stearns would resume the presidency when he returned. After the war Gustavson became the Vice President and Dean of Faculties at the University of Chicago for a short time in 1945-46. During Gustavson’s time at the University of Chicago he worked with Enrico Fermi and Edward Teller on the atomic bomb project. The destruction of Hiroshima and Nagasaki convinced Gustavson the only hope for human survival was the promotion of peace through education that taught appreciation of other peoples and cultures. In 1946 Gustavson moved to the University of Nebraska where he remained as Chancellor until 1953. After leaving the University of Nebraska Gustavson became the first president of Resources for the Future where he served from 1953-1959. An outgrowth of his work on the atomic bomb project this organization conducted economic research and analysis to help craft better policies on the use and preservation of natural resources. Gustavson then resumed teaching at the University of Arizona and was a member of the chemistry department from 1960 until his death in 1974.

Source: John Patrick McSweeney. The Chancellorship of Reuben G. Gustavson at the University of Nebraska, 1946-1953. Lincoln: Digital Commons @ University of Nebraska, 1971.

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Gustavson Memorandum of Discussion with Jacob Marshak

THE UNIVERSITY OF CHICAGO

Date February 19, 1946

To:     RMH [Robert Maynard Hutchins, President of the University of Chicago (1929-45); Chancellor (1945-51)]; ECC [Ernest Cadman Colwell, President of the University of Chicago (1945-51)]
From: RGG [Reuben G. Gustavson, Vice-President of the University of Chicago (1945-1946)]

Professor Marschak came in to talk to me about possible recommendations for men in the Department of Economics. He discussed the following:

  1. John Hicks of London. He is now at Oxford but is coming to this country. He is about forty years of age. He is quite well known, especially for his book called the “Brainwork of Social Economy.” [sic, The Social Framework: An Introduction to Economics] This book is now being used in the College.
  2. Paul Samuelson is a much younger man than Hicks. He is now an associate professor at M.I.T. He is known for his work in the general theory of disequilibrium.
  3. Arthur Smithies is professor at the University of Michigan. He is now in the Bureau of the Budget at Washington. Marschak describes him as a man who is concerned with economic policies. He takes the empirical approach to the study of economics.

Marschak states that Mr. Hicks is also a good man in local finance [Hicks’ wife, Ursula Hicks, probably mentioned by Marschak]. He says also that T. Koopmans, Research Associate with the Cowles Commission, who has been recommended for an associate professorship, is a very fine man. He is in mathematical statistics. He speaks highly of Lionel Robbins of the London School. Marschak says he is an all-around personality. He has been of great service to the English government during the war.

He thinks very highly of Lloyd Metzler. He was an instructor at Harvard. He as applied the modern methods of Samuelson to international trade.

Professor Marschak also thinks very highly of Milton Friedman, who is a graduate of the University of Chicago.

I shall discuss all these men with Schultz.

 

Source: University of Chicago Library, Department of Special Collections. Office of the President. Hutchins Administration. Records. Box 284, Folder “Economics, 1943-1947”.

 

Image Source: Reuben G. Gustavson from University of Chicago Photographic Archive, apf1-06588, Special Collections Research Center, University of Chicago Library.

Categories
Chicago Funny Business

Chicago. Gilbert and Sullivan Parody Songs. About Classical and Keynesian Economics.

 

 

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Every so often the tiny cultural studies scholar inside my economist body says it is time to post another artifact from the social life of an economics department. Annual Christmas parties, skit parties and picnics (less so) are occasions when economists attempt to write comedy and some popular or familiar song or text gets reworked into a bit of burlesque humor.

Transcriptions of such masterpieces previously posted in Economics in the Rear-view Mirror include: FIRST EPISTLE UNTO NEW STUDENTS, WHEN I WAS A LAD, COWLES COMMISSION SONG, and SONG FOR AN ENTREPRENEUR.

This evening I thought I would treat myself to a quick-and-easy posting of the lyrics of two songs taken from the nine pages stapled together of University of Chicago skits that I found in Albert Rees’ papers at Duke. In an act of unpremeditated scholarship I glanced at what I had believed to be identical copies of the same stuff in Milton Friedman’s papers. Then to my horror (I really wanted this to be a quick-and-easy posting), I discovered that the two versions are not quite identical (recycling!). The only honorable thing to do was to post both versions side-by-side and highlight their differences. The versions found in Milton Friedman’s papers seem to me to read better than those found in Albert Rees’ papers which leads me to conclude that the versions from the Friedman papers are of more recent vintage.

Authorship is unknown, but there can be no doubt that we are dealing with lyrics composed, performed, and (first) enjoyed by economists at the University of Chicago sometime in the first two decades after WWII (when Rees was at the University of Chicago).

My personal favorite line: “In economic theory we’re wed to ceteris paribus./We find it nicer living where the air is rather raribus.”

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Parody of  Gilbert and Sullivan’s “I am the very model of a modern Major General”

To enjoy the original work being parodied:

English National Opera: Major-General’s Song from The Pirates of Penzance – live and with lyrics!

I AM THE VERY MODEL OF A CLASSICAL ECONOMIST

(To the tune of “I am the very model of a modern Major General” from THE PIRATES OF PENZANCE)

I AM THE VERY MODEL OF A U OF C ECONOMIST

(To the tune of “I am the very model of a modern Major General” from THE PIRATES OF PENZANCE)
I am the very model of a classical economist.
A Marshall, Smith, Pigou and Mill
Comprise my total reading list
For policy, you must insist
On having as your analyst
A U of C example of a classical economist.		 I am the very model of a classical economist.
A Marshall, Smith, Pigou and Mill
Comprise my total reading list
For policy, you must insist
On having as your analyst
A U of C example of a classical economist.
Our tools are based on static equilibrium analyses.
The economy we study is afflicted with paralyses.
But, if you want an analyst,
For quality you must insist
On a U of C example of a classical economist.		 Our tools are based on static equilibrium analyses.
The economy we study is afflicted with paralyses.
But, if you want an analyst,
For quality you must enlist
A U of C example of a classical economist.
Competitive adjustment is the true course for all laborers.
A freely fluctuating wage, all long-run benefits confers,
So, unions, if you must persist
Remember, that an analyst
Does not come any finer than a classical economist.		 Competitive adjustment is the true course for all laborers.
A freely fluctuating wage, all long-run benefits confers,
So, unions, if you must persist
Remember, that an analyst
Does not come any finer than a classical economist.
In economic theory we’re committed to ceteris paribus.
We find it easier living where the air is rather raribus.
So, if you want an analyst
For purity you must insist
On a U of C example of a classical economist.		 In economic theory we’re wed to ceteris paribus.
We find it nicer living where the air is rather raribus.
So, if you want an analyst
For purity you must enlist
A U of C example of a classical economist.
The chastity of this our land we manifestly must preserve.
The banking system should be based on 100% reserve.
So obvious, so simple this
Why does the FRB exist?
Replace it with a very special U of C economist.		 The chastity of this our land we manifestly must preserve.
The banking system should be based on 100% reserve.
So obvious, so simple this
Why does the FRB exist?
Replace it with a very special U of C economist.
Our little coterie extends from here across to Manchester.
But government advisers seldom here or there with us concur.
We must ask a psychiatrist
Why our advice they all resist.
But we’ll keep the tradition of the classical economist.		 Our little coterie extends from here across to Manchester.
But government advisers seldom here or there with us concur.
We’ll ask a good psychiatrist
Why our advice they all resist.
But we will bear the standard of the classical economist.
Source: Duke University. David M. Rubenstein Rare Book & Manuscript Library. Economists’ Papers Archive. Papers of Albert Rees. Box 1, Folder “Rees—Personal”. Source: Hoover Institution Archives, Papers of Milton Friedman, Box 79, Folder 6 “University of Chicago Miscellaneous”.

