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Arthur F. Burns

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Arthur F. Burns
Born
Arthur Frank Burns

Template:Birth date
Stanislau, Austrian Poland (now Ivano-Frankivsk, Ukraine)
DiedJune 26, 1987(1987-06-26) (aged 83)
Baltimore, Maryland, U.S.
Occupation(s)Economist, diplomat
Years active1927–1985
Known for10th Chairman of the Federal Reserve (1970–1978); Counselor to the President (1969); U.S. Ambassador to West Germany (1981–1985)

Arthur Frank Burns (April 27, 1904 – June 26, 1987) was a distinguished American economist and diplomat who held the position of the 10th Chairman of the Federal Reserve from 1970 until 1978. Prior to this, he led the Council of Economic Advisers during President Dwight D. Eisenhower's administration from 1953 to 1956 and was appointed as the inaugural Counselor to the President under Richard Nixon in 1969. Burns also contributed significantly to academia through his roles at Rutgers University, Columbia University, and the National Bureau of Economic Research.

President Nixon selected Burns to replace William McChesney Martin as Federal Reserve Chairman and later renominated him for a second term. His tenure concluded in 1978 when G. William Miller succeeded him. Subsequently, President Ronald Reagan designated Burns as the United States Ambassador to West Germany, a post he occupied from 1981 to 1985.

Early life

Born in Stanislau (present-day Ivano-Frankivsk) within Austrian Poland (Galicia), in 1904, Burns was the son of Polish-Jewish parents Sarah Juran and Nathan Burnseig, who worked as a house painter. Exhibiting remarkable intellectual talents early on, he translated portions of the Talmud into Polish and Russian by age six and engaged in debates on socialism by nine years old. In 1914, his family emigrated to Bayonne, New Jersey, where he later completed his education at Bayonne High School.

At seventeen, Burns secured a scholarship to attend Columbia University, balancing multiple jobs while earning both his B.A. and M.A. degrees by 1925, graduating with honors as a member of Phi Beta Kappa.

Rutgers University

Burns commenced his teaching career in economics at Rutgers University in 1927 and remained there until 1944. During this period, alongside Homer Jones, he played a pivotal role in shaping leading economists such as Milton Friedman, persuading Friedman that contemporary economic theory could effectively address the challenges posed by the Great Depression.

In 1930, Burns married Helen Bernstein, who was employed as an educator.

While serving at Rutgers, he undertook graduate studies at Columbia University and became closely associated with Wesley Clair Mitchell, founder of the National Bureau of Economic Research. In 1933, Burns joined the NBER to focus on business cycle research and earned his Ph.D. in economics from Columbia in 1934.

Recognized for his statistical expertise, Burns was named a Fellow of the American Statistical Association in 1943. He departed Rutgers in 1944 and assumed the role of research director at NBER in 1945 following Mitchell’s retirement.

Columbia University

In 1945, Burns accepted a professorship at Columbia University and was appointed to the John Bates Clark endowed chair in 1959. During his time there, despite a longstanding acquaintance with economist Murray Rothbard, Burns declined approval of Rothbard's thesis on the Panic of 1819.

His academic excellence earned him election to both the American Academy of Arts and Sciences and the American Philosophical Society.

National Bureau of Economic Research

Beginning in 1933, Burns dedicated himself to quantifying and analyzing business cycles, focusing on periods of economic growth and contraction. His initial significant work appeared in 1934 with Production Trends in the United States Since 1870.

Burns collaborated extensively with Wesley Clair Mitchell and succeeded him as NBER’s research director from 1945 through 1953. Together they authored Measuring Business Cycles in 1946, which established NBER’s foundational methodology for studying business cycles. Notably, Burns initiated the formal academic practice of dating recessions—a tradition maintained today by NBER’s business cycle dating committee.

In the late 1940s, Burns brought economist Milton Friedman into NBER to investigate monetary influences on business cycles. The macroeconomic perspectives developed by Burns significantly informed Friedman and Anna Schwartz’s influential publication A Monetary History of the United States, 1867–1960.

Counselor to the President

In 1969, Burns was named Counselor to the President under Richard Nixon, a cabinet-level role intended as a transitional appointment. In this capacity, he provided guidance on economic matters before assuming the position of Chair of the Federal Reserve later that year. Upon his Federal Reserve appointment, he stepped down from the Nixon administration, taking over from William McChesney Martin.

Federal Reserve Chairman

Burns held the chairmanship of the Federal Reserve from February 1970 until January 1978. Throughout his tenure, he faced criticism for allowing political considerations to influence monetary policy and for endorsing the then-common belief that unemployment should be maintained near 4 percent.

During Nixon’s 1959–1960 presidential bid, the Federal Reserve, led by Chairman William McChesney Martin, implemented tighter monetary policies that contributed to a recession by April 1960. Nixon later attributed his electoral loss to these actions. Burns’s rapport with Nixon was tense; when Burns resisted political interference, adverse media reports and legislative pressures undermined the Fed’s autonomy. His personal diary revealed Nixon’s insistence on projecting positive economic forecasts despite unfavorable data.

