New York Times
May 2, 1999
W.S. Salant, 87, Economist From the Keynesian School
By MICHAEL M. WEINSTEINWalter S. Salant, who as a graduate student in the 1930's and later as a Government and private economist helped infuse the revolutionary teachings of John Maynard Keynes into Washington policy deliberations, died on Friday at a hospice near his home in Washington.
He was 87.
After graduating from Harvard University in 1933, Salant attended the lectures of Keynes at Cambridge University, two years before he published "The General Theory of Employment, Interest and Money" -- the discipline-shattering treatise that argued that industrialized economies, then mired in depression, were unlikely to recover on their own but could use Government spending and tax cuts to do so.
Salant returned to Harvard and joined the celebrated fiscal policy seminar run by Professors Alvin Hansen and John Williams that explored Keynes's new ideas and trained economists who went on to build a discipline forged in part on the Keynesian foundation.
"It was an economically depressed time," James Tobin, a Nobel laureate at Yale University, recalled in a recent interview.
"Most older professors other than Hansen himself had no explanation or understanding of what was happening, and no solution.
The idea that Keynes had an explanation and a solution that involved an intellectual revolution but not a proletarian revolution was a pretty exciting thing.
Walter was part of the core Keynesian group, a major figure of what became the center of American Keynesianism."
Tobin calls a short book, "An Economic Program for American Democracy," that Salant co-wrote with a number of graduate students in 1938 a "Keynesian manifesto" -- one of the first strong polemics in the United States on behalf of more Government investment and other Keynesian ideas that were then revolutionary but would, because of the efforts of Salant and others, become mainstream.
Salant left Harvard for a series of Government positions. He served in the Treasury Department, the Securities and Exchange Commission and Commerce Department in the 1930's, and, in the 1940's, the Office of Price Administration and other agencies that designed the national strategy for wartime price controls. He was a senior staff member for international relations on the President's Council of Economic Advisers from 1946 to 1952.
He later served as a consultant to NATO and in the Treasury Department in the Kennedy and Johnson Administrations.
He left the Government in 1954 to become a senior fellow at the Brookings Institution in Washington, staying until 1976.
Tobin credits Salant with helping to "internationalize Keynes." "The General Theory," Tobin said, "analyzed economies that engaged in no trade. Salant applied its lessons to a world that increasingly relied on trade and foreign investment -- analyzing how trade surpluses play the same role in an economy to create employment and output as do private investment or Government spending."
Prof. Charles P. Kindleberger of M.I.T. points to an influential report that Salant prepared for the Truman Administration showing that the proposed Marshall Plan -- a massive aid program for the reconstruction of Europe -- was affordable, financially feasible and would not, as critics feared, ignite a ruinous inflation.
Kindleberger also cites Salant's contributions to analyzing America's balance-of-trade deficits, a problem so severe that a senior official in the Kennedy Administration cited it along with nuclear arms as the two biggest issues confronting Government. A report that Salant wrote with Lorie Tarshis, Emile Despres, Alice Rivlin, now vice chairman of the Federal Reserve Board, and other distinguished economists at the request of President Kennedy's Council of Economic Advisers laid out the proper economic role of the United States as the world's central bank. Just as central banks need to provide currency to their domestic economies, they said, the United States needs to supply dollars to the international economy. In a controversial article he wrote in 1966 with Kindleberger and Despres, Salant explained that a steady outflow of dollars to pay for the trade deficit was no economic catastrophe. Indeed the outflow was necessary to feed an international economy desperate for liquidity.
Ms. Rivlin says the staff of the Brookings Institution in the 1960's included many distinguished economists who, like Salant, worked on practical problems of economic policy. His colleagues included Kermit Gordon, Joseph Pechman, Herb Stein, Charles Schultze and Arthur Okun, all of whom served in the Federal budget office or on the Council of Economic Advisers.
She also cites Salant's role as mentor. He was, she said, "one of those people who took you under his wing."
Salant was born in New York City in 1911 and received his Ph.D. in economics from Harvard in 1962.
He served on the Board of Editors of the American Economic Review, the journal of the American Economic Association, from 1956 to 1958.
He is survived by his wife, Edna; two sons, Michael, of Washington, and Stephen, of Ann Arbor, Mich., and three grandchildren.
Referring to his decision to leave university life for Washington in the Depression, Salant wrote in a reminiscence of the New Deal that the spirit of the Roosevelt Administration brought in young people like himself, "generated ideas, fermentation, energy, a feeling that something was being done, that there was leadership when leadership was needed, that there was a relationship between the government and the people in which the government was the citizen's friend."