Obituary: Walter S. Salant

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The Independent Culture
WALTER S. SALANT was an economist who helped bring the message of the British economist John Maynard Keynes's The General Theory of Employment, Interest and Money to the United States, before its publication in 1936. In it Keynes theorised that increased government spending and tax cuts could pull industrialised economies out of the Depression.

A graduate of Harvard University in 1933, he spent two years at Cambridge University, 1933-34, where he was a research student in the Keynes seminar, along with Robert Bryce, who later became deputy minister of finance in Canada, Lorie Tarshis, another Canadian, who became a professor at Stanford University, V.K.R.V. Rao, later of the Delhi School of Economics, Henry H. Villard, later of City College in New York, and Alec Cairncross, who went on to a long and illustrious career in British government. In his recent, posthumously published, autobiography, Cairncross writes that Salant was among his closest friends, at Cambridge and for the rest of their lives.

On returning to Harvard for further study, Salant communicated the Keynesian analysis to a host of brilliant graduate students in economics - Paul A. Samuelson and James Tobin, who were later awarded the Nobel Prize in economic science, Richard Musgrave, Paul Sweezy, Emile Despres, whom he had known in New York as a boy, Robert Bryce and others in the seminar in money and banking run by Alvin H. Hansen and John H. Williams, the latter a half-time Harvard appointment who was also vice-president for economic research at the Federal Reserve Bank of New York.

Seven of the group wrote a book in 1938 entitled An Economic Program for American Democracy, described as a "Keynesian manifesto", which urged policies of government spending to carry the United States out of the Depression. Two of the group, on leave at Harvard from official positions, contributed to the effort but did not sign.

Salant left Harvard in 1936, and worked in a series of government offices in Washington: the Treasury Department, the Securities and Exchange Commission, the Commerce Department and the Office of Price Administration, transferring after the passage of the Full Employment Act of 1946 - a Keynesian product - to the Council of Economic Advisers, set up to provide advice to the US President.

When President Harry S. Truman established three committees to judge whether the United States had the resources, the productive capacity to carry through the Economic Recovery Program, popularly known as the Marshall Plan, without inflation, Edwin Nourse, the chairman of the Council of Economic Advisers, was called on to undertake the macro-economic aspects of the program, with Salant contributing much of the Nourse report.

Salant spent the remainder of his career in international economics at the Brookings Institution, the Washington organisation conducting research into public policy, as senior fellow from 1954 to 1976. He worked with a distinguished group of economists, Kermit Gordon, Alice Rivlin, Arthur Okun, Herbert Stein, Charles Schultze and Joseph Pechman, most of whom served at some point on the Council of Economic Advisers or as director of the Bureau of the Budget. There Salant moved gradually into the international aspects of macro-economic policy. He was the author of a Brookings study in 1963, forecasting, without complete success, the balance of payments of the United States in 1968.

He wrote, with Emile Despres and me, a controversial article which appeared in The Economist in February 1966 entitled "The Dollar and World Liquidity - a minority view", which held that the balance of payments of the United States should be judged on another basis than that of most countries. The United States served as a bank, rather than as a normal manufacturing or commercial company - and could run small deficits of $2bn to $4bn year after year which provided liquidity: additions to short-term dollar balances, which the rest of the world needed.

Salant's other publications include World-wide Inflation: theory and recent experience (1977) and European Monetary Unification and its Meaning for the United States (1973).

At the Brookings Institution, Salant took the role of mentor to the younger staff, according to Alice Rivlin, who is now vice-chairman of the Board of Governors of the Federal Reserve System. From 1956 to 1958 he served on the Board of Editors of the American Economic Association.

Charles P. Kindleberger

Walter S. Salant, economist: born New York 24 October 1911; economist, National Council of Economic Advisers, Executive Office of the President 1946-52; consultant, economic and finance division, Nato 1952-53; Senior Fellow, Brookings Institution 1954-76; married 1939 Edna Goldstein (two sons); died Washington DC 30 April 1999.