On the make

‘Oh! happy is the man who sits

Beside or at the feet of Fritz’…

– Kenneth Boulding, a distinguished and versatile economist who once remarked that among men of affairs he passed as an economist, and among economists as a man of affairs

Fritz Machlup had arranged the lunch. After a lecture a week or so earlier I had run into him in the brown-panelled corridor of the Philosophy Faculty. In his kindly way he had enquired how I was getting on, when I would come and see him, would I be attending the Rubin seminar, ‘Friday, yes, come on Friday after Rubin’s seminar, the great Rubin, you will not, of course, miss him, will you,’ a simple stataement of fact,’ come in and you will tell me what you are doing, and’, after an arch pause injected like a question mark into the musical, almost accentless English of the Viennese elite, ‘what you are going to do’.

Fritz was a leading economist of the Austrian School, an influential group founded in the nineteenth century, which included the philosophers von Mises and von Hayek. Their writings on freedom and government and their individualist and somewhat parsimonious thoughts on social policies such as welfare assistance and the evils of economic regulation were to influence much of the orthodixy of the times later on in the 1980s nd 1990s. Nixon might have said in the sixties that we were all Marxists now, but Reagan in the eighties with some truth might have affirmed that we were all Austrians.

Always diligent, always in a hurry but never appearing so, he kept, despite what some might have thought his stern political philosophy, a caring finger on all the students of Johns Hopkins` economics department for whom he felt responsible. And not least this gangling Australian, who was not even an economist, but for whom he certainly was responsible, for it was he and he alone who had got me there.

The year before I had wandered into his in-tray, and then, beyond what I reckoned were all the odds, into his life and the Johns Hopkins University’s lecture rooms. I had sent him a a letter I’d worked over for a week of nights back in Accra, the capital of Ghana, after my then day job as an engineer alone in a consulting office tending bridges, designing buildings, checking roads washed out by monsoon rains, interpreting the offbeat prose of supplicant local contractors. On the strength of that letter, which had explained to him, far away in Baltimore, Maryland, that I taken some courses in economics a few years before in Tasmania, had some construction experience, and, further, on a presumption he made of my proficiencies, derived from the civil engineering degree, in mathematics-a subject he strictly eschewed in his economics but a knowledge of which he thought provided good moral training-he had let me in to the Master’s program.

The Departmental Seminar, staged fortnightly, was the single most revered event in the cycle of the Department’s liturgy. Located handily between Washington and New York, close to many of the nation’s policy, intellectual and scientific centres, Hopkins, as the University is familiarly called, had a special allure because, founded by a prominent abolitionist and businessman, it provided the model in the US of the modern research university. In addition the economics Department-more formally the Department of Political Economy, a title which heightened the allure, taken as it was from the name of the discipline as it was way back in Adam Smith’s day -was adorned by a faculty of distinction and variety, and was readily able to attract glowing orbs from the economic firmament to adjust their fiery paths for an afternoon to take in the port city, famous for its trading and whaling past.

The great Rubin was a Board member of the US Federal Reserve Bank, of New York, the largest of the Federal Reserve Banks, the first among the equals of all the regional Federal Reserve Banks, and Rubin was thus one of the highest economic gods. But more, he was a theorist whose fame and fluency had ensured that the large seminar room was crammed with all faculty and postgraduate students. A substantial man of a comfortable friendliness, he dizzyingly argued that, in that year of 1960, the natural rate of interest on capital across the globe was five per cent per annum. This confidently produced pronouncement of a vision encompassing all the economic activities of the whole world, reducing them to a single, round-sell odd-number, fell upon us from a lightly floating skein of gold sparkled dialectic.

Overcome by the glory of sitting before this visiting god, his edict it seemed to me was fit to have issued from the lips of Abelard orating at the pulpit of Notre Dame to the assembled multitudes. I had indeed been overcome by these regular demonstrations of lofty talk and academic grace from the start. Conscientious though the stafff back home at Queensland had been, so spending a couple of hours would have been doggedly rebuffed as much a waste compared with taking that much further the tricky design question we had recently been set.

A few, low-modulated questions from the more illustrious of the staff. Not one from a student’s trembling lips. Good humoured respectful thanks from the presiding chair. A witty compliment from Machlup himself, to was it the Department Chair. Rubin concluded.

I emerged in a daze of wonder and delight and slowly wandered down the corridor, and, leaving my companions still mesmerised by the great man’s flights, entered Fritz’s plain but elegant office. Light came from casement windows overlooking a courtyard. The square room was made comfortable with a long neat desk and a couple of leather arm chairs. Long shelves of books imposed an academic gravity. A bunch of them were Machlup’s own.

Fritz was wearing a plain, blue, singlebreasted, well-tailored suit and a matching, full, bow-tie with spots of red. He sat behind a tidy desk with leathered insets of some antique style. Always affable, he received my recent progress in the courses I was taking with other lecturers, and regretted my decision not to avail myself of the PhD scholarhip he had some time earlier indicated he could make available. With two young boys, a third recently on the way, belief in the ‘rhythm method’ now in shreds, I could not accept the prospective life of a student in a foreign land. Besides, Fritz himself and several of the other people I would especially want to work with were departing in one of those noisy academic flights which certainly in those days frequentl marked the drying up of sustaining funds in one University and the opening up of others in another. And there was another reason: I wasn’t sure that to wall myself into no matter how well furnished an ivory tower, as in those days I still saw universities to be, was the way really to do something in the world What then for when I had completed my present course work and later on the thesis?