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Parody of  Gilbert and Sullivan’s “I’m Called Little Buttercup”

To enjoy the original work being parodied:

Lyric Theatre of San Jose performing “I’m Called Little Buttercup” from H.M.S. Pinafore.  Song starts at 0:45.

KEYNESIAN SONG

(To the tune “They call me Little Buttercup” from H.M.S. Pinafore)

THEY CALL ME A KEYNESIAN

(to the tune of Buttercup from PINAFORE)
They call me a Keynesian, a Keynesian Economist
And that I can never deny
For I’m a heretic, a classicist critic—
Bold little Keynesian, I.		 They call me a Keynesian, a Keynesian economist
And that I cannot deny.
For I’m a heretic, a classicist critic,
Bold little Keynesian, I.
I’ve equations and functions, and marginal assumptions
All here in my little kit bag.
I have tricky proposals for income disposals
All lest the economy sag.		 I’ve equations and functions, and marg’nal assumptions
All here in my little kit bag.
I’ve tricky proposals for income disposals
Lest the economy sag.
To deficit spending and government lending
I give a hearty “Huzzah”.
I distrust automaticity despite its simplicity—
I doubt if it would work at all.		 To deficit spending and government lending
I give a hearty huzzah.
I shun automaticity despite its simplicity;
I doubt if it would work at all.
For I am a Keynesian, a Keynesian economist
And that I can never deny
For I’m a heretic, a classicist critic—
Bold little Keynesian, I.		 They call me a Keynesian, a Keynesian economist
And that I can cannot deny.
For I’m a heretic, a classicist critic,
Bold little Keynesian, I.
When faced with deflation or misallocation
I feel that the former is worse
I abominate waste with Ricardian distaste
But still first things always come first.		 When faced with deflation or misallocation
I feel that the former is worse.
I abominate waste with Ricardian distaste,
But still first things always come first.
And yet they deplore me, criticize and abhor me
For I am the standard straw man
But blows I don’t heed—Oh, I’ll stick to my credo
That a plan is a plan is a plan.		 And yet they deplore me, criticize and abhor me,
For I am the standard straw man.
But blows I don’t heedo, I’ll stick to my credo,
That a plan is a plan is a plan.
For I am a Keynesian, a Keynesian economist
And that I can never deny
For I’m a heretic, a classicist critic—
Bold little Keynesian, I.
Source: Duke University. David M. Rubenstein Rare Book & Manuscript Library. Economists’ Papers Archive. Papers of Albert Rees. Box 1, Folder “Rees—Personal”. Source: Hoover Institution Archives, Papers of Milton Friedman, Box 79, Folder 6 “University of Chicago Miscellaneous”.

Image Source:   Monty Python’s silly walks.  Quora website:   What are examples of Low Comedy?

 

 

 

 

Categories
Amherst Chicago Columbia Economists

Columbia. John Maurice Clark. Autobiographical notes, 1949

 

The following recollections of John Maurice Clark of his earliest contacts with economic problems is found in a folder of his papers containing notes about his father, John Bates Clark. The hand-written notes are fairly clear until we come to a clear addition on the final page. Abbreviations are used there and the handwriting is not always clear. Still the pages together provide a few nice stories and short lists of J.M. Clark’s teachers and students.

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June 8, 1949

J.M.C.’s recollections of his earliest contacts with economic problems.

I think my earliest contact with an economic problem came on learning that the carpenter who sometimes came to do odd jobs for us at 23 Round Hill got $2.00 a day. I had a special interest in that carpenter. He was a tall man, with a full, dark beard; and it had been my imprudent interest in his operation with the kitchen double-windows (putting on? taking off?) that led me to lean out of a hammock and over the low rail of our second-story porch, to watch him (I was between two and three at the time). Mechanical consequences—I descended rapidly, landing on my head, but apparently suffering no injury except biting my tongue. Subjective consequences – maybe it pounded a little caution into me at an early age; but the present point is that it fixed that carpenter in my memory as “the man who picked me up.” It was some time later I learned that he got $2.00 a day.

I don’t remember whether I took the initiative and asked, or not. The cost of things was often discussed in our house, and my mother often talked of the difficulty of making both ends meet. I knew my father’s salary, though I can’t be sure now whether it was $3,500 or less. Anyhow, it was maybe eight or ten times the carpenter’s pay; and I began wondering how he made both ends meet, and remarked to my father that $2.00 a day wasn’t much to live on. He answered that it was pretty good pay for that kind of work. So I learned there were two ways of looking at a daily stipend—as income to live on and as the price of the service you gave your employer. Or perhaps simply the standpoints of the recipient and the payer. But especially I learned there were people who had to adjust their ideas of what they could live on, to a fraction of the income we found skimpy for the things we thought of as necessary. In short, I had a lesson in classes and their multiple standards to ponder over; without reaching any very enlightening conclusions.

I don’t think I connected this with our friends the Willistons (of the family connected with Williston seminary in Easthampton) who lived in the big house above us and from whom we rented ours. They were evidently much richer than we. They had gone to Europe (and been shipwrecked on the way, and had to transfer at sea to a lumber-schooner, which threw its deckload of lumber overboard to enable it to take on the people from the helpless steamship. — but that’s another story.)

To return to the carpenter. I suppose today he’d get perhaps $16, more?, and a Smith College salary, for a full professor, might be $7,000 or $8,000. The discrepancy has shrunk to maybe 2/5—certainly less than half—of what it was then. That puzzling discrepancy was my first lesson in economics—the first I remember.

There was another lesson—if you could call it that—the summer we spent a while at the Stanley House (now gone) in Southwest Harbor, on Mt. Desert. The rich people went to Bar Harbor. At Southwest, there was Mr. Brierly who had a yacht. We took our outings in a rowboat, sometimes with the help of a spritsail. One time we were going up Somes Sound, and were passed by one of the biggest ocean-going steam yachts—the “Sultana”. It was a very impressive sight, in those narrow waters, and looked about as big as the “Queen Mary” would to me now. I don’t remember anybody doing any moralizing; but if they did, the impression it left was that we, in our fashion, were doing the same kind of thing they were.

My first contact with economic literature (not counting the subversive economics of Robin Hood, which we boys knew by heart, in the Howard Pyle version) was at 23 Round Hill, so I must have been less than nine. I found a little book on my father’s shelves that had pictures in it – queer pictures done in pen and ink, which puzzled me. There was a boy not much bigger than I was, in queer little knee-britches, acting as a teacher to a class of grown men (including I think a Professor Laughlin, under whom I later taught at the University of Chicago.) And there were classical females being maltreated by brutal men, and other queer things. I was curious enough to read some of the text, to find out about the pictures. It was “Coin’s Financial School,” the famous free-silver tract.

I read enough to become a convinced free-silverite. And then I had the shock of discovering that my beloved and respected father was on the wrong side of that question. I decided there must be more to it than I’d gotten out of the queer picture-book. I suppose that was my first lesson in the need of preserving an open mind and holding economic ideas subject to possible reconsideration. Davenport and Veblen gave me more extensive lessons, fifteen or twenty years later, only this second time it was my father’s ideas I had to rethink, after reluctantly admitting that these opposing ideas represented something real, that needed to be reckoned with. One had to do something about it, though the something didn’t mean substituting Veblen for my father. It was a more difficult and discriminating adjustment that was called for.

To return to my boyhood. It may have been about this time that I learned something about mechanical techniques, when my father took me to see the Springfield Arsenal. They had a museum, with broadswords that had been used in battle—one was so nicked up that its edge had disappeared in a continuous series of surprisingly deep nicks—but the mechanical process that impressed me was a pattern-lathe, rough-shaping the stocks of Krags. On one side was a metal model of the finished stock revolving, with a wheel revolving against it. On the other side was the wooden blank revolving, and a wheel like the one on the model, and linked to it so as to copy its movements, and armed with knives. So the machine could make complicated shapes following any model you put into it, and do it faster and more accurately that a hand worker.

