Shultz, George Pratt

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SHULTZ, George Pratt

(b. 13 December 1920 in New York City), politician and statesman who served as U.S. Secretary of Labor (1969–1970), first director of the Office of Management and Budget (1970–1972), Secretary of the Treasury (May 1972–May 1974), and Secretary of State (July 1982–January 1989).

Shultz is the only child of Birl E. Shultz, founder and director of the New York Stock Exchange Institute, and Margaret Lennox (Pratt) Shultz. He grew up in Englewood, New Jersey, and attended a private school in Windsor, Connecticut. Shultz received his bachelor degree cum laude in economics from Princeton University in 1942. Later that year Shultz enlisted in the U.S. Marine Corps and served as an artillery officer in the Pacific theater through 1945, earning the rank of captain. On 16 February 1946 he married Helena Marie O'Brien, with whom he had five children. After his service, he earned his Ph.D. in industrial economics from the Massachusetts Institute of Technology (MIT) in 1949.

Shultz taught economics at MIT until the then little known University of Chicago Graduate School of Business (GSB) hired him in 1957 as a professor of industrial relations. Shultz served in the first of his government posts when he was appointed as a senior staff economist to President Dwight Eisenhower's Council of Economic Advisors in 1957. In 1962 Shultz was appointed dean of the GSB and served until 1968. While at Chicago, his fellow economist Milton Friedman's monetarism theories greatly influenced Shultz. Later, Friedman's theories and Shultz's application of them were crucial to the economic policies of President Richard M. Nixon.

Shultz was involved as both a writer and editor for several books and articles on industrial and labor relations during his tenure at Chicago, including Strategies for the Displaced Worker: Confronting Economic Change (1966), co-written with Arnold R. Weber. The material for the 1961 book Management Organization and the Computer, edited with T. A. Whisler, came from the proceedings of a 1959 seminar sponsored by GSB and the McKinsey Foundation. Shultz described this work as a "wake-up call" on the coming paradigm shift in management practices that technology would cause. "But no one paid any attention," recalled Shultz. Also, Guidelines, Informal Controls, and the Market Place: Policy Choices in a Full Employment Economy (1966), edited with Robert Z. Aliber, detailed a GSB conference in response to the growing trend of the executive branch to influence labor and industry by offering wage-price guidelines. Such guidelines and federally ordered "freezes" were Nixon's prescription for containing unemployment and inflation.

One of Shultz's personal accomplishments at GSB was the integration of the M.B.A. program. As dean, he worried about the absence of minority representation. Shultz visited many of the major African-American universities to find out why none of their students applied to GSB. "I was told that the school was too expensive," he later said, "and none of the candidates believed they'd be hired into management positions after graduation." Shultz then recruited several major corporations to underwrite fellowships that guaranteed summer jobs between the M.B.A.'s first and second years. "This was something of a breakthrough," said Shultz.

Shultz continued his personal research on labor market problems, specifically the effect of strikes on major industries. The period from 1963 to 1973 saw a marked rise in labor contract rejections, and unauthorized "wildcat" strikes reached a post–World War II high. Industry tried to contain wages, and union leaders struggled to overcome member apathy and the growth of racial and feminist activism within their ranks. The John F. Kennedy and Lyndon B. Johnson administrations practiced an interventionist policy by invoking the 1947 Taft-Hartley Act and declaring a strike a "national emergency" to compel the parties to the negotiating table. (The Taft-Hartley Act outlawed a "closed shop," where all employees must be union members; allowed the president to delay strikes by ordering a "cooling off" period; and restrained labors' political and economic power.) Shultz, however, believed that labor and management differences were best resolved when left alone. Political reality tested Shultz's academic theories once he was inside the Nixon White House.

Shultz garnered his secretary of labor post on 11 December 1968 by successfully heading up a Republican task force to develop economic proposals and recommendations for Nixon to implement if elected president. If Nixon's cabinet was colorless, then, according to Newsweek magazine, Shultz was "the grayest of the gray." Soft-spoken, physically stiff, and yet with Marine Corps discipline, Shultz was Nixon's choice for the difficult tasks, such as the Job Corp reorganization of 1969 and the settling of the postal workers' strike of 1970. Shultz had the respect of all for his principles, flexibility, and intelligence. Some even called him an "intellectual conglomerate."