He took it entirely for granted that furthering the careers of his students was a part of the professorial canon, and tried whenever possible to fulfil the rol of rainmaker for his students. Most of them came with some affiliation to a former alma mater, sometimes with funding. But he took his self-imposed responsibilities as seriously, perhaps more so, even when the object of his interest appeared, as did the case before him, in some random way from Australia via West Africa, and unnourished by any kind of educational gravy train.

Would I be interested, perhaps, in an introduction to the world of papermaking, to , no less, the colossus of Reed, one of the great forestry and paper corporations? They pay well, he quickly added, apparently especially moved by what I had thought had been a only lightly sketched account of my slenderfinancial position. It was only much later that I learnt that his family, back in Austria, had had large interests in paper, and that he personally had worked in the field as a young man, before he had moved, in the thirties, to the US not far ahead of the Nazis. This was among his various other professional engagements in finance, banking and international trade. In short, he was reaching into his personal casket to offer me some of the cake of his birthright.

Perhaps it was just as well that I didn’t know that at the time. I found ir easier than it might have been to turn the generosity aside and to explain, once again, as I had done in that first letter to him, and when I had pitched up on his step to begin the course, that my interests lay in the developing nations then emerging in the world, especially in the Chinese and Asian areas, which later in the century carryied the French term, ‘le monde troisieme’, the third world, as their label.

‘The World Bank!’, he exclaimed with a big smile, a big satisfied smile, that showed the issue now resolved. You should talk to the World Bank. I will speak with Penrose.’

I knew that Ernest Penrose, who supervised my international field studies, had long been an international official in various roles combining it with a career as an economics professor. He was married to Edith Penrose an economist also at Hopkins who supervised my economic field studies and both of them had not long before spent some years at the Australian National University, and so took a special interest in me so far from home, and at a time when postgraduate students from Down Under were rarities in the United States. Ernest Penrose had made a career of moving to and for between the world of affairs and the world of the book; but it had certainly not occurred me that he could be plucked so readily to play an introductory gavotte to accompany my advance into the salons of the International Bank for Reconstruction and Development (IBRD), familiarly known as the World Bank, and thence into the anterooms of the third world.

A tall, lean, somewhat vague, always smiling man, generally wearing a neat, tweed jacket, the Englishman was now nearing the end of his career. Both he and Edith had had long associations with Hopkins and now he was coasting down the runway to an agreeable retirement while she, much younger, was diverting from formal economic theory to the economics of energy, then a new field to which she later made important, foundational contributions. Ernest, who guided my forays into the theory of international relations and especially the history of the Indian subcontinent, had taken a good natured interest in me from the start and, on my side, I had been chuffed that he approved warmly of my plan to combine a practical life with an academic one, a venture which didn’ appeal to many, in particular my mother, who with sober anxiety, saw it as yet another manifestation of my grass-hopper mind. REWRITE

Only a couple of days later, at our next tutorial, Pen told me he had arranged for me to call David Symondss at the World Bank to fix a lunch to consider ways in which I might ener that illustrious institution. (That eldeer mentors intorducing disciples to preferred career paths was an quite normal way for Pen to proceed, it left me totally amazed and indeed I came to see that this was not how David Symonds viewed the matter.

FM sitting in bowtie, paper company, World Bank, David ?Schwarz/2 weeks after /WB on 1818 H street, meat and two vegs, a piece of apple tart, and a cup of coffee, reference to FM’s call and my purposes, hasty departure with his arm in mine, and stroll around the adjoining streets, apparent this to avoid eavesdropping whether by human ear or concealed radio ear, quietly explained only experienced,

One thought on “On the make

  1. I read this piece with interest as I am writing a biography of Edith Penrose for Oxford University Press and have been researching her life, with her husband Pen. I have a great deal of personal material and access to all her professional papers, but to hear more about her life at Hopkins is most intriguing. After Pen died in 1984 she lived with me & my husband, her son Perran, and her grandchildren, until her death in 1996. I came across your piece through looking to see if I could see when Kenneth Boulding wrote the ‘poem’ about Fritz Machlup as I wondering whether to include it. You talk of Edith & “formal economic theory” but of course the book she wrote at Hopkins, The Theory of the Growth of the Firm is now considered far more than that. She and Machlup remained friends and colleagues until his death, corresponding after she left the USA.

    Far from coasting to an agreeable retirement Pen was consumed with the effect of McCarthyism on American life, particularly academic life. He and Edith were active in the defence of their colleague Owen Lattimore. Pen could not bear to stay in the USA which is why they went first to Australia and then to Iraq before moving to the UK. Edith had a final year at Hopkins after two years in Baghdad when she would have begun to bring oil issues into her teaching; I would be very interested to hear about that.

    I assume you went on to work for the World Bank…..

    If you have any more memories of them, especially Edith I would be very grateful to hear about them.

    Thank you


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