Sidney Alexander and wartime economic intelligence
I had been working on a chapter (awaiting publication) about Sidney Alexander, an economist at MIT-Sloan, perhaps best known for his earlier work on the Balance of Payments. He had a fascinating range of interests. But I had encountered a puzzle. The dates did not quite line up. If he was at the IMF between 1949 and 1952, how did he also lead econometric work for the President's Materials Policy Commission which started in 1951 and reported its results in 1952? He must have been on secondment, so I asked the IMF Archives. Seemed simple. They were incredibly helpful, but said they couldn’t tell me straight away because his personnel records were still classified!
What? Not just confidential but actually still classified well over half a century later. The archivists set about determining whether they could be declassified, and fortunately, as a result, they were. So what could be the secret?
Sidney Alexander was one of the golden period of Harvard economists of the late 1930s, which included Lloyd Metzler, J.K. Galbraith, the Sweezy and Salant brothers, Benjamin Higgins, and James Tobin - “the Age of Hansen - and of Schumpeter, and of Leontief”(Samuelson 1980, see also Samuelson 1988). Alexander graduated Summa Cum Laude in 1936 and won a prestigious Henry Fellowship to study at King’s College Cambridge, UK, for the following year under Keynes. After travelling in Europe on the eve of war, he returned to Harvard, receiving a master's degree in 1938. Alexander was an astute observer and commentator, as demonstrated by his letter home in late 1936 as the war clouds gathered and noted in his King’s College obituary (2008).
After Harvard, Alexander joined the National Bureau of Economic Research, from where he was seconded to the Office of Price Administration.
With the advent of war in Europe, the American administration was looking to greater planning and preparation which extended to economic intelligence. Harvard professor Edward S. Mason was building a team of the brightest and best economists into what would become the Office of Strategic Services. These included luminaries such as Walt Rostow, Charles Kindleberger, Moses Abramowitz, Paul Sweezy, Paul Baran and Wassily Leontief. Sidney Alexander was brought in from the OPA to analyse industrial resources, he held the rank of First Lieutenant.
The study of the enemy’s industrial capacity and resources was of particular importance, to estimate how well Germany could maintain its war effort. Initial assumptions were that the German economy was fully mobilised by 1941 and operating at full capacity. This proved to be wrong and their resilience was greater than expected. By early 1943 Alexander was convinced that a more scientific approach was possible and developed a technique of serial number analysis (see Katz 1989:110-11). A simple approach had been to compare the lowest and highest serial numbers on captured equipment. However Alexander suggested that there were deliberate gaps in the sequences and that equipment such a tanks were not uniformly deployed by lot. He managed to get permission to gather data from the battlefields of North Africa and Sicily. Whilst he was driven around by an American driver and a captured mechanic, the data he gathered was being analysed in London by Richard Ruggles and a team of analysts. A notable finding was that although German tank production was much lower than Allied estimates, it had nonetheless been increasing steadily (Katz 1989: 111).
After the war, Alexander remained in government service as an economic consultant to the State Department and the Economic Cooperation Administration, estimating the costs of the Marshall plan and its initiation. He then resumed his study of American corporate finance at the NBER, which informed his 1946 Harvard PhD thesis on the ‘Financial structure of American corporations since 1900’. He was an Assistant Professor of Economics at Harvard from 1946 to 1948 and then, from 1949 to 1952, served on the staff of the International Monetary Fund in Washington in charge of the econometrics work of the Statistics Division. Here he developed the absorption approach to the balance of payments, a major contribution to international economics (see Vines 1987).
Now, here was the answer to the classified nature of his employment history. Alexander actually had two periods of leave of absence. The first in 1951, previously unknown, was to the highly sensitive National Military Establishment’s Weapons Systems Evaluation Group (WSEG). The Group mostly analysed specific military scenarios, but also undertook industrial and economic studies, a limited number have since been declassified. The WSEG had gained the services of Edgar M. Hoover, from the Council of Economic Advisers, to lead a project on an economic assessment of the enemy (the Korean War had started in mid 1950). This was similar to Alexander’s earlier experience with the OSS and the military approached the IMF to borrow him to be Hoover’s deputy and lead a major part of the work. I can only assume that the outcome of that work remains classified.
