Charles Poor Kindleberger

Charles Poor Kindleberger (October 12, 1910 – July 7, 2003) was an American economic historian and author of over 30 books. His 1978 book Manias, Panics, and Crashes, about speculative stock market bubbles, was reprinted in 2000 after the dot-com bubble. He is well known for his role in developing what would become hegemonic stability theory, arguing that a hegemonic power was needed to maintain a stable international monetary system. He has been referred to as "the master of the genre" on financial crisis by The Economist.

Life

Background

Kindleberger was born in New York City on October 12, 1910. He graduated from the Kent School in 1928, the University of Pennsylvania in 1932, and received a PhD from Columbia University in 1937.

During the summer of 1931, he traveled to Europe and attended a seminar hosted by Salvador de Madariaga, but, when the latter was appointed Spanish Ambassador to the United States, Kindleberger attended lectures at the Graduate Institute of International Studies in Geneva led by Sir Alfred Zimmern.

Government

Treasury While writing his thesis, Kindleberger was employed temporarily in the international division of United States Treasury under the direction of Harry Dexter White. He then joined the Federal Reserve Bank of New York full-time (1936–1939). Subsequently, he worked at the Bank for International Settlements in Switzerland (1939–1940), the Board of Governors of the Federal Reserve System (1940–1942).

World War II Some members of the Enemy Objectives Unit, during their time off, demonstrating turbulence and laminar flow. Seated left to right: Charles Kindleberger, Roselene Honerkamp, Irwin Nat Pincus. Standing left to right: William Salant, Walt W. Rostow, Agent Selko, Edward Mayer. During World War II, he served in the Research and Analysis Branch (R&A) of the Office of Strategic Services (OSS). From February 27, 1943 to June 19, 1944, he commanded the Enemy Objectives Unit (EOU) at OSS/London, taking over this position from Chandler Morse, where he pioneered the American version of strategic bombing, which was to use on-the-ground intelligence to identify specific targets for destruction, built on the theory of air dominance written by Giulio Douhet. This greatly differed from the present British system here, which was to dominate the air by carpet bombing the objective. EOU identified viable German targets for destruction and was allowed, unlike other R&A branches, at OSS/London, to offer policy advice and guidance to military commanders. Kindleberger criticized the British system as being that of "all hammer and no anvil."

In June, 1944, Kindleberger was forward-deployed with the 12th US Army Group, an OSS Detachment embedded in the G-2 for General Edwin Sibert. He served here in the final stretch of the war, as the Army advanced deeper into Nazi Germany.

Kindleberger was a leading architect of the Marshall Plan. In 1945–1947 he served at the Department of State as acting director of the Office of Economic Security Policy, and briefly from 1947 to 1948 as counselor for the European Recovery Program.

Harry Dexter White

Though he himself was spared anti-communist investigation during the 1950s, he later recalled: ...I worked in the Treasury under Harry Dexter White. That gave me a lot of trouble later on because he got in trouble, and anybody who was infected by him got into trouble, too. The FBI listened to my phone calls and things I said in the course of my work at the State Department and gave gossip and some misrepresentations to columnists like George Sokolsky. J. Edgar Hoover fed them such gossip.

Academia

After 1948, Kindleberger was appointed Professor of International Economics at MIT. 1966 Dr. h.c., University of Paris 1977 Dr. h.c., University of Ghent 1978 Harms Prize, Institut für Weltwirtschaft, Kiel 1984 Dr. Sci. h.c., University of Pennsylvania 1987 elected member of the American Philosophical Society 1989 Bicentennial Medal, Georgetown University

Personal

Kindleberger was married to Sarah Miles Kindleberger for 59 years. They had four children: Charles P. Kindleberger III, Richard S. Kindleberger (a reporter for the Boston Globe), Sarah Kindleberger, and E. Randall Kindleberger.

He died of a stroke on July 7, 2003, in Cambridge, Massachusetts. Blaming the peculiar length and depth of the Depression on the hesitancy of the US in taking over leadership of the world economy when Britain was no longer up to the role after World War I, he concludes that "for the world economy to be stabilized, there has to be a stabilizerone stabilizer", by which, in the context of the interwar years at least, he means the United States. In the last chapter, "An Explanation of the 1929 Depression", Kindleberger lists the five responsibilities the US would have had to assume in order to stabilize the world economy:

maintaining a relatively open market for distress goods; providing countercyclical, or at least stable, long-term, lending; policing the relative stability of exchange rates; ensuring the coordination of nations' macroeconomic policies; acting as a lender of last resort by discounting, or otherwise providing liquidity, in a financial crisis.

Kindleberger was highly skeptical of Milton Friedman and Anna Schwartz's monetarist view of the causes of the Depression, seeing it as too narrow and perhaps dogmatic, and dismisses out of hand what he characterized as Paul Samuelson's "accidental" or "fortuitous" interpretation. The World in Depression was praised by John Kenneth Galbraith as "the best book on the subject".

For Kindleberger, the main problem with international institutions is that they provide public goods whose provision states are incentivized to free-ride on. Following Mancur Olson, Kindleberger argued that the solution to the free-riding problem was to have an actor who was large enough (a hegemon) and willing to bear the cost of cooperation alone.

Books International Short-term Capital Movements (NY: Columbia University Press, 1937) International Economics (Irwin, 1953) Economic Development (New York, 1958) Foreign Trade and the National Economy (Yale, 1962) Europa and the Dollar (Cambridge, Massachusetts, London, 1966) Europe's Postwar Growth. The Role of Labor Supply (Cambridge, Massachusetts, 1967) American Business Abroad (New Haven, London, 1969) Power and Money: The Economics of International Politics and the Politics of International Economics (Macmillan and co, London) The Benefits of International Money. Journal of International Economics 2 (Nov. 1972): 425–442. The World in Depression: 1929–1939 (University of California Press, 1973); Manias, Panics, and Crashes: A History of Financial Crises (Macmillan, 1978) Historical Economics – Art or Science? (1990) (online book)

A Financial History of Western Europe (New York, 1984) World Economic Primacy: 1500 – 1990 (Oxford University Press, 1996) Centralization versus Pluralism (Copenhagen Business School Press, 1996) Economic Laws and Economic History (Cambridge University Press, 1997)