The Lure of Chicago

At the beginning of 1946, when Samuelson was working on his textbook, the University of Chicago made moves to recruit him.²⁵ One of Samuelson’s supporters at Chicago was Jacob Marschak, at the Cowles Commission, who had encouraged the university’s chancellor, Robert Hutchins, to recruit both him and Milton Friedman.

Samuelson has shown that all assumptions of rational economics—in whatever fields—can be reduced to that of stability. He applies powerful tools to test stability empirically. He thus revolutionized both “micro­economics” (theory of the firm and the household and of relative prices) and “macroeconomics” (theory of the economy as a whole), far tran­scending Hicks as offering a key to questions in all fields of economics.

He then explained to Hutchins why he was having difficulty in getting the department to support Samuelson. “Since macroeconomics—which is, after all, the foundation of all economic policy other than that of doing- nothing[—]is considered a Keynesian heresy,” he wrote, “I have a difficult stand in the department in defending this candidature.” Samuelson was seen by some colleagues as duplicating Lange, but this was no objection.

If, on the other hand, the opponents of Samuelson mean that he and Lange have similar creeds and that we must work on a well- equilibrated two-party (or two-sect) system, and if such non-scholarly, politician­like view should be at all granted—which I hope it won't—then it is only fair to say that at present the equilibrium is very harshly distorted in the other direction. As long as this distortion was due to the pres­ence of men of the reputation of Knight and Viner, and as long as the economic depression and the war experience did not show the short­comings of the old tradition, this “under-representation” of the new currents was all right. It is not all right any more.²⁸

If Marschak's favored option of appointing Samuelson and Friedman were pursued, this would not alter the political balance of the department, though he protested that the problem was the reluctance of most colleagues to take “detached, non-partisan, non-personal action.”

Marschak wrote to Samuelson requesting the materials he would need to convince his colleagues, though Samuelson had to explain that as he had only one copy of Foundations, he could not send that.²⁹ On March 20, the depart­ment chair, Theodore Schultz, invited Samuelson to visit the department and to talk with Chancellor Hutchins and President Colwell.³⁰ In the same post was a letter from Marschak, telling Samuelson how he was perceived by certain people at Chicago and what he needed to do on his visit.

The main difficulty to overcome is to convince people here that ι) you are not a passion-blinded partisan, 2) you are not self-centered, haughty or rude. I believe that at least some of the people here, both in the department and in the administration are fully aware of your importance as one of the very few living system-builders in econom­ics. While this can be easily proved by showing your published work, there remains the difficulty which I just mentioned.

In reply, Samuelson explained his attitude to his student days by quoting Wordsworth’s “Blessed was it in that dawn to be alive, / But to be young was very heaven!” and observing that in those days “Giants walked the earth.”³² However, though Stigler, Friedman, and Allen Wallis had been his idols in those days, he now found himself trying to convert his idols. This was pre­lude to a statement of his political philosophy.

As far as ends are concerned.. I haven’t changed much during the years.... I have still a bias in the direction of “individual freedom.” But more or less unwillingly, I have had to revise my notions concern­ing the interest-elasticity of motivated private investment, concerning the finality of James Mill’s views on effective demand, and on a num­ber of other technical matters.

On the strategic policy level, I have therefore had to change my judgments somewhat. And so here I stand today, possessed of a few fiscal notions which the Chamber of Commerce might consider suspi­cious and which the C.I.O. would consider reactionary.³³

In the possibly misguided hope that these statements of political philoso­phy would reassure him that Samuelson was no “passion-blinded partisan,” Marschak forwarded Samuelson’s letter to Hutchins to inform him about his personality and attitude.³⁴ Arrangements were made for Samuelson to visit Chicago during April 18—20.³⁵

Immediately after returning to Cambridge, Samuelson wrote to Schultz thanking him for a pleasant visit and implicitly signaling his interest in receiving an offer.³⁶ He thanked Marschak for making the visit possible, say­ing that his only regret was the lack of opportunity for scientific discussions, aside from an exciting conversation with Tjalling Koopmans, who had told him about some things the Cowles Commission was doing.