Incidentally (and as a digression) that was our first military rifle with smokeless powder, more powerful than black; our first regular military magazine rifle of the modern kind with a bolt action and a box magazine. The regulars were just getting them. The militia still had the black-powder 45-70 Springfields at the time of the Spanish War, and a Massachusetts regiment had to be ordered off the firing-line at El Caney because their smoke made too good a target. Teddy Roosevelt had pull enough to get Krag carbines for his Rough Riders plus the privilege of using their own Winchesters if individuals preferred, and, if they had the 30-40-220, which took the Krag cartridge.

But my regular education in economic theory began at the age of 9 or 10, in our first year at Amherst, when we lived on Amity Street, opposite Sunset Ave. My father had in mind James Mill’s training of his son, John Stuart Mill, and he copied the techniques of explaining something during a walk, but he didn’t follow James Mill’s example by making me submit a written report for criticism and revision. All he did was to explain about diminishing utility and marginal utility—using the illustration of the oranges. And he was satisfied that I understood it, and concluded that the simple fundamentals of economics could be taught to secondary school or “grammar-school” students. Later, my friend and former graduate student, Leverett Lyon, pithily remarked that I probably understood it better then than I ever had since. Maybe he was right. I know when I met Professor Fetter, the year the Ec. Ass. met in Princeton, he told me I didn’t understand the theory, because I had said (in print, I think) that there were some dangers about the concept of “psychic income.” I didn’t say it was wrong, but I did think it was likely to be misleading to use a term that was associated with accountants’ arithmetic. So I did probably understand the theory “better” at the age of 9 or 10. Twenty ears later, it didn’t look so simple. This was long before I disagreed with Fetter about basing-point pricing and the rightness of the uniform FOB mill price, as the price “true” competition would bring about.

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J.M.C. later history.

Amherst, C in Ec tho 85 on exam, & written work not credited. (cf French A from Wilkins, C from [William Stuart] Symington (father of present (1951) W. Stuart Symington, head of nat security Resources Board). Symie sized my attitude up as that of a gentleman & gave me a gentleman’s mark) Crook said he “didn’t get hold” of me. He was correct.

 

Columbia: Giddings, A. S. Johnson, H.L. Moore, Seligman, Seager, Hawkins [?], Chaddock, Agger, Jacobstein. indoctrinated: J. B. C. orthodoxy modified by overhead costs (catalogued as “dynamics”) Dynamics (defined as) everything statics leaves out. & much induction. Take “Essentials” on slow dictation.

Veblen: slow infiltration of its logical & progre[?] rel. to the abstractions of J.B.C.: reverse normalizing might make[?] an arguable claim to equal legitimacy.

1912 ed. of Control of Trusts

“Contribution to theory of competive price” [QJE, August 1914] forerunner of “mon-comp”, largely empirical basis.

Germs of social & inst. ec. Rich-poor, Freedom as val in ec.[??] B. M. Anderson cf. Cooley

Revs of Hobson?, Pigou, Davenport Economics of Enterprise [Political Science Quarterly, Vol 29, no. 2]

 

To Chi. 1915 Changing basis of economic responsibility [JPE, March 1916] on moving to Chi. open declar[ation] of non-Laughlinism: backfire to an Atlantic article of Laughlin’s.

Modern Psych.

1917-18. War-ec. (“basis of war-time collectivism.”)

Students: Garver oral. Slichter, Lyon, Innis, Martin [?], Goodrich, Copeland, O’Grady [John O’Grady ?]

Ayres, Knight on faculty.

Ov. C. [Studies in the Economics of Overhead Costs]

Social Control [of Business]

 

Columbia. Students, Friedman, Ginzberg, Salera, Kuznets’ oral

 

Source: Columbia University Archives. John M. Clark Collection. History of Economic Thought. Box 37, Folder “J. B. Clark, 1847-1938”.

Image Source: John Maurice Clark. University of Chicago Photographic Archive, apf1-0171.  Special Collections Research Center, University of Chicago Library.

Categories
Chicago Funny Business

Chicago. First Epistle Unto the Entering Students. Ca. 1950

 

 

These scriptural apocrypha were found in a folder archived in Milton Friedman’s papers at the Hoover Institution labelled “University of Chicago, Miscellaneous” in which texts from Chicago (economics) performance art had been filed. The First Epistle Unto the Entering Students and First Epistle Unto New Students are clearly of divine inspiration though we are left without any explicit indication of authorship or date. The version designated V2.0 is presumed to be of later origin: the correction of “thou” for “thee” as well as the multiplication of false gods, from “Probability” to “Macro-economics and Probability” seem to fit the proposed sequence.

Confidence intervals for the date of the first appearance of the Epistle should probably include 1950. The Cowles Commission “The American Patrol” song follows immediately in Friedman’s folder and it has been dated to be around 1949 by Carl Christ (JEL, March 1994, p. 34). For this reason I have included course descriptions for the economics courses in 1950-51 specifically mentioned (301 and 302 being standard Frank Knight courses). From the text it would appear that a dissertation writing graduate student at that time could have been the author “for these many months have I spent in the land of Marshall and Pigou, and have felt the weight of prelims on my balding head.” Perhaps a visitor to this page knows the identity of a witty balding graduate student in economics at mid-century Chicago?

The image for this posting is taken from the bottom of the page of the alternate version of the First Epistle. Is there another riddle of the Sphinx?

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First Epistle Unto the Entering Students:
[V1.0]

Lo ye who enter through the gates of admissions, unto the sanctity of the Department, behold its Grace and witness the Truth it gives unto you.

Heed ye well the words of one who is older and wiser than thee, for these many months have I spent in the land of Marshall and Pigou, and have felt the weight of prelims on my balding head.

Beware the course called 302, for therein shalt thou know the deer from the beaver.

Beware also the courses 300 A & B, for they shall try thee sorely. There is a time to speak and there is a time to be silent: be thou silent. Present thyself upon the appointed hour, lest the social cost exceed the private gain and the wrath of the master descend upon thee.

Shun thou the geometer, for he loveth his curves too dearly and seeks to seduce thee therewith. Throw thou his siren song from thy soul, for it lacketh rigor and appeals but to the senses.

Shun thou also the temple of the false god Probability, for therein dwell the Philistines who worship not Marshall. For there shall they descend upon thee with all manner of strange things, and thy head shall whirl in n-dimensions.

Attend carefully upon the course 301, for there if thou learnest nothing else, shalt thou learn at least this—and it shall be a contribution to thy general education.

Avoid thou the seven sins of the classicists and remember as thine own name the five rates of substitution. Confuseth not stocks with flows lest thou spend thy days in the industrial relations center.

Shun thou the welfare economist, for he duly loveth to stick out his neck, and he will teach thee his evil ways.

Disturb not the agricultural economist when he is at his data for he loveth them mightily and will defend them as a lioness her cubs—he heeds not the statistician or the wiseman.

Yea, verily, stray not unto the land of the Hansenites. When I was a child, I spake as a child, I understood as a child, I thought as a child, but when I became a man, I put away childish things.

Scourge from thy heart the heretics of Keynes. The devil dost appear in the name of the Lord.

Await the coming of the Messiah, for then shall the Pigou effect bring full employment upon the land.

