The Ultimate Purpose of an Economy Is to Produce More Consumer Goods

Arthur F. Burns? Raymond J. Saulnier? Anonymous?

shopping08Dear Quote Investigator: One criticism of modern economies asserts that consumer goods are being wastefully over-produced and human happiness has become disconnected from the possession of superfluous material objects. These critics contend that individuals and economic architects should concentrate on creating positive and constructive experiences and deemphasize the proliferation of mass-produced physical artifacts. I am interested in a quotation that exemplifies the opposite viewpoint:

The economy’s ultimate purpose is to produce more consumer goods.

This statement has been attributed to the notable economist Arthur F. Burns who was an adviser to President Dwight Eisenhower. Indeed, as I write this message the Wikipedia entry for Burns ascribes this saying to him, but no solid citation is given, and I have doubts. Would you please examine this topic?

Quote Investigator: There exists some confusion regarding the name of the economist who made this statement and the precise form of the remark.

In 1959 Dwight Eisenhower was the president of the United States, and the prominent economist Raymond J. Saulnier was the chairman of the Council of Economic Advisers. In January 1959 Saulnier gave testimony to the Joint Economic Committee of Congress, and he spoke a version of the saying under investigation in response to a question from a senator. Boldface has been added to excerpts: 1

Mr. Saulnier. Let me interpolate by saying that, as I understand an economy, its ultimate purpose is to produce more consumer goods. This is the goal. This is the object of everything that we are working at: to produce things for consumers.

Senator O’Mahoney. But we must have consumers who can buy.

Based on current evidence QI suggests that Raymond J. Saulnier should be credited with the expression above. QI has not yet found solid support for the ascription to Arthur F. Burns. Interestingly, Burns was also the chairman of the Council of Economic Advisers during the Eisenhower administration; however, Burns served before Saulnier. It is possible that the shared job title may have caused a misunderstanding that resulted in a misattribution. Of course, it is also conceivable that both economists made the remark.

Here are additional selected citations in chronological order.

Continue reading The Ultimate Purpose of an Economy Is to Produce More Consumer Goods

Notes:

  1. 1959, Congressional Hearing, Hearing Before the Joint Economic Committee, Congress of the United States, Eighty-Sixth Congress, First Session, Pursuant to Sec. 5(a) of Public Law 304 (79th Congress), Meetings Held in January and February 1959, January 1959 Economic Report of the President, (Statement of Raymond J. Saulnier, Chairman of the Council of Economic Advisers on January 27, 1959), Quote Page 29, Government Printing Office, Washington, D.C. (HathiTrust Full View) link link

I Take the Punch Bowl Away Just When the Party is Getting Good

Arthur F. Burns? William McChesney Martin? G. William Miller? Paul A. Volcker?

Dear Quote Investigator: The U.S. economy has experienced two large bubbles in recent years in technology stocks and in real estate. These gyrations in the market reminded me of an old comment from a previous director of the Federal Reserve.

He said his job was to shut down any wild and irresponsible “party” involving money before it could start.  He was going to take the punch bowl away before people started profligately spending money and negligently loaning money.  I know this was said before the terms of Alan Greenspan and Paul Volcker, but I am not sure who said it. Would you please explore this picturesque saying?

Quote Investigator: The earliest evidence known to QI appeared in a syndicated financial column called “Trade Winds” by Lou Schneider in October 1955. He discussed a speech delivered to the Investment Bankers Association about a week earlier by William McChesney Martin who was the chairman of the Board of Governors of the Federal Reserve System. Martin employed the vivid punch bowl metaphor. Boldface has been added to excerpts: 1 2

Mr. Martin owned up that the Federal Reserve “is in the position of the chaperone who ordered the punch bowl removed just when the party was really warming up.” But it was done because there are economic danger signals in sight. “If we fail to apply the brakes sufficiently, and in time, we shall go over the cliff.”

Martin definitely popularized this figurative language, and he was the speaker in the first known citation. Yet, it was not certain whether he originated this metaphorical framework. Special thanks to top researcher Barry Popik who located the above citation. His webpage on this topic is located here.

Here are additional selected citations in chronological order.

Continue reading I Take the Punch Bowl Away Just When the Party is Getting Good

Notes:

  1. 1955 October 25, Greensboro Record, Trade Winds: Credit Controls Policy Unchanged by Lou Schneider, Quote Page B9, Column 5, Greensboro, North Carolina. (GenealogyBank)
  2. 1955 October 25, Evening World-Herald (Omaha World Herald), Trade Winds: Talk by FRB Chief Explicit by Lou Schneider, (Consolidated News Features), Quote Page 32, Column 1, Omaha, Nebraska. (GenealogyBank)