Naturally, even the contingent prospects of working with such a large and strong department of Economics is an exciting one. The only hesitation which I have arises from a natural reluctance to tear my roots from the Cambridge community, where opportunities with respect to research stimulus and teaching load, and total financial income have been so attractive. Indeed, the only circumstances under which I could, with conscience, consider leaving my present post— assuming that I would be honored by a call from Chicago—would be if I were convinced that the Chicago department, would in the years to come become prefminent as a world center for Economic study, and that I could make a harmonious and important contribution to that development.³⁷

The reference to harmony within the department, and to not wanting to put Marschak in an “uncomfortable position” by agitating for his appointment, makes it clear that he understood the tensions within the department.

However, no offer was forthcoming and there was not even any acknowl­edgment of his claim for travel expenses, until he wrote Schultz on June 6 to inquire whether his earlier letter had gone astray. Schultz apologized for the delay, explaining that he had wanted to wait until he could report a definite decision.³⁸ Given that the department dispersed during the summer, there was unlikely to be anything decided before the fall. In the midst of this process, Henry Simons, one of Samuelson’s teachers and the most prominent monetary economist in the Chicago department, died unexpectedly at the age of forty-six. On hearing the news, Samuelson wrote to Schultz to express his sympathy and his admiration for Simons. He suggested that Simons be commemorated by publishing several of his articles as a book.³⁹ By then, however, Schultz was in India and would not be back until the end of July.⁴⁰

When the Chicago department reassembled after the summer, there were further discussions of Samuelson, and on November ii, 1946, the deci­sion was made to offer Samuelson a position as associate professor, starting October i, 1947, at a salary of $7,500.⁴¹ Faced with the need to make a decision in his role as president, Colwell wrote to Hutchins asking about the opinion he had formed at the interview he had had with Samuelson.⁴² Hutchins had clearly formed a bad impression of Samuelson, for he sent a telegram to Colwell saying, “Samuelson is a vicious character with a high intelligence quotient.

In mid-November, Schultz made a trip to the East Coast, in the course of which he met Samuelson and explained Chicago's “long term interest in hav­ing you come to the University of Chicago as a colleague.”⁴⁴ He laid before Samuelson the opportunities that would be created for him at Chicago, and discussed possible other recruits, including Samuelson's Harvard friend Lloyd Metzler, whom Schultz had just invited for a second visit to Chicago. Koopmans, in consultation with Marschak, tried to persuade Samuelson by explaining why Chicago needed him and what it had to offer.

Chicago needs you because its present teaching does not pay sufficient attention to the problems of full employment, and more generally to the problems of relationships involving economic aggregates, which are especially your field of interest, and to which you have contributed so much.⁴⁵

However, the main reason for needing Samuelson was that his work would fit with what was going on at the Cowles Commission.

Chicago also needs you because the sharper mathematical formulation of economic theory which in your research interest has a complement in the sharper formulation of statistical procedures, and their adapta­tion to the economic application, in which particularly the Cowles Commission is engaged. I believe that the 2-hour conversation we had when you were here demonstrated a unity of purpose as well as a complementarity of efforts which makes me hope strongly that you will come to Chicago.^e

Koopmans gave samples of the work he was referring to and then explained in more detail why Samuelson was needed. They had made progress in their work on statistics, and this was causing them to make increased demands on economic theory.

Both in the research activity of the C.C., and in the teaching in the Department, there is at present a risk of hypertrophy of statistics.

e. This was the discussion Samuelson had described as “exciting” in his earlier letter to Marschak.

and to our urging the theorists to develop their results in such a way as to give a real foothold for econometric measurement of relationships.

Samuelson was the economic theorist most likely to engage with the statis­tical work they were doing, thereby rebalancing the activities of Chicago economists toward economic theory.

Against the enthusiasm of Marschak and Koopmans for Samuelson, there was strong opposition that now included Friedman, who had joined the department on September ι. On November 27, he wrote to George Stigler, blaming Paul Douglas for the decision to make Samuelson an offer.

