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Ex-Fed Chairman Burns Dies at 83 : Adviser to Presidents Influenced Economic Policy for 25 Years

June 27, 1987|TOM REDBURN | Times Staff Writer

WASHINGTON — Arthur F. Burns, a former Federal Reserve Board chairman, ambassador to West Germany and close economic adviser to Presidents Dwight D. Eisenhower and Richard M. Nixon, died Friday in Baltimore of complications from heart surgery. He was 83.

Burns was a Washington institution, a conservative but pragmatic economist whose forceful personality and strong intellect influenced economic policy from the early 1950s through his eight-year tenure at the helm of the nation's central bank.

As Fed chairman, he presided over monetary policy from 1970 to 1978, clashing frequently with President Jimmy Carter during the first year of his Administration and was even in disagreements at times with Nixon, who appointed him to the powerful post just as the nation was entering one of the most turbulent economic periods in its history.

Burns, who had entered Johns Hopkins Hospital in April for triple-bypass heart surgery, died at noon of heart failure after a stroke, hospital spokesman Phil Kibak said.

Easily Recognizable

The Austrian-born Burns--known for his constant pipe smoking and easily recognizable with his white hair and wire rim glasses--came to Washington in 1953 as Eisenhower's chief economic adviser. He revived the President's Council of Economic Advisers in 1956 and quickly made the relatively obscure position of its chairman a key instrument of economic policy making.

He ended his government service as ambassador to West Germany from 1981 to 1985, returning to Washington as a distinguished scholar at the American Enterprise Institute, a Washington think tank.

"Don't believe in retirement," he told an interviewer in 1985, "and I don't understand people who do."

Reagan: 'Man of Gifts'

"Dr. Burns was among the most brilliant economists of his generation," President Reagan said in a statement. "America has lost one of its most dedicated and able public servants, a man of great gifts who gave those gifts freely to the nation he loved."

Secretary of State George P. Shultz praised Burns for his dedication "to democratic values and free market principles."

Born in Stanislau, Austria, which is now in the Soviet Ukraine, on April 27, 1904, Burns moved to Bayonne, N.J., with his family at age 10 and became a pioneer in research on business cycles at Columbia and Rutgers universities.

He helped identify certain economic signposts as "leading" indicators--reliable guides of whether the economy was going into or coming out of a recession. Those indicators are still reported by the government and play a key role in economic forecasting.

Wage-Price Controls

Although a dedicated free market advocate, he also repeatedly urged wage-price controls as an alternative to tight money in fighting inflation. When Nixon finally accepted such controls in 1971 as part of his Administration's dramatic economic policy changes that ended the dollar's fixed relationship with gold and other currencies, Burns allowed the money supply to grow at a relatively rapid pace in the early 1970s.

Although critics suggested later that the Fed's efforts to sustain economic growth were aimed at helping ensure Nixon's reelection, Burns insisted that his policy was never politically motivated.

"The central focus of his monetary policy was always aimed at curbing inflation," said Robert Holland, who served as a Fed governor with Burns and is now president of the nonpartisan Committee for Economic Development here. "He pushed as hard as he thought he could. In 20-20 hindsight, I suspect he wished he had pushed even harder, but I don't think society then was as ready to face up to the hard choices as it was later."

Model Fed Chairman

Burns was a model of the classic Fed chairman, maintaining an air of impenetrability with his frequent relighting of his pipe and complicated responses to congressional questioning that was continued by outgoing chairman, Paul A. Volcker. Burns was known to keep Fed meetings running much longer than usual until he was certain that participants had reached a consensus close to his own preference.

"Arthur Burns was a staunch supporter of the Federal Reserve as an institution and a firm friend of many of us within it," Volcker said in a statement. "We have enormously benefited from both that support and that friendship. He will be honored in our memory."

Burns left the Fed with enough distinction to receive the West German ambassadorship, one of the premier posts in the Foreign Service.

Ambassador Offers Praise

"He has served German-American relations in an outstanding manner and on a broad basis, reaching from our common security to our economic partnership and in particular our strong attachment to freedom and democracy," said Guenther van Well, West Germany's ambassador to the United States.

"Arthur Burns was one of the greatest scholars and statesmen of the 20th Century," said Christopher DeMuth, president of American Enterprise Institute. "His contributions to his adopted country were marked by a rare distinction; his contributions to the science of economics were legendary."

Burns is survived by his wife, Helen, and two sons, David Burns of New York and Joseph Burns of Washington. He is also survived by two sisters. Funeral arrangements were incomplete.

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