Having occupied important positions in every Republican administration from the end of World War II to the mid-1980s, Arthur Burns (1904-1987) was one of the most influential economic statesmen of his times.
Born in Stanislau, Austria, Arthur Burns soon immigrated with his Austro-Hungarian Jewish parents to New Jersey. He grew up in Bayonne, where he showed particular promise in debate and languages. He attended Columbia University on a scholarship, and while a student worked as a painter, sailor, writer, and clerk. Occasionally, he published articles in New York Herald Tribune.
Burns studied under Wesley Clair Mitchell, one of the nation's leading economists who pioneered in the development of statistics. Mitchell had organized the National Bureau of Economic Research at Columbia and, after receiving his Ph.D. in economics, Burns joined him there. His first important publication, Production Trends in the United States Since 1870, was released by the National Bureau in 1934 and established him as a coming scholar in that field.
During the 1930s economic debate in America centered on the concepts of John Maynard Keynes, who held that a vigorous governmental role was needed to direct the economy. Because the United States then was mired in a deep depression, this meant large-scale government spending programs such as those sponsored by President Franklin D. Roosevelt's New Deal. While accepting some of Keynes' ideas, Burns believed the American Keynesians were far too simplistic in their approaches. Along with Mitchell, he believed economic action must be preceded by careful gatherings of facts and not based upon some abstract idea. Each industry has its own cycle, he wrote, and when several head downward at the same time, we will have a recession or depression. What is needed then is some intervention, but on a highly selective basis.
By the late 1940s, by which time he had succeeded Mitchell as director of research at the National Bureau of Economic Research, Burns had come to believe that the maintenance of employment was a prime goal of government, but that inflation was another serious problem which had to be addressed. This would be accomplished by "leaning" against the economy whenever one or the other threatened. Gentle stimulative pressures would be applied when recession threatened, and restrictive ones when inflation seemed about to rise or accelerate. This placed Burns squarely in the camp of moderate Republicans who then were supporting General Dwight D. Eisenhower for the presidency.
When Eisenhower became president in 1953 he selected Burns to head the Council of Economic Advisors. A recession developed later that year, and Eisenhower was willing to embark upon a major recovery program. Burns urged him to hold back. The economic indicators seemed to point to a milder correction than most other economists expected. He proved correct. Without major intervention the economy turned upward in 1954, leading Eisenhower to remark, "Arthur, you'd have made a fine chief of staff during the war."
Burns resigned from the administration after the 1956 election and returned to the National Bureau of Economic Research and Columbia. He advised Eisenhower from there and later took on temporary assignments from his successors, John F. Kennedy and Lyndon B. Johnson. In addition, he kept in close contact with Richard Nixon, formerly Eisenhower's vice president and then a New York attorney.
When Nixon won the 1968 election he asked Burns to return to Washington as counselor to the president, a position which would carry cabinet rank and give him wide responsibilities in domestic affairs. At the time the nation was in the midst of a crisis of confidence due to anti-Vietnam War sentiment, high inflation, and the largest budget deficit of the post-World War II period. Burns recommended a slowdown in the growth of the money supply through Federal Reserve Board policies and cutbacks in spending, which he hoped would dampen the inflation rate without causing a recession. Nixon accepted the broad outlines of the program, and at first it seemed to be working. Then the Federal Reserve tightened up sharply on the money supply, causing interest rates to rise and leading to an economic downturn while inflation was still deemed a problem. Thus was born "stagflation," a problem which would haunt the nation throughout the 1970s and cause economists to rethink many of their earlier ideas.
With the coming of stagflation Burns' position in the Nixon White House declined, and his views started to change. Now he supported wage and price "guidelines" as a means of controlling inflation and seemed to inch away from his earlier stance.
In late 1969 President Nixon named Burns to become chairman of the Federal Reserve, where he would be able to act independently. Burns expanded the currency supply, which gave the economy a boost. When the Penn Central Railroad collapsed in 1970, Burns proclaimed that the Federal Reserve would provide sufficient funds to prevent a panic, and his calm behavior in this crisis not only enhanced his reputation but made him one of the most powerful men in the country insofar as economic matters were concerned. Burns continued to support wage and price guidelines and was credited with having helped prompt President Nixon to impose them in 1971. That same year he expanded the money supply considerably, so that by Election Day 1972 the economy was growing while prices were being contained, making the economy appear quite healthy and helping Nixon win a second term. Burns was accused of having used the Federal Reserve for political purposes, which he vehemently denied.