The Samuelson matter was again forced to a head—by Douglas—& thanks mainly to his efforts we lost badly. The dept has voted to make Samuelson an offer. We don't know the end of the story. But whatever it is, I am very much afraid that it means we're lost. The Keynesians have the votes & the means to use them. Knight is bitter & says he will withdraw from active participation in the dept. [Lloyd] Mints, Gregg [Lewis], & I are very low about it.⁴⁷

This letter makes it very clear that it was Samuelson's alleged Keynesianism that upset those who were opposed to his appointment, and also that had Samuelson accepted the offer, he would have joined a very divided depart­ment in which feelings were running high between factions. Friedman may also have thought that Samuelson's appointment would reduce Stigler's chance of an offer, for Stigler was doing the rounds of top universities, hop­ing to find a position.¹⁸'¹"

By January, Schultz had heard nothing so he wrote to Samuelson, ask­ing him to set aside time to talk at the AEA meeting in Atlantic City later that month.⁴⁹ This elicited a letter from Samuelson, explaining in detail why he had decided not to accept the invitation. He accepted that Chicago had a much better economics department and that the intellectual stimula­tion he would receive from Knight and Marschak would be second to none. However, MIT was an ideal environment. It was sufficiently close to Harvard for his relationships there to be “symbiotic without, I trust, becoming para­sitic.”⁵⁰ Time, money and facilities for research were “virtually unlimited,” and because the graduate program was so small, he was able to enjoy teach­ing a wide variety of courses. The final aspect of MIT, which would no doubt be in stark contrast to what he would find in Chicago, was that “there is an

f. Later that year, Stigler moved to Columbia. atmosphere here of serenity and congeniality which is very enjoyable and very conducive to scholarly productiveness and balance.” He might have mentioned the strong support he was getting from President Compton when members of the MIT Corporation were attacking his textbook as being insuf­ficiently supportive of free markets.

Samuelson’s final reason was that being on the East Coast enabled him to engage in a greater variety of activities than if he were in Chicago, where his professional activities would be confined to the university.

I also have the feeling—perhaps I am wrong in this—that being upon the Eastern seaboard and not being limited by the University of Chicago form of professional contract, I shall find myself actively par­ticipating in more worthwhile outside consulting activities; activities, which have, to a potentially “narrow” theoretical economist, a value far beyond their pecuniary return; but which might gradually die out were it not for the pecuniary element to the transaction.⁵¹

He then partially retracted this, saying that it was a minor point and that the terms of the offer meant that he needed to pay little attention to the financial aspect of the decision.^g However, he added that he and Marion had settled in Cambridge and were reluctant to leave.

Despite this comprehensive case for not accepting Chicago’s offer, Schultz kept up the pressure on Samuelson, talking with him at the AEA and then writing to him with details of the housing situation in Chicago, including details of five houses and apartments, with analyses of what they would cost to purchase and to run. It appears that in his discussions with Schultz he had stressed the personal ties that kept him in Cambridge, for almost immediately after the meeting Paul Douglas wrote Samuelson, try­ing to reassure him that he would get a very warm welcome in Chicago. He described the stimulation he had received from having Samuelson, Jacob Mosak, and Gregg Lewis in his classes, but said that he was not just regarded as a former student of whom they were proud: he would come as an “honored colleague with whom it would be a pleasure and honor to be associated.” Though discussion in the department was sometimes “sharp and intense,” and occasionally on a personal level, Douglas wrote that he had “never known any real department politics to be played.”⁵² Roy Blough, whom Samuelson knew through consultancy at the U.S.

g. Chicago offered a contract that involved the university’s receiving a professor’s outside earnings. Given this, his remark indicates either that he had no idea of the royalties that his textbook would generate or he was being disingenuous.

Treasury just before he moved to Chicago, wrote to say he was distressed at Samuelson’s decision, asking him to reconsider.^53,h He reassured Samuelson about the neighborhood, saying that though he had anxieties about com­ing to Chicago, he and his wife had settled down well, liking the “informal society” better than other places they had lived. He praised what Schultz was doing for the department, reassuring him that there was complete independence about what everyone did.