 

FIRST EPISTLE UNTO NEW STUDENTS
[V2.0]

 

  1. To all who enter through the Gate of Admissions unto the sanctity of the Department, heed ye well the words of one who is wiser and older than thou. For verily I have dwelt in the land of Marshall for many months, and have felt the curse of Prelims on my head.
  2. Beware the courses called 300A and 300B, for they will tax thee sorely. They have been devised that the deer may be known from the beaver.
  3. Present thyself upon the appointed hour, lest the social cost exceed the private gain and the wrath of the Master fall upon thee mightily.
  4. Shun thou the geometer, for he seeks to seduce thee with curves. His siren song is pleasant but he lacketh rigor.
  5. Shun thou also the temple of the twin gods, Macro-economics and Probability, for therein dwell the Philistines who worship not Marshall. There wilt thou be set upon with all manner of strange things and thou shalt feel the lash of the mixed strategy upon thee, and thy head shall whirl in n-dimensions.
  6. Treasure thy Marshall, for verily all manner of mysteries are set down therein. Read it well and carefully, but say not that thou hast understood.
  7. Take to thine own bosom the demand curve lest it desert thee in thine hour of need.
  8. Attend well upon the lectures called 301, for there if thou learnest nothing else, shalt thou learn at least one thing and it shall be a contribution to thy general education.
  9. Shun thou the agricultural economist when he is at his data, for he loveth them dearly and will defend them as a lioness her cubs.
  10. Beware also the statistician who will leave thee witless with a pair of dice.
  11. Shun the welfare economist, for he loveth mightily to stick out his neck and will teach thee his evil ways.
  12. Shun thou the Social Science Tea, but study diligently in Harper lest thou and thy end thy days in the Business School.
  13. There is a time to speak and a time to be silent. Be thou silent in the presence of the Master, for he shall reveal to thee the secrets of Marshall and there shalt thou solve the riddle of the Sphinx.

Source: Hoover Institution Archives. Milton Friedman Papers. Box 79, Folder 6, “University of Chicago, Miscellaneous”.

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ADVANCED COURSES

300A, B. Price Theory. A systematic study of the pricing of final products and factors of production under essentially stationary conditions. Covers both perfect competition and such imperfectly competitive conditions as monopolistic competition, oligopoly, and monopoly. 300A deals primarily with the pricing of final products; 300B, with the pricing of factors of production. Prereq: for 300A, Econ 209 or equiv and Math 112 or equiv, or consent of instructor. For 300B, Econ 300A. Aut (300A) ThTh 1:30-3:30; Wallis; Win (300A): MWF 1:30; Metzler; Win (300B): TuTh 1:30-3:30; Friedman; Spr (300B): MWF 2:30; Metzler.

301. Price and Distribution Theory. Study of the general body of economic thought which centers about the theory of value and distribution and is regarded as “orthodox theory.” Critical examination of some modern systems of this character. Prereq: Econ 209, Math 112 or equiv, and two years’ work in the Division of Social Sciences, or equiv. Sum: MTuWF 11; Knight.

302. History of Economic Thought. Brief survey of the whole field of economic thought and a more intensive study of the “classical school” of British economists, whose doctrines are studied in relation to the problems and discussions of today. Prereq: Econ 301 or equiv. Spr: TuTh 3:30-5:30; Knight.

 

Source:   The University of Chicago. Announcements, Vol. L, No. 9 (July 20, 1950): The Division of the Social Sciences, Sessions of 1950-1951, pp. 28-29.

Categories
Bibliography Columbia Courses Economists Suggested Reading

Columbia. Friedman’s lecture notes to first Hotelling lecture in Mathematical Economics, 1933

 

 

On October 3, 2017, Antoine Missemer tweeted an image of an undated examination question by Harold Hotelling “Describe two mathematical contributions to economics published before 1910”. One should note that asking students to talk about work published at least a quarter century before the current academic year is not necessarily a deep dive into the history of economics, though of course Cournot, Bertrand and Edgeworth had achieved “historical” fame by 1933.

From Harold Hotelling’s course in Mathematical Economics taught in the first semester of 1933/34 at Columbia, Milton Friedman kept about forty-five 3 by 5 inch index cards worth of notes (both sides). From his first lecture, we can put together a convenient “short list” of Hotelling’s chosen greatest hits in mathematical economics. I have taken the liberty of expanding Friedman’s abbreviations, figuring the main purpose of transcribing archival material is to ease digital search down the road.

Earlier postings include a list of Hotelling’s courses and his class rolls at Columbia as well as an outline and exam for his course in mathematical economics offered at North Carolina (1946, 1950).

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Milton Friedman’s student notes to Harold Hotelling’s first lecture in Mathematical Economics (1933)

9/2/33 (1)

Hotelling, Harold on Mathematical Economics

Has been stated that methodological difference between economics + natural sciences is that in former cannot + in latter do experiments

Not entirely true: in econonomics may experiment, + in some physical sciences (e.g. astronomy, meteorology etc.) do not experiment.

Better dividing line to be found in number of relevant factors

 

Use of Mathematics in Economics:

A. Cournot 1838

J. Bertrand 1883 Journal des Savants (reviewed Cournot)

F. Y. Edgeworth 1881 Math. Psychics. Papers relating to Pol. Economy.

Pareto

Alfred Marshall Principles of Economics

(Edgeworth laid foundation of many theories more modern than Marshall

Using higher Mathematics in Economics

G. C. Evans

C. F. Roos

Zeuthen

Pareto in Encyclopedie des Science Math, Vol I, Tome IV part 4 (Tome I, Vol. IV)

[Yes, that is all that Friedman wrote down for that lecture]

Source: Hoover Institution Archives. Milton Friedman Papers, Box 120, Class note cards.

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Links to Works Referred to by Hotelling

Cournot, Augustin. Recherches sur les Principes Mathématiques de la Théorie des Richesses. Paris: Hachett, 1838.

Nathaniel T. Bacon translation: Researches into the Mathematical Principles of the Theory of Wealth with a bibliography of Mathematical economics by Irving Fisher. New York: Macmillan, 1897.

Bertrand, J. (Review of) Théorie Mathématique de la Richesse Sociale par Léon Walras: Recherches sur les Principes Mathématiques de la Théorie des Richesses par Augustin Cournot. Journal des Savants 67 (1883), 499-508.

Edgeworth, F. Y. Mathematical Psychics. An Essay on the Application of Mathematics to the Moral Sciences. C. Kegan Paul & Co., 1881.

Edgeworth, F. Y. Papers Relating to Political Economy.  Volume I;  Volume II; Volume III. London: Macmillan, 1925.

Pareto, Vilfredo. Économie mathématique, —in Encyclopédie des sciences mathématique, Tome I, vol. 4 (Fascicule 4, pp. 590-640), 1906 [?].

Marshall, Alfred. Principles of Economics (8th edition). London: Macmillan, 1920.

Griffith C. Evans. Mathematical Introduction to Economics. New York: McGraw-Hill Book Co., 1930.

Reviewed by Hotelling in Journal of Political Economy, 39, no. 1 (Feb 1931) pp. 107-09.

F. Zeuthen Problems of Monopoly and Economic Warfare. London: Routledge, 1930.

Reviewed by Corwin D. Edwards (New York University) in AER, 21, no. 4 (December, 1931), pp. 701-704.

Charles Frederick Roos. Dynamic Economics—Theoretical and Statistical Studies of Demand, Production and Prices. Monographs of the Cowles Commission for Research in Economics, No. 1. Bloomington, Indiana: Principia Press, 1934.

 

Image source: From a photo of the Institute of Statistics leadership around 1946: Gertrude Cox, Director, William Cochran, Associate Director-Raleigh and Harold Hotelling, Associate Director-Chapel Hill. North Carolina State University.

Categories
Economists NBER

NBER. Mitchell to Burns about Friedman. 1945

 

 

Reading the letter written by Wesley Clair Mitchell, the Director of Research at the NBER, to Arthur Burns in which Mitchell offers discouraging words regarding an appointment at NBER for Milton Friedman in 1945, it is interesting to see how Milton Friedman and his wife report on the controversy that very clearly influenced Mitchell’s personal opinion of Milton Friedman. What is not yet clear is whether Arthur Burns ultimately made an offer to Friedman or whether it was perhaps the timely offer arranged by George Stigler for Milton Friedman to teach at the University of Minnesota that made a NBER appointment a moot point.