It was during the second leave of absence, in the later half of 1951, that he contributed the substantial statistical study on key commodities and energy sources for the President's Materials Policy Commission published as Resources for Freedom (1952). The Commission was led by William S. Paley, the chairman of Columbia Broadcasting System (CBS), and, maybe predictably, included Edward Mason. It would appear that Paley had approached the IMF specifically for Alexander’s services, and the executive director of the commission (Philip Coombs, also ex-OSS) was willing to involve the White House, if necessary, to convince the IMF to release him (IMF Archives: E.M. Bernstein Memo March 28, 1951). The IMF had been rather looking forward to get their leading econometrician back! On the other hand, it was hoped that the Commission would provide the most reliable estimates to date of America's raw material import requirements over the following decade and, they argued, of national importance and thus relevant to the IMF's general areas of responsibility: the IMF relented.
The following year Alexander left the IMF to become Economic Advisor to CBS. Here he provided economic analysis of the emerging business of commercial television, its regulation, and longer term business environment from 1952 to 1956. In mid-1955 Alexander had a series of discussions with the the Sloan School of Management, meeting both MIT’s President Killian and Vice-President Stratton in July and his appointment as Professor of Industrial Management was announced the following January to start from July 1956. Mehrling suggests his past contacts with Kindleberger at the OSS may have played a role (2022:161-2). As well as developing courses in business economics, business policy and management problems, his appointment would help formulate a research programme “in industrial management with emphasis on the interrelationship with the social sciences” (MIT News Service press release 26 Jan 1956). Alexander also worked with the RAND Corporation, including an early 1970s project on the Middle East. He retired in 1986.
PS Please do read his 1936 letter from Europe, it’s a great insight to the situation on the eve of war. (The transcription misreads his references to Taussig, the venerable Harvard professor, as Taunig).
References
IMF Archives: ‘A117 Loan of Staff to Other Organizations - Alexander, Sidney S.’ Ref:2924 1950-1951
MIT Archives: Alexander, Sidney, cuid28354, Box: 5, Folder: 9. Massachusetts Institute of Technology, Office of the President, records of Karl Taylor Compton and James Rhyne Killian, AC-0004. Massachusetts Institute of Technology. Libraries. Department of Distinctive Collections.
Sidney S. Alexander Appointed to Faculty of School of Industrial Management, 1956 January 26, AC0069_195601_002, Box: 4. Massachusetts Institute of Technology, News Office records, AC-0069. Massachusetts Institute of Technology. Libraries. Department of Distinctive Collections.
Alexander, S. et al (1952) 'The Outlook for Key Commodities' Vol II of Resources for Freedom: Report to the President by the President's Materials Policy Commission June Washington DC: US Government Printing Office.
Katz, B.M. (1989) Foreign Intelligence Cambridge, Mass. & London: Harvard University Press.
King's College, Cambridge (2008) Annual Report Cambridge: King's College.
Mehrling, P. (2022) Money and Empire, Charles P. Kindleberger and the Dollar System Cambridge: Cambridge University Press.
Samuelson, P.A. (1980) ‘Lloyd Metzler Memorial Service’, Paul A Samuelson Papers, David M. Rubenstein Rare Book & Manuscript Library, Duke University: Box 53.
Samuelson, P.A. (1988) 'In the Beginning' Challenge July/August Vol.31 no.4 pp.32-34.
Vines, D. (1987) 'Absorption Approach to the Balance of Payments' in Eatwell, J., Milgate, M., & Newman, P. (eds) The New Palgrave: A Dictionary of Economics