As labor secretary, Shultz resolved the inherited 1968 international longshoreman strike. The Labor Department's eighty-day Taft-Hartley injunction, issued under Johnson, was about to expire. The national press corps asked Shultz, "Now, what are you going to do, Professor?" Nixon accepted Shultz's noninterventionist recommendation, and the parties soon settled. As he had at GSB, Shultz continued to work on racial equality. He effectively established goals for minority employment at federally subsidized construction sites, a program called the Philadelphia Plan. Moreover, he quietly ended the racially sensitive Charleston, South Carolina, hospital strike. Later Nixon appointed Shultz to chair the Cabinet Committee on School Desegregation, to ensure that school districts in the Deep South complied with federal regulations. Little did Shultz realize that Nixon's economic policy had a political objective: building a coalition of conservative white southerners and northern blue-collar workers by appealing to racial and cultural fears. Nixon saw the American Federation of Labor–Congress of Industrial Organizations (AFL-CIO) president George Meany and his union as a crucial ally in this plan. Shultz was Nixon's unofficial ambassador to the AFL-CIO.

From his post at the Labor Department, Shultz was Nixon's most trusted economic adviser. When Nixon created the Office of Management and Budget, he named Shultz its first director in the hope that he might run the economy from there. However, Shultz's Friedmanesque gradualist monetary policies exacted a political price as the economy slowed. Ever the team player, Shultz served the Nixon administration even though he opposed all three phases of the New Economic Policy of Nixon and Treasury Secretary John Connally. The policy included interventionist wage and price controls and involved Connally's support of Nixon's suspension of the Bretton Woods agreement that allowed the dollar's convertibility into gold, which Shultz philosophically opposed. Nonetheless, in May 1972, Nixon appointed Shultz as secretary of the treasury. Even as Nixon and Shultz tried to forestall the Great Recession that lasted into 1975, the Watergate scandal preoccupied Nixon. (Watergate was the name for the political scandal surrounding the break-in of the Democratic Party headquarters at the Watergate office complex, which was subsequently traced back to the White House and the Committee to Re-elect the President.) Shultz counseled the President to "tell all" about his participation, but in May 1974, William Simon replaced Shultz, who reentered the business community, becoming executive vice president of Bechtel Corporation in San Francisco.

Later, Shultz accepted another cabinet position when President Ronald Reagan replaced Alexander Haig with Shultz as secretary of state. Sworn into the cabinet on 16 July 1982, Shultz served until January 1989, becoming the only man ever to have held four cabinet-level posts. After his last stint of public service, Shultz returned to academia in January 1989 at Stanford University's Hoover Institution, where he was named the Thomas W. and Susan B. Ford Distinguished Fellow. Shultz also received the Presidential Medal of Freedom, the highest award given to a civilian, on 19 January 1989.

Shultz wrote a 1,184-page best-selling memoir, Turmoil and Triumph: My Years as Secretary of State (1993). Other accounts of Shultz's life and political career are in Dan Rather and Gary Paul Gates, The Palace Guard (1974); William Safire, Before the Fall: An Inside Look at the Pre-Watergate White House (1975); and Laurence I. Barrett, Gambling with History: Reagan in the White House (1983). See also Allen J. Matsuow, Nixon's Economy: Boom, Busts, Dollars, and Votes (1998). Articles about Shultz are in Time (5 July 1982), Newsweek (5 July 1982 and 7 Feb. 1983), the New Republic (15 Dec. 1986); the Economist (2 Apr. 1988 and 3 Dec. 1988), and Newsweek (31 May 1993).

Robert Vellani

George Pratt Shultz

views updated May 21 2018

George Pratt Shultz

George Pratt Shultz (born 1920), a labor and economics specialist, educator, author, businessman, and international negotiator, served under three U.S. presidents. He was the first director of the Office of Manpower and Budget and served as secretary of the Department of Labor, of the Department of the Treasury, and of the Department of State.

George P. Shultz was born in New York City on December 13, 1920, the only child of Birl E. and Margaret Lennox (Pratt) Shultz. He spent his childhood in Englewood, New Jersey, and attended private school in Windsor, Connecticut. He majored in economics at Princeton University, where he received a B.A. degree in 1942. During World War II he joined the United States Marine Corps, served in the Pacific arena, and advanced to the rank of captain. While in Hawaii he met Helena Maria O'Brien, an Army nurse. They were married on February 16, 1946, and had three daughters and two sons.