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The Friedmans Remember

The publication of the NBER book by Simon Kuznets and Milton Friedman Incomes from Independent Professional Practice (1945) was delayed four years in part because of the new demands for statistical and economic analyses due to World War II. In Milton Friedman’s judgment the delay was caused “mostly by a controversy about one part of the manuscript” that attributed half the observed excess average income of physicians over dentists to “the difference in ease of entry, produced at least in part by the success of the American Medical Association in limiting entry into medicine.” (pp. 71-72) A member of the special reading committee of directors appointed to evaluate the manuscript, C. Reinhold Noyes, did not agree and wrote “I suggest that the subject of freedom of entry is a hot poker and be dropped.” Friedman described how he and Kuznets wrote eighty pages worth of memos in response to this and other criticisms of Noyes. In his account of the controversy, Milton Friedman has nothing but praise for Wesley Clair Mitchell: “Three years of back and forth discussion followed, with Wesley Mitchell…supporting the scientific freedom of bureau authors…In later years I came to appreciate how rare is the combination of toughness and diplomacy that Mitchell demonstrated in defense of our scientific freedom.” (pp. 74-76)

Rose Friedman wrote about her worries about her husband’s job prospects after World War II ended.

“Presumably he could have gone back to the Treasury but that was the last thing he wanted to do. A government career was never Milton’s choice. He could always return to the National Bureau, but I knew that too was not Milton’s preference. An academic career was what he wanted. By early September, when we moved back to our apartment in Manhattan, Milton had received no offer for the fall. As an inveterate worrier always fearing the worst, I was not happy. I remember very well a visit from the Burnses and Arthur’s attempt, while Milton was temporarily out of the room to reassure me by telling me that Milton was very gifted and would make it to the top and that I had no reason to be concerned.” (p. 147)

 

Source: Milton and Rose D. Friedman, Two Lucky People: Memoirs (Chicago, 1998).

_______________________________

 

Letter from Wesley Clair Mitchell to Arthur Burns

 

Huckleberry Rocks
Greensboro, Vermont

August 27 1945

Dear Arthur

Milton offers a problem that is painful indeed, but we ought to face it squarely. You know how highly I value Simon’s [Kuznets] judgment as well as your own. Both of you have longer + more intimate acquaintance with M. than have I. I am sure both of you try to be objective about him. So do I. That we differ must be due to the unlike weights we attach to qualities we agree, or admit, he possesses.

We agree about his acute mind, about his thorough training in mathematical statistics + mathematical economics, about his creative powers at least in the first of these fields and probably in the second, about his personal likeability, + about his honesty of intention. We must admit that he has fooled himself, unwittingly, + thereby fooled all three of us who were so predisposed to accept his findings. Do you remember that first paper in which M. argued that the incomes of physicians run substantially higher than those of dentists, + the criticisms Fred Mills made of the averages on which M. rested his conclusion? Simon was annoyed by Mills; you were annoyed by him; I was a little annoyed; but Mills was right in large part. Then came the second + graver case brought out by Noyes’ rather brutal attack which enlisted my sympathies as well as yours + Simon’s warmly on Milton’s side. M. drew up a table that seemed to settle the critical issue in his favor. It was made from data he had collected + studied. We knew nothing about these materials in detail. Simon accepted the results. You accepted them. I accepted them with pleasure. Noyes’ second set of criticisms forced a more searching examination. I put in more than a month of careful study + concluded that M. had misused his data in several ways + reached an indefensible conclusion. The best thing about that sad affair was that M. frankly admitted his errors.

I think Milton’s troubles arose from accepting a conclusion about the monopolistic practice of the medical societies, feeling sure that restriction of entry must tend to increase the incomes of medical practitioners, + so accepting at face value any statistical evidence that pointed in the direction he knew to be right. We are all of us subject to this type of error. We examine far more critically evidence that appears to run counter to our hypotheses than evidence that supports them. But M. seems to me worse than most of us on this respect.

Another weakness that I think hurts Milton is lack of interest in and appreciation of non-rational factors that influence, + sometimes dominate, economic behavior. They cannot be handled effectively by the calculus of economic theory concerned with what it is to the interest of men to do. Milton’s clever appraisal of the effect of the higher costs of medical than of dental education is a brilliant specimen of this sort of theorizing. Of course he knows his argument is most unrealistic + says so. Under pressure of criticisms he stressed his qualifications still further. What does such an analysis really add to our knowledge of how men choose their occupations? Can’t the simple bits of truth in the proposition that high costs of training limit the number who enter a profession be put better in simpler form? Why work out an accountant’s estimate in detail when you have to add that few men are able to do such work correctly; that still fewer possess the concrete evidence needed to give the estimate some air of reality; that a man clever enough to do the job + possessed of the factual data would realize that conditions might well change by the time he or his son was ready to set up in practice, + that no one should suppose that choices are really made in this way?

I wish I could share your intuitive faith that M. “has more to contribute to economic science than any man of his generation.” If only we could find the man of whom this remark is true + draw him into the National Bureau, I should be happy indeed! Whoever he may be, he has more insight into human nature than Milton has been blessed with.

Nor do I think you would be wise in taking on a man whom you would have to follow through all the details of his work to make sure that his deficiencies, genuine or problematical, would never again embarrass us. As director of research, you need colleagues who know a great deal more than you will have time to learn about the materials they are severally handling. The kind of watching M. needs is not critical examination of his statistical methods + general reasoning, but detailed study of his data + the way he uses them. That is a time consuming job. None of us did that for M. until far too late. I must accept primary responsibility for this error of omission. I don’t want to see you put in a position where your conscience will force you to spend weeks in making good the guarantee you suggest.

You know that I am grieved to write as I do. To me it seems that you are letting admiration for Milton’s technical proficiencies + personal liking warp your judgment. Loyalty to the aims we both cherish requires me to be candid, though at cost to your feelings as well as mine. If you can produce genuine evidence that my present opinions are wrong, I shall be glad. In the meantime, please do your best to give proper weight to my misgivings.

[…]

Ever yours

[signed]

Wesley C. Mitchell

 

Source: Arthur F. Burns Papers at the Economists’ Papers Archives. Duke University, David M. Rubenstein Library. Box 2, Folder “Correspondence: Wesley Clair Mitchell 1911-1945”.

Image Source: Columbia 250 Website:  Arthur F. Burns,  Milton Friedman. Foundation for the Study of Cycles Website: Wesley Clair Mitchell.

Categories
Chicago Exam Questions

Chicago. Money, Banking, and Monetary Policy Exam for A.M. and Ph.D. Friedman, Mints, Marschak, 1952

 

 

 

The committee for the Money, Banking and Monetary Policy examination for the A.M. and Ph.D. degrees for the Winter Quarter 1952 at the University of Chicago consisted of Milton Friedman (chairman), Lloyd Mints, and Jacob Marschak. The date of the examination was February 12, 1952 taken by 25 students. From Milton Friedman’s notes it appears that the committee agreed to pass ten examinees at the Ph.D. level, ten at the A.M. level and five were failed.

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MONEY, BANKING, AND MONETARY POLICY
Written Examination for the A.M. and Ph.D. Degrees
Winter Quarter, 1952

 

Write on the first three and two other questions. Time: 4 hours.

DO NOT PLACE YOUR NAME ON YOUR PAPER. GIVE ONLY YOUR NUMBER.

