The End of the NRPB

Like many of President Roosevelt's New Deal institutions, the NRPB was highly controversial, strongly criticized by conservatives. For example, a Republican senator criticized the NRPB for accepting Hansen's fiscal spend­ing policies and for “fronting ‘a gigantic move to plan the new social order' in ‘this communistic program' aimed at invading ‘the domain of the sex life of our young people,' while ultimately aiming at ‘the complete destruction of all free enterprise.' ”100 In addition, there were widespread doubts about its role, for its work seemed to overlap considerably with that of other agencies.

The NRPB also became entangled in disputes between the Executive Branch and Congress, for it reported directly to the president, not to Congress. Quite apart from partisan opposition, which became stronger when the Republicans made gains in the 1942 elections, many in Congress took the view that they, not the president, should be making plans for after the war. It was also felt that Roosevelt had started postwar planning much too early, and that he should have waited at least until the outcome of the war had become clearer. In 1943, this criticism came to a head, and in June 1943, the decision was made to disband the NRPB, effective at the end of August.¹⁰¹

Beneath such disputes lay an ongoing hostility to the New Deal and to the idea that government should play a role in stimulating the economy. Merriam, Chase, and others associated with the NRPB had been arguing, in widely read media such as The Nation and Harper’s magazine, that gov­ernment controls on economic activity should continue after the war, and critics took this as indicating a desire to change the nature of the American economy.¹⁰2 Senator Robert Taft argued that “a mixed economy really meant a fifty percent socialist economy,” an idea picked up by much of the press, who saw government as trying to control business.

The attacks on the NRPB, according to one historian, peaked after the publication of the Security, Work and Relief Policies and the Report for 1943, which were read as implying that the NRPB supported the idea of a con­stantly increasing national debt.¹⁰⁴ Taft claimed, in Congress, that “constant debt increase would lead to the ruin of our entire system and the destruction of all the values that constitute the past savings of the people of the United States.” An article in the New York Sun criticized the theory on which the NRPB policies were based:

the theories upon which they [the NRPB] base their fundamental cal­culations constitute such a radical departure from the established and accepted laws of economics as to suggest, subtly, the need for revising many of the basic axioms on which scientific progress has rested for centuries. It is just possible, for example, that Newton's head really fell up and hit the apple.¹⁰⁵

Taft's position was supported, in even stronger language, by Yale professor Fred Fairchild, who warned the Chamber of Commerce about the dangers of planning, in an address that was reported in the New York Times. He attacked not only planning but the idea that the United States could afford to play a major role in the world.

We must abandon illusory expedients for the control of business cycles, curtail military expenditures, balance the budget, avoid repudiation of the public debt and start reducing it. And we must abandon grandiose notions of America policing, feeding, reconstructing the world. We must give up the Atlantic Charter and all the things it proposes to have America do for the world, and do for nothing.

Control of business, Fairchild argued, was a fantastic or impossible illu- sion.¹⁰7 The vice president of the American Federation of Labor adopted a similar stance, claiming that corporation tax policy was being used “for the destruction or conversion of our society into some idealistic state.”¹⁰⁸

Fairchild's isolationist remarks pointed to the two very different views of America's role in the world that dominated public debate at this time and that stood in stark contrast with Samuelson's view, outlined two years earlier:

American humanitarian zeal will desire the feeding of the war- devastated populations of the world once the present conflict is ended, and the nation may want to assist in the rebuilding of destroyed productive plant upon which depends the provision of better standards of living for other peoples. In part the goods and services America provides to other areas of the world may be paid for with raw materials and services rendered us. On the other hand, it may be necessary to give away cer­tain goods and services without the expectation of reimbursement.¹⁰⁹

There is no evidence that Fairchild had these remarks in mind, or even that he had read them—they were in an internal memorandum. Insofar as he drew any distinctions between NRPB personnel, Fairchild’s target was Hansen, by then the leading public advocate of Keynesian policies and author of the controversial NRPB Pamphlet, After the War—Full Employment. However, Samuelson was aligned firmly with Hansen’s policies, was a contributor to Hansen’s major academic publication on the subject, and was the author of a pamphlet that, for all of its caution, was advocating essentially the same policies as Hansen had under virtually the same title.

The NRPB staff had carried on functioning through this period when the organization for which they worked was under attack. In March, Hagen wrote to Samuelson saying that he had an offer from the War Labor Board and that he was discussing a similar position with the Office of Strategic Services.¹¹⁰ He admitted that the situation facing the NRPB seemed to be improving and that Blaisdell was optimistic, but he was not convinced about the unit’s future, so he was likely to accept one of these two positions.

