Per Jacobsson (1894–1963), Swedish monetary economist and international public servant, was for more than forty years a leading spokesman for policies of monetary stability and international financial cooperation. The height of his influence was reached during a richly creative period as Managing Director of the International Monetary Fund from November 1956 until his death in May 1963.
Prior to 1956 Jacobsson served for 25 years as Economic Adviser to the Bank for International Settlements in Basel, Switzerland. Here he was an unofficial and confidential counselor to many of the world’s leading central bankers and statesmen. His official responsibility centered on the preparation of the bank’s Annual Report. First published in 1931, the report, under his guidance, became known as the most influential diagnosis of the principal events and forces at work in the world’s economy to appear anywhere. Earlier, Jacobsson had served from 1920 to 1928 with the economic and financial section of the League of Nations Secretariat in Geneva, working primarily in the field of public finance. He spent the years 1928–1931 in Sweden, first in public service, and a brief period, 1930–1931, in private business.
Before leaving Sweden in 1920, he had worked and studied, both during the formative stages of his intellectual development at Uppsala University and in the years thereafter, with a remarkable group of Swedish economists, notably Gustav Cassel, David Davidson, Eli Heckscher, and Knut Wicksell. Their emphasis on the influence of monetary factors on the general level of economic activity, and their highly developed analysis of the functions of the rate of interest in influencing investment flows, were identifying characteristics of Jacobsson’s own economic thought and writing. His firm grasp of the fundamentals of the Swedish approach may also account, in part, for his ability to evaluate and find appropriate uses for the doctrines developed by Keynes: he avoided both the impassioned rejection and uncritical acceptance which were so common among various of Jacobsson’s contemporaries in Europe and the United States.
Although Jacobsson was a prolific writer, highly articulate in four languages (Swedish, English, German, and French), his impact on political economy was greater through his direct influence upon men and events than through his published work. To him as well as to Keynes, economics was a method of thought, not a single body of doctrine. His ability to grasp the doctrine that was suited to the needs of the times, combined with the ebullient good humor with which he presented his views, assured him access to the financial and governmental leaders who were working on the important economic problems confronting nations or the world economy as a whole, and he communicated the essence of his appraisals with telling clarity and directness.
Among his striking predictions that were of special significance for the evolution of public policy was the daring forecast in 1925 that interest rates would soon begin a major decline in the principal countries of the West (1925). After World War II, he was also one of the first to see that massive postwar demand would preclude the postwar depression expected in the United States and elsewhere (Bank for International Settlements 1944, esp. p. 23). In a 1950 lecture, Monetary Improvements in Europe and Problems of a Return to Convertibility (1950, pp. 37–43), he rejected the hypothesis of a continuing dollar shortage and indicated the range of fundamental problems that the end of the dollar shortage would produce.
Jacobsson assumed his duties as Managing Director of the International Monetary Fund in November 1956. Shortly thereafter, a large United Kingdom credit from the Fund was instrumental in restoring financial confidence shaken by the Suez crisis. Apart from meeting the immediate financial strains which that crisis produced for several countries, Jacobsson concentrated his attention on containing the continuing world-wide forces of inflation. In that effort, he strongly supported the effective application of the classical doctrines of sharply restrictive monetary policy and high and rising rates of interest in order to check internal expansion and re-establish balance in a country’s external accounts. But as the United States achieved reasonable price stability from 1958 on and yet experienced larger and larger balance of payments deficits while unemployment remained unusually high, Jacobsson saw this as an even greater economic problem for the world at the time. With characteristic flexibility, he drew heavily on the doctrines that Keynes had developed during the great depression of the 1930s to help find ways to resolve this new paradox of the 1960s. He stressed the need for greater reliance on fiscal policy and specifically for tax reduction, even though large budget deficits were still continuing, while also urging careful attention to wage costs and the active development of incomes policies.
His activities at the Fund are best described by listing the series of tests which the international financial system met and overcame during the years he served there. For example, on two occasions, in 1957 and 1961, the Fund took a leading part in operations that helped stabilize the position of the pound sterling. In 1962 the Fund provided the principal counterforce that quelled the speculative uncertainties threatening the Canadian dollar. Earlier, in 1958, Jacobsson was convinced, when many others were doubtful, that France was ready for monetary stability. With daring and initiative he led the Fund to its decision to assist France through rigorous application of the classic approach of monetary stability and budgetary restraint. The resulting stabilization of the franc proved to be the major prerequisite for the widespread restoration of European currency convertibility that occurred at the end of 1958.
At the same time that the financial resources of the Fund were substantially expanded to cope more adequately with pressures on the world’s leading currencies, Jacobsson also continued to explore ways in which the Fund could most effectively promote the growth and financial stability of the world’s less developed nations. His last major effort, in 1963, led to the Fund’s decision on “compensatory financing of export fluctuations,” by which a new facility was provided for members, particularly for those producing primary materials, to be used at times when their export earnings were adversely affected by a decline in prices and sales.
Jacobsson combined, in unusual measure, a keen analytic faculty with a highly developed sense of what was possible and practical in the financial affairs of nations. He became the spokesman and the conscience for a monetary system that would be able to promote the orderly growth of the world economy.
Robert V. Roosa
1925 The Rate of Interest: A Forecast. Economist 100: 441–442, 491–492, 529–530, 587–588. → Unsigned articles written by Per Jacobsson as a correspondent.
1950 Monetary Improvements in Europe and Problems of a Return to Convertibility. Cairo: National Bank of Egypt.
1958 Some Monetary Problems: International and National. Basle Centre for Economic and Financial Research, Publications, Series B, No. 4. Oxford Univ. Press.
1959 Towards a Modern Monetary Standard. Univ. of London.
1961 The Market Economy in the World of Today. American Philosophical Society, Memoirs, Vol. 55. Philadelphia: The Society.
1963 The Role of Money in a Dynamic Economy. New York Univ., Graduate School of Business Administration.
1964 International Monetary Problems, 1957–1963: Selected Speeches. International Monetary Fund, Monograph Series, No. 3. Washington: The Fund. → Published posthumously.
Bank for International Settlements 1944 Annual Report of the President, Fourteenth. Basel: The Bank. → See especially Per Jacobsson’s opinion on page 23.
Emminger, Otmar 1963 Per Jacobsson in Memoriam (1894–1963). Weltwirtschaftliches Archiv 91:5–14.
Montgomery, Arthur 1963 Per Jacobsson och IMF. Ekonomisk revy 20:345–353.
Sweden, Statens Krigsberedskapskomission 1918 Betdnkande: Part 1. Stockholm: Statens Krigsberedskapskomission. → See especially pages 55–143.