 

  1. Suppose that (1) the national income is $270 billion; (2) the total wage bill is $180 billion; (3) the average annual wage is $3000, with only negligible variation among individual wages; (4) government’s demand for goods and services is $60 billion, and consumers’ demand is $200 billion. Suppose that, through joint action of employers and labor unions the wage rate is increased by 10%, and that the real volume of government demand is not changed. Indicate further conditions (such as, for example, the monetary policy, fiscal policy, technological conditions, initial level of employment, the behavior of consumers and of entrepreneurs) that you deem particularly important for a rough estimate of the effects of the rise in wages upon the levels of (present and future) consumption and of prices. Give two or three such estimates on the basis of your own hypothetical numerical specifications of those conditions.
  2. “It will be sound policy for the Treasury to borrow new funds insofar as possible from nonbank sources, to minimize the inflationary potential of the deficit.” (January 1952 Economic Report of the President, pp. 141-2.)
    Discuss the basis for and validity of this view. In your answer, distinguish between the effects of borrowing from the Federal Reserve Banks and from other banks; and justify your conclusions in detail.
  3. According to the Keynesian theory of income and employment, the change in money income equals the change in “investment,” or, more generally, the change in “autonomous expenditures” times the “multiplier.”
    (a) Explain the terms in quotation marks. How, if at all, does the value of the “multiplier” depend on the distribution of income, the stock of money, the rate of interest?
    (b) A shift from a balanced government budget to a deficit because of an increase in expenditures would generally be regarded as a corresponding increase in “autonomous expenditures,” and therefore, other things the same, as leading to an increase in money income equal to the multiplier times this amount. Can this statement, which suggests that any effect on money income of the deficit depends only on its size and the size of the multiplier, be reconciled with the quotation in question 2, which implies that “the inflationary potential of the deficit,” presumably meaning the rise in money income it produces, depends on the method of financing the deficit?
  4. It has been claimed that the British made the gold content of the pound sterling too high when they returned to gold in 1925. What would be the effects of such action? Did these effects actually appear to any significant degree? In any case, what means were available, if any, for determining the “correct” content of the pound?
  5. “The great difficulty, if not the impossibility, of reversing a downward movement [of business activity] by monetary means alone must be accepted as demonstrated by experience.” Is this statement warranted? Support your position.
  6. “Lowness of interest is generally ascribed to plenty of money. But money, however plentiful, has no other effect, if fixes, than to raise the price of labour…It is in vain…to look for the cause of the fall or rise of interest in the greater or less quantity of gold and silver, which is fixed in any nation” (David Hume, 1752).
    Discuss in light of “modern” theories of the rate of interest.

 

Source: Hoover Institution Archives. Papers of Milton Friedman. Box 76, Folder 9 “University of Chicago Econ 300A”. [sic, this and other money, banking and monetary policy exams have been filed with material for the price theory course]

Categories
Courses Statistics Suggested Reading Wisconsin

Wisconsin. Seminary in Statistical Research. Harry Jerome, 1937-38

The University of Wisconsin-Madison's Carillon Tower in Madison -- Wisconsin's capital city.

 

Harry Jerome taught statistics in the economics department of the University of Wisconsin from 1915-1938. The following course materials for a research seminar that he taught were found in Milton Friedman’s papers at the Hoover Institution in a file “Student Years”. Since there is no indication of either university or instructor for these materials and with only the course number and academic year to go on, it seems likely that an archivist presumed these might have been from a course at Chicago or Columbia which can be clearly seen not to be the case upon consulting the respective course catalogues.

Possible explanations why Milton Friedman had this Wisconsin material was that he was recruited by Harold Groves as a potential successor to Harry Jerome in the economics department and the material was sent to him in the course of the recruitment or that Friedman came across the stuff in his review of statistics instruction at Wisconsin. In any event, given Friedman’s and Jerome’s common NBER connection, it is not surprising that a research seminar on Wisconsin income statistics would be something that Milton Friedman was naturally interested in.

______________________________________

 

Harry Jerome (1886-1938)

“Professor Harry Jerome, economist and author, was born March 7, 1886, to Sarah and Moses Jerome at Bloomington, Illinois, and died September 12, 1938, at Madison, Wisconsin. He graduated from the University of Wisconsin in 1914 and took his post-graduate work there, receiving his Ph.D. degree in 1918.

He was instructor in economics from 1914 to 1918 at Wisconsin. From that year until his death in 1938 he held the position of professor of economics at Wisconsin, and was chairman of the economics department from 1931 until 1936.

In 1919 and 1920 Jerome was district assessor of incomes for the Wisconsin State Tax Commission. He was a member of the staff of the National Bureau of Economic Research from 1923 to 1925, and was one of the directors of that organization for many years. He also served as a member of the advisory board for an income tax study by the Wisconsin Tax Commission. From 1936 he was consultant for a survey of productivity and changing industrial techniques by the Federal Works Progress Administration in cooperation with the National Bureau of Economic Research.

Jerome was the author of three books, Statistical Methods (1924), Migration and Business Cycles (1926), and Mechanization In Industry (1934).”

Source: Harry Jerome Papers, Finding Aid. Wisconsin Historical Society.

 

Research Tip: Boxes 5 and 6 of Harry Jerome’s papers at the Wisconsin Historical Society  have material on the NBER and the Wisconsin department of economics.

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Course Announcement

[Econ.] 230. SEMINARY IN STATISTICAL RESEARCH. Yr; 2 cr. Cooperative research in one or more economic problems, each member of the class concentrating on a selected phase of the common subject. Subject for 1937-38: amount and distribution of wealth and income, with special attention to Wisconsin. Reports on current developments in statistical method. Fee $1.00. 7:15-9:15 Th. Mr. Jerome.

Source: Copy of page 148 from the course catalogue of the University of Wisconsin College of Letters and Science for 1937-38 that was provided Economics in the Rear-View Mirror by fellow historian of economics Professor Marianne Johnson of the College of Business, University of Wisconsin, Oshkosh.

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Course Materials from Econ 230, University of Wisconsin
1937-38

TREATISES ON NATIONAL INCOME AND THE FORMATION OF CAPITAL

List for Review in Econ. 230, 1937-38

  1. W. I. King, The Wealth and Income of the People of the United States.
  2. National Bureau of Economic Research: Vol. I, Income in the United States
  3. Same as (2) – Volume II.
  4. Federal Trade Commission, National Wealth and Income, 69th 1st. Sess. Sen. Doc. No. 126.
  5. W. I. King, The National Income and its Purchasing Power. (NBER)
  6. Maurice Leven, et al, America’s Capacity to Consume (Brookings)
  7. Robert F. Martin, National Income and its Elements (NICB)
  8. U. S. Department of Commerce:

National Income, 1929-36, supplemented by National Income, 1929-32, Sen. Doc. 124, 72d Cong. 2d Session, 1934; and National Income in the United States, 1929-35.

  1. Simon Kuznets, National Income, 1919-35, NBER Bul. 66, supplemented by bulletin on National Income and Capital Formation, (in press).
  2. Harold G. Moulton, The Formation of Capital (Brookings)
  3. Robert F. Martin, Income in Agriculture, 1929-35 (NICB)
  4. Colin Clark, National Income and Outlay (Great Britain)
  5. John A. Slaughter, Income Received in the Various States, 1929-35, (NICB)

 

GROUP A. ESTIMATES OF INCOME PRODUCED IN WISCONSIN, BY INDUSTRIES, 1929-1937

  1. Agriculture
  2. Manufacturing
  3. Construction
  4. Transportation

Railroads and other freight and passenger traffic

  1. Other public utilities
  2. Trade: wholesale and retail
  3. Finance
  4. Service occupations
  5. Government

 

GROUP B. SPECIAL PROBLEMS IN INCOME STATISTICS (WISCONSIN)

  1. A plan for estimating income and number of recipients below the reporting levels for income tax purposes.
  2. Methods of estimating income from currently available data, for tax administration purposes
  3. Distribution of income in Wisconsin by objects of expenditure
  4. Geographical distribution of Wisconsin income
  5. Interstate movement of income: to and from Wisconsin

 

GROUP C. STUDIES IN THE AMOUNT AND DISTRIBUTION OF WEALTH

  1. Estimates of distribution of wealth in a selected county or counties, based on probate records.

 

 

REPORTS FOR October 14, 21 and 28.

  1. A. L. Bowley, “The Definition of National Income”, Econ. Journal, vol. xxxii (1929), pp. 1-11.
  2. Simon Kuznets, “National Income”, in Encyclopedia of the Social Sciences, Vol. II, pp. 205-224.
  3. J. Stamp, “Methods used in different countries for estimating national income; with discussion. Royal Statistical Society Journal. 97 No. 3: 423-66; no. 4: 541-57.