Burns served as chairman of the Federal Reserve until the conclusion of his term in 1978, at which time he was not reappointed by Democratic President Jimmy Carter. This caused the dollar to plummet and shook the new administration. Burns left government to take a post at the American Enterprise Institute and also lectured and wrote, becoming an elder statesman of moderate economics. During that time he published Reflections of an Economic Policy Maker (1978).
In 1981 President Ronald Reagan named Burns ambassador to the Federal Republic of Germany. He took the post during a time of strong anti-American sentiment in Europe, because of U.S. deployment of cruise and Pershing missiles. Reagan proved wise in his decision to appoint Burns, who was well-respected throughout Europe for his past performance in economic matters. He was able to quell European concerns, arriving at an agreement with the West German foreign minister that significantly eased tensions within NATO. Burns served as Ambassador to Germany for four years, then returned to the American Economic Institute to pursue writing and teaching.
Arthur Burns died in Baltimore, Maryland on June 26, 1987, leaving a tremendous legacy. Not only did his economic policies dramatically influence the American and world economies, he also inspired people, such as his famous pupil, Milton Friedman. He was clearly an approachable man, being described by one reporter as "a small-town druggist circa 1910."
There is no biography of Arthur Burns. A discussion and analysis of his life and ideas may be found in Robert Sobel, The Worldly Economists (1980); William Breit and Roger Ransom, The Academic Scribblers (1971); Edward Flash, Jr., Economic Advice and Presidential Leadership (1965); and Herbert Stein, The Fiscal Revolution in America (1969). For his work during the Eisenhower administration see Sherman Adams, Firsthand Report: The Story of the Eisenhower Administration (1961), while William Safire, Before the Fall contains material on his work during the Nixon administration. Among the more accessible works by Burns himself is Reflections on an Economic Policy Maker (1978), which is a collection of his papers and speeches through the years. Also see Wyatt C. Wells, Economist in an Uncertain World: Arthur F. Burns and the Federal Reserve, 1970-78, Columbia University Press, 1994. □
"Arthur Burns." Encyclopedia of World Biography. . Encyclopedia.com. (July 25, 2017). http://www.encyclopedia.com/history/encyclopedias-almanacs-transcripts-and-maps/arthur-burns
"Arthur Burns." Encyclopedia of World Biography. . Retrieved July 25, 2017 from Encyclopedia.com: http://www.encyclopedia.com/history/encyclopedias-almanacs-transcripts-and-maps/arthur-burns
Burns, Arthur Frank
Arthur Frank Burns, 1904–87, American economist, b. Austria, grad. Columbia Univ. (A.B., 1925; A.M., 1925; Ph.D., 1934). He taught economics at Rutgers Univ. (1927–44), and then joined (1944) the faculty of Columbia, where he became John Bates Clark professor of economics in 1959. A member of the National Bureau of Economic Research from 1933, he was director of research (1945–53) and president (1957–67) of that organization. Under President Eisenhower, Burns was chairman (1953–56) of the Council of Economic Advisers. He returned to government service as economic counselor (1969–70) to President Nixon. As chairman (1970–78) of the board of governors of the Federal Reserve System, he advocated fiscal and monetary restraint. He later (1981–85) served as ambassador to West Germany.
"Burns, Arthur Frank." The Columbia Encyclopedia, 6th ed.. . Encyclopedia.com. (July 25, 2017). http://www.encyclopedia.com/reference/encyclopedias-almanacs-transcripts-and-maps/burns-arthur-frank
"Burns, Arthur Frank." The Columbia Encyclopedia, 6th ed.. . Retrieved July 25, 2017 from Encyclopedia.com: http://www.encyclopedia.com/reference/encyclopedias-almanacs-transcripts-and-maps/burns-arthur-frank