“subtract your age from 100, and that is the percentage you should have in equities.”
timesonline.co.uk
Obituaries
Charles Kindleberger II
Economist who helped to devise the Marshall Plan and advised on how to invest when facing death
Charles Kindleberger was one of the young American academic economists who helped to devise the Marshall Plan for American aid to Europe after the Second World War. He taught at the Massachusetts Institute of Technology and published many influential works on economic history. Generations of business-school graduates were brought up on his entertaining history of financial crises from the Dutch tulip mania of the 17th century to the Japanese real-estate boom and bust of the 1970s, the classic manias, panics and crashes.
Charles Poor Kindleberger was educated at Kent boarding school in New England and at the University of Pennsylvania. He finished his doctorate in economics at Columbia in the depths of the Depression, when there were no jobs going for academic economists. Instead he went to work for the federal Government, first for the Treasury and then for the Federal Reserve Bank of New York.
A conservative columnist, George Sokolsky, who at one point picked up the fact that Kindleberger had worked for Harry Dexter White and another official accused of left-wing associations, jumped to the conclusion that he was sent to Germany at the end of the war by the communists to carry out the Morgenthau Plan for reducing the German economy to a pre-industrial, agrarian one.
In reality, Kindleberger reached Germany by a more creditable route. In late 1938 the Bank of International Settlements in Basle was looking for a young American economist. Kindleberger, who was newly married, decided, naively, that it would be fun to spend some time in Europe. The fall of Czechoslovakia woke him up, and after the fall of Paris he thought “either the war would be short and the wrong people would win, or it would be long and Europe would be a poor place to be”.
He worked for a while for Alvin Hansen, the champion of Keynes in the United States, on the joint economic commission between the US and Canada, and on the lend-lease agreement with Britain.
When America entered the Second World War Kindleberger tried to get a commission in the US Navy, but when he found he would be in a desk job, he joined the Office of Strategic Services (OSS), the precursor of the CIA. It was not, he explained later, “hokey-pokey, not the fancy spying, but simple straight analysis”. It was a time when instant experts were being created, and Kindelberger was attached to the US Twelfth Army Group, under General Omar N. Bradley, advising on the targets which might most usefully be attacked by the bombers attached to the group. At one point he went to a prisoner-of-war camp and found that the interrogators were only too glad to be asking interesting questions about how German railroads were running, instead of just asking the prisoners their name and number.
Kindelberger saw the Nordhausen concentration camp with his own eyes, but he was almost equally horrified when the army took two local mayors and their wives to see the camp, and they went home and committed suicide. He remained moved by the issue. It made him determined not to be sanctimonious about the Germans. He disapproved of the rule against “fraternising”. In the long run, he said: “We are going to have to treat them as human beings, and we are all guilty.”
When the war ended, Kindleberger was the head of the State Department’s division of German and Austrian affairs. When George Catlett Marshall, the Secretary of State, announced his plan, Kindleberger was made secretary of the State Department’s committee, and worked for four years estimating the needs of the 16 European countries who accepted American aid.
He worked closely with Will Clayton, the former Texas commodities trader who went to Europe to explain the plan and helped to sell it to Congress. As an economist he was irked by the way the Congress made “counterpart” funds — balances accumulated by selling US goods in local currency — a source of money for junketing.
Once Congress had approved the Marshall plan, Kindleberger moved to MIT, where he remained for the next 33 years. He frequently served as a consultant to the US Treasury and the Federal Reserve, and in 1985 he was president of the American Economic Association. In 1967 and 1968 he took leave to teach at the black colleges of the Atlanta University Centre.
He was a prodigious worker who published 30 books, 29 of them after he went to MIT in 1950. His interests evolved from foreign exchange and international trade to economic and financial history. He came to the view that markets had to be regulated by “leadership”, such as had been provided by Britain in the 19th century and the United States in the 20th.
He published The World in Depression, a history of the great slump of the 1930s. In 1978 came Manias, Panics and Crises, and in 1984 he published A Financial History of Western Europe, from the 9th to the 19th century.
He retired to Waltham, Massachusetts, where he watched with amusement as the dot-com markets followed in the wake of the other investment crazes from a tulip mania on. “I’m ashamed to say I enjoy the decline in the stock market,” he told a Wall Street Journal reporter at the age of 91. “It is what we call Schadenfreude, a joy in the troubles of others.”
Kindleberger’s own savings, he said, were in certificates of deposit, money-market funds and bonds. The collapse of the markets had helped sales of his book. In November he wrote an essay on how to invest when you are 90 and contemplating death. As you get older, he told the Journal reporter, it makes sense to become more risk-averse because there is less time to ride out market volatility. His advice was to “subtract your age from 100, and that is the percentage you should have in equities.”
Kindleberger said that he liked to go and talk to his friend John Kenneth Galbraith, who was a couple of years older than him, and was the author of the classsic study of the 1929 crash. What did they talk about? “We all love talking about Enron.”
Kindleberger’s wife, Sarah, predeceased him. He is survived by four children.
Charles Kindleberger II, economist, was born on October 10, 1910. He died on July 7, 2003, aged 92. |