Papers in Studies in Income and Wealth (as yet unpublished [NBER, 1937])
by the Conference on Research in National Income and Wealth:

  1. Gerhard Colm, “Public Revenue and Public Expenditure in National Income”
  2. M. A. Copeland, “Concepts of National Income”
  3. Solomon Fabricant, “On the Treatment of Corporate Savings in the Measurement of National Income”
  4. Simon Kuznets, “Changing Inventory Valuations and Their Effect on Business Savings and on National Income Produced”
  5. Solomon Kuznets, “Some Problems in Measuring Per Capita Labor Income”
  6. Carl Shoup, “The Distinction between ‘Net’ and ‘Gross’ in Income Taxation
  7. O. C. Stine, “Income Parity for Agriculture”

 

Source: Hoover Institution Archives. Papers of Milton Friedman. Box 5, Folder 12 “Student years”.

Image Source:University of Wisconsin’s Carillon Tower from Library of Congress Prints and Photographs Division Washington, D.C. 20540 .

 

Categories
Exam Questions Suggested Reading Wisconsin

Wisconsin. Business Cycles. Readings and Exam. Friedman 1940-41

 

 

One of the courses taught by Milton Friedman in his year at the University of Wisconsin (1940-41) was on business cycles. A few charts and notes have survived from that course (in Milton Friedman’s papers at the Hoover Institution Archives) but also found in the same folder for that course are three pages of handwritten references that likely were readings for the course. These are listed below, most of which have been linked to the respective books/papers. The bibliographic data have been corrected and expanded where necessary. His incomplete notes, actually more of a log of the sessions, include a reference to “Mitchell & Burns, first chapter” for the third lecture “What is business cycle?”. I guess this must have been from an early draft of the 1946 NBER publication by Burns and Mitchell,  Measuring Business Cycles.

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Business Cycle Readings

Wesley Clair Mitchell. Business Cycles: The Problem and Its Setting. NBER, 1927. Chapter 2. Economic Organization and Business Cycles, pp. 61-188.

Friedrich A. Hayek. Monetary Theory and the Trade Cycle (translated by N. Kaldor and H. M. Croome). New York: 1933.
____________. Prices and Production. London: 1935.

R. G. Hawtrey. Currency and Credit. London: 1919, 1923, 1927.  First ed. 1919;  Second ed. 1923.

____________. The Art of Central Banking. London: 1932
____________. Capital and Employment, 1937

Ludwig von Mises. The Theory of Money and Credit, 1934 (based on second German edition of 1924). Yale University Press 1953 ed.

Lionel Robbins. The Great Depression, 1934.

W. Ropke. Crises and Cycles (Vera C. Smith, trans. and rev.). 1936.
____________.  “Trends in German Business Cycle Policy”, Economic Journal, Sept. 1933.

Knut Wicksell.  Interest and Prices (R. F. Kahn, trans.). London: 1936.
____________. Lectures on Political Economy (E. Classen, trans.). London: 1935.  Volume I;  Volume II.
____________. “Influence of Rate of Interest on Prices”, Economic Journal, June 1907.

Alvin Hansen, Full Recovery or Stagnation. New York: 1938.

Chap. 1. Keynes, pp. 13-34;
Ch VI & VII pp. 137-60 Purchasing power: government deficit financing in various forms including consumer reserves[?];
Ch XVI through XX, 267-329. The economic outlook, Interpretation of 1937 recession, consequences of reducing expenditure, [illegible word beginning with “P”] pricing[?], Investment outlets & secular stagnation, The Fear[?] of Inflation

Walter Salant’s contribution to the discussion of Chapter 4 (“The Volume and Components of Saving in the United States 1933-1937”) in Conference on Research in National Income and Wealth. Studies in Income and Wealth, Volume 3. NBER, 1939. Vol. III. pp. 305-15.

Gottfried Haberler. Prosperity and Depression. League of Nations, 1937. Chapter 2 “The Purely Monetary Theory”, pp. 14-28.

  1. C. H. Douglas, Social Credit. Edinburgh: 1924. Part II, Ch I & II, 78-107 [sic, pp. 89-122]
  2. J. A. Hobson, The Economics of Unemployment. London: 1922. Ch. II “The Failure of Consumptions”, pp. 29-42
  3. William Trufant Foster and Waddill Catchings. Profits. Boston: 1925. pp. 398-418
  4. J. E. Meade, An Introduction to Economic Analysis and Policy. London: 2nd ed, 1937. Ch. 1 “Can the Economic System Work?”, pp. 1-11.
  5. E. F.M. Durbin, Purchasing Power and the Trade Depression. Toronto, 1934. Ch. I-III, pp. 17-102

National Resources Committee. Consumer Expenditures in the United States: Estimates for 1935-36. Washington, DC: USGPO, 1939. App. C[?]

Lester V. Chandler, Introduction to Monetary Theory. New York, 1940. Ch VI & VII, pp. 115-83

 

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ECONOMICS 176
Final Examination
January 30, 1941

  1. One device proposed for mitigating the severity of cyclical fluctuations is the concentration of governmental expenditures on public works in depressions, the extra expenditures at such times to be financed from surpluses accumulated during prior periods of prosperity, from borrowing, from the creation of new money, or from current taxes. Under what conditions, if any, would you recommend the adoption of this proposal? If adopted, what method of financing would you endorse? Justify your answers in detail. Discuss both the merits and demerits of the proposal and of the various methods of financing. Discuss also the observed features of cyclical fluctuations that make the proposal appear strategically desirable or undesirable.
  2. “The business cycle in the general sense may be defined as the alternation of periods of prosperity and depression, of good and bad trade.” Discuss.
  3. Distinguish between “a theory of business cycles” and a “description of the cyclical process”. What characteristics would an adequate cycle theory possess?
  4. Does the fact that there has not yet been developed an adequate cycle theory known to be consistent with the observed course of cyclical fluctuations mean that there is no basis for judging the desirability of governmental measures designed to mitigate cyclical fluctuations? Does it mean that society is condemned either to inaction or to irrational intervention? Give the reasons for your answers.

 

Source: Hoover Institution Archives. Papers of Milton Friedman. Box 75, Folder “University of Wisconsin, Econ. 176”.

Image Source:  Milton Friedman on the Columbia University 250th Anniversary Website.

Categories
Chicago Curriculum Economics Programs Regulations Yale

Ruggles-Friedman correspondence on Draft Report on Graduate Training in Economics, 1955

 

A transcription of the complete printed Report of the Panel Discussions on Graduate Training in Economics at Yale (1956) was provided in the previous posting. A copy of the draft of that report from December 1955 can be found in Milton Friedman’s file of correspondence with the chairperson of the Yale Committee responsible for the report, Richard Ruggles, along with Ruggles’ cover letter and a copy of Friedman’s response. The first couple of pages of the draft are transcribed below because they provide a little bit of the backstory for the Report as does Ruggles’ cover letter. Otherwise the only substantive change between the two versions, aside from a rearrangement of a few sections in the Report, comes from Friedman’s reservations concerning the publication of doctoral theses in a university series. These were incorporated into the final Report. 

Fun Fact: Richard Ruggles graduated from Harvard in 1939. Classmates included his later Yale colleagues James Tobin and William Parker. The composer/conductor Leonard Bernstein was also a member of that Harvard class of ’39.

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Letter from Richard Ruggles to Milton Friedman
Requesting Comments on Panel Report

 

YALE UNIVERSITY
Department of Economics
New Haven, Connecticut

Richard Ruggles

December 12th 1955

Professor Milton Friedman
Department of Economics
University of Chicago
Chicago, Illinois

Dear Milton,

At long last a preliminary draft of the report on the panel discussions held at Yale last spring has been prepared. This draft is based on notes taken on the discussions in the five panel meetings, and the draft has been gone over and revised according to the interpretations they placed upon the discussions in which they participated. Although the same agenda was followed in all the panel discussions, the amount of time spent on the various topics differed considerably.