This era experienced marked inflationary pressures. Nixon attempted to curb inflation through wage and price controls, while Burns’s Fed simultaneously expanded the money supply. Although Burns opposed Nixon’s decision to close the "gold window," he publicly backed the administration’s initiatives. Following Nixon’s 1972 reelection and amid the oil crises of 1973, price controls failed to contain inflation, which surged to 12.3% by 1974.

Burns argued that public tolerance for unemployment near 6% was insufficient to manage inflation effectively, asserting that monetary policy alone could not resolve the issue and that income controls were necessary. During his leadership, consumer price inflation climbed from approximately 6% in early 1970 to beyond 12% in late 1974 before falling below 7% by 1976, averaging around 9% annually. The economy faced multiple challenges, including oil shocks and substantial federal deficits tied to Vietnam War expenditures and Great Society programs.

Following the 1972 Watergate burglary, investigators discovered burglars in possession of sequentially numbered $100 bills linked to the Federal Reserve. Burns impeded Congressional investigations and forbade internal discussions regarding these findings within Fed offices.

In recognition of his public service, Burns was honored in 1976 with the U.S. Senator John Heinz Award for Greatest Public Service by an Elected or Appointed Official from Jefferson Awards.

American Enterprise Institute

After concluding his Federal Reserve role, Burns joined the American Enterprise Institute in 1978 at the invitation of then-president William Baroody. At AEI, he continued to shape economic policy debates.

Ambassador to West Germany

Under President Ronald Reagan's administration, Burns was appointed as United States Ambassador to West Germany, serving in Bonn from June 1981 through May 1985.

Death

Burns passed away on June 26, 1987, at Johns Hopkins Hospital located in Baltimore, Maryland.

Criticism

Conservative economist Bruce Bartlett has criticized Burns’s tenure as Fed Chairman, highlighting that inflationary problems beginning in 1970 took more than ten years to resolve. Bartlett contends that Burns either failed to recognize his mistakes due to commitment to Keynesian principles or was constrained by political pressures exerted by Nixon—both interpretations reflecting negatively on his leadership effectiveness. This period is now regarded as a cautionary tale illustrating economic policy failures driven by short-term political objectives.

The statement "The ultimate purpose of an economy is to produce more consumer goods" is frequently misattributed to Burns; however, no documentation supports this claim, and he consistently promoted thriftiness and fiscal discipline throughout his career.

Selected publications

  • Burns, Arthur Frank; Mitchell, Wesley C., Measuring Business Cycles, National Bureau of Economic Research (Studies in Business Cycles), 1946
  • Burns, Arthur Frank, Wesley Clair Mitchell: The Economic Scientist. New York: National Bureau of Economic Research, 1952
  • Burns, Arthur Frank, The Frontiers of Economic Knowledge: Essays, Princeton University Press, 1954
  • Burns, Arthur Frank, Prosperity Without Inflation, Buffalo, Smith, Keynes & Marshall; distributed by Doubleday, Garden City, N.Y., 1958
  • Burns, Arthur Frank, et al., The Anguish of Central Banking, Per Jacobsson Foundation, 1979

See also

References

  • Abrams, Burton A. "How Richard Nixon Pressured Arthur Burns: Evidence from the Nixon Tapes," Journal of Economic Perspectives, Fall 2006, 20(4): 177–188.
  • Burns, Arthur F. Inside the Nixon Administration: The Secret Diary of Arthur Burns, 1969–1974 (University Press of Kansas, 2010); reviewed by Doug French at Mises Institute.
  • Burns, Arthur F. Reflections of an Economic Policy Maker: Speeches and Congressional Statements: 1969–1978 (AEI Studies no. 217; American Enterprise Inst., 1978); reviewed by Paul W. McCracken in Journal of Economic Literature, 1980, 18(2): 579–585.
  • Burns, Arthur F. "Progress Towards Economic Stability," American Economic Review, 1960, 50(1): 1–19. Covers economic expansion, corporate growth, government subsidies, consumer spending, and industrial development between 1929 and 1959.
  • Engelbourg, Saul. "The Council of Economic Advisers and the Recession of 1953–1954," Business History Review, 1980, 54(2): 192–214. Discusses the Keynesian policies of the CEA under Eisenhower with input from Burns and Jacoby.
  • Hetzel, Robert L. "Arthur Burns and Inflation," Economic Quarterly, Winter 1998, 84(1): 21–44, Federal Reserve Bank of Richmond.
  • Meltzer, Allan H. A History of the Federal Reserve – Volume 2: 1951–1986, University of Chicago Press, 2009; Volume 1 pages 486–682 and Volume 2 pages 683–1005.
  • Throckmorton, H. Bruce. "The Moral Suasion of Arthur F. Burns: 1970–1977," Essays in Economic and Business History, 1991, 9:111–121. Analyzes Burns's congressional testimony regarding inflation and interest rates.
  • Wells, Wyatt C. Economist in an Uncertain World: Arthur F. Burns and the Federal Reserve, 1970–1978, Columbia University Press, 1994.

External links

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