Saturday 4 February 2012

Marriner S. Eccles

Marriner S. Eccles during a press conference. [A]
"You create the source of wealth by labor and employment, which is the only source of wealth."

Born in Utah, Marriner Stoddard Eccles (1890-1977) was a Mormon and during his youth did missionary work in Scotland. By the age of 22, he was a millionaire and an economist.

By the age of 43, an established banker and industrialist, Eccles was summoned to a hearing before the Committee on Finance, US Senate (February 13 to 28, 1933).

He had also accumulated an impressive CV, which he proceeded to mention:

  1. President of First Security Corporation (Utah and Idaho);
  2. Vice president and treasurer of the Amalgamated Sugar Co;
  3. President of Sego Milk Products Co (Utah, Idaho, and California);
  4. President of the Utah Construction Co;
  5. President of the Stoddard Lumber Co (Oregon);
  6. Director of 2 chain retail concerns: the Anderson Lumber Co.; the Mountain States Implement Co (Utah and Idaho);
  7. Member of Utah governor's executive relief committee;
  8. Director of the Salt Lake branch of the Reconstruction Finance Corporation.
Eccles had a reason to mention this to the Committee: "I mention these contacts merely to rebut any assumption that my views are founded upon theory alone".

It would seem, in those days, to claim commercial success, if not wealth itself, could provide some credibility, especially if one held views that went against the mainstream of economics. At the time, such unconventional views were summarily dismissed as wishful thinking (not to mention as the delusions of a feverish and obtuse mind, or, worse, as charlatanism).

Evidently, things have changed enormously in our enlightened times...

In any case, Eccles needed any advantages he could muster: the then head of the Finance Committee, Reed Smoot (Republican, Utah), also a Mormon, had confronted serious challenges to his Senate membership, decades earlier, due to his religion. One could speculate that, per se, the presence of Eccles, another Mormon from Utah, would raise eyebrows among the senators attending the proceedings.

On top, in that hearing Eccles revealed highly heterodox and contentious views on economics. From a historical perspective, the most important subject is arguably his Five-Point Program, which anticipated many of the New Deal policies then newly elected President Franklin Delano Roosevelt would eventually apply with Eccles' help.

"Construction of a Dam". William Gropper (1939). [B]

But this is not what I intend to highlight here. The brief quote opening this text comes from those hearings and suggests that Eccles was not only a Keynesian before Keynes, but he might also have seriously considered the "metaphysical" [1] labour theory of value:
"Senator WALSH of Massachusetts. It [i.e. the Federal Budget] would not be balanced immediately; it would be balanced in the future.
"Mr. ECCLES. I am saying that when that is done it would automatically balance as with an individual or corporation, because you create the source of wealth by labor and employment, which is the only source of wealth."
But, if on account of its brevity, the quote above is not necessarily conclusive, the following, more extended quote, is much more suggestive:
"If our problem is then the result of the failure of our money system to properly function, which to-day is generally recognized, we then must turn to the consideration of the necessary corrective measures to be brought about in that field; otherwise, we can only expect to sink deeper in our dilemma and distress, with possible revolution, with social disintegration, with the world in ruins, the network of its financial obligations in shreds, with the vary basis of law and order shattered. Under such a condition nothing but a primitive society is possible. Difficult and slow would then be the process of rebuilding and it could only then be brought about on a basis of a new political, economic, and social system. Why risk such a catastrophe when it can be averted by aggressive measures in the right direction on the part of the Government?"
Is Eccles speaking of a revolution and proposing his Five-Point Plan as a way to ensure it does not come about? I highly recommend readers to read the transcript, so they can judge by themselves.

Photo Credit:
[A] Marriner S. Eccles. Wikipedia.
[B] "Construction of a Dam", by William Gropper (1939). US Department of the Interior. Wikipedia.

[1] The "metaphysical" remark is a private joke I share with some anti-Marx progressives who achieved the noteworthy feat of "disproving" Marxism, without knowing anything about it. Other readers can safely disregard the comment.

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