Shultz resumed his academic career by enrolling at the Massachusetts Institute of Technology in 1945. He earned his Ph.D. degree in 1949 within the program of industrial economics, specializing in the problems of labor relations, employment, and unemployment. Shultz stayed on at the university until 1957 to teach industrial relations. During this time period he began to serve on arbitration panels for labor-management conflicts, a role he was to enact many times over the next decade. He also served at the first of his many national government posts when he was appointed senior staff economist to President Dwight Eisenhower's Council of Economic Advisors.

In 1957 Shultz joined the University of Chicago Gruate School of Business, where he also taught industrial relations. He became dean of the school in 1962. Presidents John Kennedy and Lyndon Johnson appointed him to serve on several government task forces and committees related to labor-management and employment policies.

President Richard Nixon named Shultz to the post of secretary of labor on December 11, 1968. Although he advocated that the government not intervene in labor bargaining or strikes, circumstances thrust the secretary into many such disputes. One major crisis that forced his attention was the 1970 postal workers strike, which required sending the National Guard into New York City to sort the mail. During his term in office Shultz defended the Nixon administration's reluctance to pursue affirmative action programs aggressively and the administration's active campaign on union reform. He worked hard to keep wages from rising in both the private and public sectors.

After 18 months at the Labor Department, he accepted President Nixon's appointment to become the first director of the Office of Management and Budget (which replaced the Bureau of the Budget in a major administrative reorganization). In this position he continued to face problems of wage control and price freezes, as well as major private industry strikes.

In May 1972 Shultz again changed posts in the Nixon administration. He was appointed secretary of the treasury, where he became a key adviser to the president on matters of the federal debt and both domestic and international economic policies. On the domestic front, Shultz was involved in efforts to defeat the rising inflation of the early 1970s. On the international side, he travelled abroad many times to negotiate a multi-national "floating" currency system with exchange rates set by the marketplace and several trade agreements with the former Soviet Union (now the Russian Federation, comprised of 21 autonomous republics, 49 oblasts, and 6 krays). When the Organization of Petroleum Exporting Countries (OPEC) drastically increased oil prices after October 1973, causing rapid inflation, Shultz's call for an international rollback of prices went unheeded and he worked hard to stop the recession in the American economy.

Shultz resigned from government service in March 1974 and entered the business community. He became an executive vice president of the Bechtel Corporation, an international construction and engineering firm based in San Francisco. He later became president and a director of the Bechtel Group, Inc.

Nominated as the 60th secretary of state by President Ronald Reagan, Shultz was sworn in on July 16, 1982. As the nation's major adviser and negotiator of international affairs, Shultz was intimately involved with the important problems of the world. He sought plans to end conflicts in the Middle East and in Central America and to deal with international terrorism. As a member of the president's team, he supported a strong American defense program, including a space-based anti-missile defense system (the Strategic Defense Initiative, or Star Wars). He guided U.S. arms limitation talks with the Soviet Union. A constant international traveller, he attended President Reagan's meetings with Soviet leaders. His academic and labor arbitration background molded his approach to his work as secretary of state. He proved to be a thoughtful and careful operator and a firm believer in quiet diplomacy. He served as Secretary of State from 1982 to 1989, at which time he returned to the private sector as an educator (Stanford University's Hoover Institute and Graduate School of Business) and writer. His entire cabinet service spanned over twelve years and covered four separate cabinet posts (Secretary of State, Secretary of Labor, Secretary of Treasury, and Director of OMB.) He maintained a residence in Stanford, California.

Further Reading

Shultz authored a semi-autobiographical novel, Turmoil and Triumph: My Years as Secretary of State (1993), which was well reviewed. Accounts of his career during President Nixon's administration are in Dan Rather and Gary Paul Gates, ThePalace Guard (1974) and in William Safire, Before the Fall (1975). His early days in the Reagan administration are discussed in Laurence I. Barrett, Gambling With History: Reagan in the White House (1983). Shultz has written several works on economic policy and labor relations. One book that contains his insights and thoughts on economic policy issues and the government's role is George Shultz and Kenneth W. Dam, Economic Policy Beyond the Headlines (1978). □

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George Pratt Shultz