Our intended procedure is as follows. We would like all the panel participants to send in their comments on this draft. In light of these comments one or more of three possible courses of action will be taken on each specific part of the draft. If numerous comments of the same general nature are made, the draft will be revised to present these views in the body of the text. This revision may consist either of replacing present sections or adding alternative views. In cases where only one or two individuals disagree on a particular point in the text, this disagreement may be handled by appropriate foontoe references. In instances where an individual panel member feels it desirable, he may write a section embodying his views and this will be appended to the report as a supplementary statement. It is not the object of this report to come out with an appearance of any greater degree of consensus than actually exists.

There appears to be widespread interest in the results of this inquiry. Numerous requests for copies of the final report have already been received. We had expected to publish the report here at Yale, but in view of the very great interest that has been shown, the committee has instructed me to ask the panel members whether or not they would approve of having the report published in an economic journal such as the American Economic Review. I would therefore appreciate it if, when you send in your comments about the panel report, you could also let me know whether or not you would approve of such publication.

Sincerely yours

[signed] Richard

ssk
enc.

________________________

Introduction to Draft Report of the Panel Discussions on Graduate Training in Economics

Confidential Preliminary Draft;
Not for Distribution

REPORT OF THE PANEL DISCUSSIONS ON GRADUATE TRAINING IN ECONOMICS

The program of graduate training in economics at Yale, and generally elsewhere in the United States, is the result of an evolutionary development. The changes that have occurred over the last two or three decades have taken the form of specific improvements in already existing programs. Although this approach can be expected to improve a graduate training program, it will in all probability lead to an end result quite different from, and not necessarily superior to, that which would result from a comprehensive reshaping of the program to meet the changed requirements, new objectives, and shifting substance in the field itself. Any minor change in an existing program must necessarily tie in with those parts of the program which remain unchanged; because the system as a whole has not been subjected to an overall redesign, it will be found necessary to modify any partial revisions so that consistency, equity, and flexibility will all be preserved.

Revision by such minor steps has a number of advantages. The degree of risk involved is minimized. Also, the changes undertaken can be expected to be within the capabilities of the organization which puts them into force. Finally, if changes are undertaken by small stages the existing program will usually be flexible enough to incorporate them without disruption.

A major reorganization involving the setting up of an entirely new program, on the other hand, faces many problems arising from lack of experience. Because such a system is new, it is often impossible to judge whether it can be carried out with the resources available. Finally, the implementation of the new system completely different in structural form may require flexibility on the part of those responsible for carrying it out that cannot be achieved quickly.

Thus it is no accident that change is usually of an evolutionary nature, but the possibility of setting up a completely new system should not be ignored. Evolutionary development, if not subjected to periodic overall review, can easily proceed in a direction which turns out to be sterile and unsuited to the needs of the society. Because evolutionary development is piecemeal, it tends unconsciously to take the underlying assumptions of the system for granted, and not to question the overall objectives and goals in relation to the requirements which must be met. Even if a comprehensive reorganization is never undertaken, it should be considered periodically. Even a complete failure in the attempt may breed new insights and suggest new directions that an orderly evolution should take. It was with these considerations in mind that the Department of Economics at Yale undertook to review the problem of graduate training in economics.

The monograph on graduate training published by the American Economic Association was extremely instructive with respect to the current status of economics training in the country, and the possible standards and improvements in such standards that might be established. The monograph, however, did not attempt to explore any major changes in the system itself.

Participation in an overall review should not be restricted to those who are administering the present system. Individuals concerned primarily with the substance of the field often have ideas that should receive consideration. Similarly, those who make use of the people who are trained, who may themselves be very little concerned either with substance or with training methods, will have valuable contributions to make concerning the areas of strength or weakness in the products of the training.

A considerable period of time was therefore invested in searching out new ideas from people in charge of administering programs, people interested in specialized areas of economics, people in business, and people in government and international organizations. During the fall and early winter of 1954-55, a great many interviews were conducted with representatives of these groups. These people were encouraged to discuss any portions of the overall problem they thought important, and no set questionnaire was used to elicit their responses. This procedure had two advantages. First, the influence of the preconceptions of the interviewers was kept to a minimum, and second, the interviews provided a sort of ink-blot test which was useful in assessing the kinds of problem that generally worried people in the different groups.

The material gathered from these interviews naturally lacked order and did not readily fit into any single comprehensive organization, but it was extremely useful in providing a basis for an agenda for a more orderly and comprehensive discussion. Such an agenda, together with a brief discussion of the various ideas expressed by individuals in the interviews, was therefore drawn up, and on the basis of this agenda a series of six panel discussions were held at Yale in the spring of 1955. The topics chosen for panel discussion covered only a few selected problems of graduate training in economics. In view of the limited time available for panel discussion, it was thought preferable to focus on a relatively small number of major issues. The choice of problems to be included was based on (1) their relative importance in suggesting possible new directions for graduate education, and (2) the amount of controversy they generated among the people with whom they were discussed.

The following report presents the results of the discussions of this agenda by the six panels.

[…]

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Carbon copy of Milton Friedman’s Response to Ruggles

9 January 1956

Mr. Richard Ruggles
Department of Economics
Yale University
New Haven, Connecticut

Dear Dick:

Your report of the panel discussions strikes me as an excellent statement though my recollection of the discussions themselves are so vague that I would hardly feel competent to testify to the accuracy of the summary of the views expressed at the particular discussion that I participated in.

I find myself in substantial agreement with almost the whole of your report, the one point about which I have real doubts is the bottom half of page 15. While there are clearly some advantages to having a publication in the form of an annual series, it seems to me that most important of all that the better theses or redrafts of them will be worth publication in the regular professional journals and this would be much preferable. I feel that an entirely University series will not offer any substantial incentive to high quality but may well have the opposite effect.

Aside from this one point, the questions I have about the report are on a different level. My major question is whether you want to present the report as an observer’s summary of the panel discussions on the one hand or as the conclusions which the Yale committee drew from the panel discussions on the other. The present draft has more of the flavor of the first yet it seems to me that you would do better to do the second, making it explicit that the report records the judgment of the particular people in the Yale committee but is based on the discussions with the panels. This would seem to me to have two very great advantages. In the first place it avoids committing any of the panel members or giving the impression that they are responsible for or in agreement with what was said. In the second place it makes it easier to be firm and to avoid wishy-washy statements.

This choice ties in very much with the question you ask about publication. If the report takes the second form suggested, there is no need to ask panel members whether they approve of publication but only whether they are willing to have their names listed as having been participants. If the report takes the first form, I am at a loss to know what my approval signifies. I think it would be useful to publish the report. I agree generally with it but I would not want to be listed in the capacity of a co-author or as one who lists himself as fully responsible for it.

My second main question about the present report is whether it would not gain greatly by being less hypothetical and arid. What I have in mind is that there are no references at all in the report as to what is happening at any other institution except in the vaguest terms. Yet almost every suggestion that is made is now in effect in one or more institutions. The report, I think, would gain greatly in effectiveness and persuasiveness if it referred to the experiments or named institutions as evidence of the feasibility of the various changes and of their desirability. The outstanding example, it seems to me, is materially the suggestions with respect to the thesis which is here put forward as if it were an untried suggestion, whereas our experience—and for all I know that of other institutions—gives very relevant evidence on both its feasibility and desirability.

I hope you will pardon me for commenting so fully on questions not really covered in your letter. I am sure that the report of your committee will have an important influence on the course of graduate training in economics.

Sincerely yours,

Milton Friedman

MF:pan

Source: Hoover Institution Archives. Milton Friedman Papers, Box 32, Folder 16 “Correspondence: Ruggles, Richard”.

Image Source:  Richard Ruggles, noted economic statistician, dies. Yale Bulletin & Calendar Vol. 29, No. 23 (March 23, 2001).