Recognizing Samuelson’s reluctance to move, Schultz switched to offer­ing him a one-year visiting professorship, discussing it with Samuelson on the telephone on February 27. Samuelson then talked to Ralph Freeman, their dean, and Marion before writing to Schultz, the next day, to decline this offer, too. A year’s leave would come at the worst possible time for MIT, given the influx of returning veterans, and he and Marion had decided that, with two babies, one only a few weeks old, it was the wrong time to be considering a temporary move.⁵⁴ On the same day he also wrote Douglas, expressing his appreciation for what he had written, and saying how much he had enjoyed his classes.⁵⁵ His main reason for staying, he explained, was that he found his current environment “extremely pleasant and stimulating,” and given that few people are really content in their jobs, it seemed silly to tempt fate by moving.

Samuelson made it very clear to Douglas that ideological differences with other Chicago economists had not played any role in his decision.

Neither on the conscious (nor, I believe, subconscious) level did the fac­tor of my possible differences in policy viewpoints from, say Professor Knight, on such problems as the validity of the Savings-Investment analysis of unemployment, play a role in my decision. As you know, I have never been a shrinking violet. Moreover, it is only on the level of means rather than ends that I have to some degree altered my opin­ion in the last 10 years. And even on this level, our differences are not to be exaggerated. A little cross-breeding between Keynes and James Mill may produce something more viable than either.⁵⁶

Three days later, Samuelson received a letter from Killian saying that he had been promoted to full professor, with a salary of $7,500, with effect from ^ju^{[77] [78]y 1.i}

Schultz, however, was still not deterred and continued to put pressure on Samuelson. On March 4, he told him about three new positions they were going to fill, asking for advice on whom they might appoint, thereby mak­ing Chicago more attractive.⁵⁷ This caused Samuelson to change his mind, and he telephoned Schultz to accept the offer of a permanent position. On March 7 (Friday), Douglas wrote to say how delighted he was at this deci­sion.⁵⁸ Samuelson’s explanation for this change of heart was that after refus­ing Chicago's offer, he had regretted doing so.⁵⁹ However, it was evident to Marion and to his colleagues that he was uneasy with his decision, so they urged him to get away for a quiet weekend during which he could think it through.

The outcome was that on Tuesday, March 11, he wrote to Schultz saying that he had decided to remain at MIT, for the same “intangible non-profes- sional” reasons he had given when he turned down the job before. He apolo­gized profusely for the trouble and confusion he had caused, saying that he had “cut rather a sorry figure in this whole affair.” He was clearly acutely embarrassed. Shortly afterward, he and Marion purchased a new house in suburban Belmont, suitable for their growing family; it was a sign that they had decided to stay in Cambridge for good.

Though Samuelson’s reluctance to move was clearly the main reason for staying put, it cannot have hurt that on Monday Killian had written saying that, as evidence of MIT’s desire to support his work, they had approved an increase in his salary to $8,500, and that they would offer him a term’s leave of absence with full salary so that he could make that trip to Europe that he had been wanting. A month later, Killian wrote again to say that his salary from July ³ would be raised to $9,000.

Chicago was not the only other university interested in Samuelson. Early the following year, when Rupert Maclaurin heard rumors that Harvard had three vacancies and that they would be interested in recruiting Samuelson and another colleague, Richard Bissell, he felt sufficiently confident to write to Compton, “as far as I can observe from quite intimate association both Professors Samuelson and Bissell are happy here now and that only a major effort would persuade either of them to leave. I also believe that this is known at Harvard.”⁶⁰

And Schultz did not give up, continuing to harbor the hope that Samuelson might change his mind again. In November 1947, he wrote to Samuelson asking whether they might meet when he was in Washington or New York to “discuss afresh our genuine desire to have you become a col­league and a member of our faculty.”⁶¹ Samuelson was unable to meet Schultz in New York or Washington, but by then he had changed his mind on going to the AEA. He explained to Schultz that his whole family would be spending the Christmas holidays in Wisconsin, and they might get together if he were able to get to the AEA for a couple of days.⁶² Not knowing that Samuelson had turned down Chicago and that he could have moved to Harvard had he wished, chairmen of other departments sounded him out, incorrectly assum­ing that any economist at MIT would wish to move if the opportunity were to arise. In every case, his response was that he had no intention of leav­ing. Samuelson was now in a position where he could have moved to almost any economics department that had a vacancy, but he was firmly committed to MIT.^j