From a tactical point of view, it sometimes seems to me desirable sim­ply not to discuss the debt at all. In bringing it to explicit attention and analysis, unless we do succeed in convincing doubters, we may simply be turning the knife in the wound or waving a red flag before the bull. After all, the fear of the debt is largely irrational and logic is not always the best weapon in such a case.¹¹²

Thus, although he thought it would do a lot of good if published in the Atlantic or Readers Digest, he thought it might “come with bad grace from the Board which is already looked upon with suspicion in these matters.”

Members of Samuelson’s unit kept working until the very end. Toward the end of May, Samuelson received a memorandum on “liquid saving,”’ providing figures on how much of their savings businesses were holding as cash.¹¹³ On June io, Hagen sent a manuscript on “National Output at Full Employment in the United States in 1950” for transmission to Blaisdell. Recognizing that the NRPB would probably not be able to publish it, he asked permission to publish it elsewhere.¹¹ On July i, another member of the unit sent Samuelson a memorandum on British saving during the First World War that he had drafted the day before, with the remark, “It took a lot of discipline and courage to finish this memo, things being as they are. Mary was a real soldier, working while everyone else relaxed.”¹¹⁴

No sooner had the NRPB been disbanded than Samuelson began to receive inquiries about his availability to do similar work elsewhere.

Though Samuelson had spent only two days a week in Washington, for just two years, the experience was crucial to his development as an economist. He had been in charge of a large empirical project involving extensive data anal­ysis; through working with Altman, an economist with more experience in government work, he had gained experience in directing a project, recruiting staff, and trying to turn the results into a report that would stand up to criti­cism by people predisposed to challenge its conclusions.¹¹⁸ Through Hansen, he had been introduced to the work of other government departments and developed an extensive range of contacts that would have been difficult had he remained in Cambridge. He was also becoming more and more closely identified with Hansen and a set of internationalist and interventionist posi­tions on economic policy.

The failure of the NRPB prompted some soul-searching in an apparently unfinished and unpublished draft, “Post-war Planning as Seen by a Retired

h. It subsequently appeared in the American Economic Review, jointly written by Hagen, by then at the Federal Reserve, and Nora Kirkpatrick at the Office of Strategic Services.

Often in the wee-hours of the night, the theory of opportunity cost would rear its ugly head to remind him of the important cargo which his occupation of scarce space had displaced—to which his conscience had only the reply which is the last refuge of scoundrels, “If I don't use the Pullman space, some other post-war planner will.”¹²⁰

The pangs of guilt he felt also concerned the additional burdens his absence was placing on his colleagues back at MIT. He wrote of “sacrifices and har­rowing experiences,” such as the difficulty of finding hotel rooms and making train reservations, leaving implicit the comparison with those whose sacrifices and harrowing experiences were much less trivial. However, Washington did have its advantages: for a college professor “from the sticks,” it could seem “like a glorified post-graduate school, teeming with the gossip and cama­raderie typical of such institutions,” and it provided opportunities for “the economist's wife to carve out a career for herself."^121,j Samuelson must have felt doubly privileged spending part of his time in this atmosphere and the rest of it in Cambridge, where he had the luxury of being involved with MIT's graduate program and attending seminars at Harvard.

It is also possible to see feelings of guilt about the comfortable position of noncombatant economists in Samuelson's attempt to justify the high salaries that young economists could command. He argued that the agencies employ­ing them received a very high return per dollar spent.

The cream is skimmed so to speak from the knowledge of the con­sultant, so that even if he were to devote his remaining time to the Agency this would be subject to rapidly diminishing returns. More important the consultant neither sells nor does the Agency buy work­ing time, but rather a responsibility for a certain task or field of research. This responsibility is indivisible. It cannot be turned on and off. It weighs as heavily if one is working 5¼ days a month as under full time.¹²²

Samuelson claimed to be speaking without prejudice, on grounds that he had never been more than a part-time consultant. He then addressed what must have been the crucial issue, for him and others in his position.

It would be a grave misapprehension, almost a reversal of the actual facts of the case, to think that one anxious to avoid military service would do well to go to Washington. On the contrary, a check-up of the experience of recent economics majors would show that the Federal Agencies have leaned over backwards in their attitude toward selec­tive service. In no sense has the government service provided an escape from the draft.¹²³

The dubious logic of some of Samuelson’s arguments, and the attempt to leaven parts of the argument with humor, suggests that his conscience was struggling with his having had such a privileged position during the war. If it were written in 1943, it might help explain why, despite his fascination with economic problems, he became involved with technical military prob­lems relating to fire control. It was certainly important to him later on to be able to tell his correspondents that he was engaged in classified war work.