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The Council of Economic Advisers and the Recession of 1953–1954*

Published online by Cambridge University Press:  11 June 2012

Saul Engelbourg
Saul Engelbourg
Affiliation:
Associate Professor of History, Boston University
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Abstract

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.

Type
Research Article
Information
Business History Review , Volume 54 , Issue 2 , Summer 1980 , pp. 192 - 214
Copyright
Copyright © The President and Fellows of Harvard College 1980

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References

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* 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.

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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.

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22 Ibid.

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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.

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* 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.

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55 New York Times, June 9, 1954, p. 1. Minutes, ABEGS, June 10, 1954, Box 2, #5, Jacoby Papers.

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