A Canadian-born U.S. economist, whose pioneering work in the 1930s made a lasting impact on the theory and practice of macroeconomic stabilization. Currie was a top-level adviser in President Franklin D. Roosevelt’s New Deal and served as FDR’s economic adviser in the White House from 1939-1945. From 1949 until his death in 1993, he was a top-level development economist in Latin America.
Currie was born in 1902 in West Dublin, Nova Scotia, Canada into the family of a merchant fleet operator and a schoolteacher. After two years at St. Francis Xavier University in Nova Scotia (1920-1922), he moved to Great Britain to study at the London School of Economics, or LSE, which was famous at the time for turning out left-wing, Fabian 1 economists. After earning his B.Sc. in 1925, Currie moved to Harvard. His Ph.D. thesis, completed in January 1931, was on “Bank Assets and Banking Theories.” In this essay, Currie was highly critical of the “commercial loan” or “needs of trade” theory of banking policy, which had had a disastrous influence on monetary policy in the late 1920s. Currie’s topic choice had personal overtones: having invested his own and his family’s money in the U.S. stock market, he lost much if not all of it in the crash of October 1929.
In January 1932, Currie co-authored a memorandum on anti-depression policy (one of his two co-authors was Harry Dexter White), presenting a radical anti-depression program. The memo supported vigorous open-market operations, in order to expand bank reserves, as well as deficit spending financed by money creation. This document is said to show the early influence of Harvard economists on what had been viewed as a uniquely Chicago monetary tradition. In two articles published in 1933 (“The Treatment of Credit in Contemporary Monetary Theory” and “Money, Gold and Incomes in the United States, 1921-32”), Currie stressed the importance of control over the quantity of money, as opposed to the quantity or quality of credit or loans, and computed the first estimate of the income velocity of money in the United States. In a 1934 article entitled “The Failure of Monetary Policy to Prevent the Depression of 1929-32,” he argued that in the 1920s there were no traditional signs of a boom, except in the stock market, and that the tight monetary policies of the period contributed to the factors that caused the Depression.
Currie remained at Harvard as a teaching assistant until 1934 – the year that his important book, The Supply and Control of Money in the United States, was published by Harvard University Press in Cambridge, Massachusetts. Currie blamed the government for its policy of “almost complete passivity and quiescence” beginning in mid-1929, when the economy was already declining, and then for its inability to check the self-generating forces of the Depression during four years of mass liquidations and bank failures. 2 Currie also became a naturalized American citizen in 1934 and was recruited to join what had become known as the “freshman brain trust” at the Department of Treasury. There, he developed what has been viewed as an ideal monetary system for the United States. Another member of the brain trust was Currie’s fellow instructor at Harvard, Harry Dexter White. (Currie and White would work closely together for several years.) Currie had a significant impact on the design of the Federal Reserve System.
Later in 1934, Currie moved to the Federal Reserve Board as personal assistant to its head, or governor. In that capacity, he drafted the 1935 Banking Act, which emphasized budget deficits as a way out of the Great Depression – and was to guide American banking for the next half century. He also contributed to reviving the economy during the Great Depression by constructing a “net federal income-creating expenditure series.” This 1935 work (not published until 1978) demonstrated the strategic role of fiscal policy in complementing monetary policy to revive an acutely depressed economy. In 1937-1938, Currie was instrumental in persuading President Roosevelt that balancing the budget had caused the recovery to slow dramatically and that it was not the way to restore business confidence. In May 1939, Currie expanded on the theoretical and empirical rationale for fiscal activism to stress its importance in sustaining an economic recovery. 3
In July 1939, Currie moved to the White House as President Roosevelt’s special adviser on economic affairs and became the first White House economist – a role that would be filled in later years by the President’s Council of Economic Advisors. Currie advised FDR on the speeding up of peacetime and wartime production plans, as well as on the issues of taxation and social security. His other achievements included bringing Canada into the supply chain for American military production – and directing American military and economic aid to China.
On January 28, 1941, Currie was sent on a mission to Chungking, China “to secure first-hand information on the economic conditions in China, to consult with Chinese leaders and to extend to Chiang Kai-shek the President’s personal greetings.” Besides “three weeks of conferences with Chiang Kai-shek,” Currie also “studied arsenals, military training schools and industrial cooperatives.” 4 On his return in March 1941, Currie recommended including China in the government’s Lend-Lease program – and was put in charge of the program’s administration from 1941 to 1943.
When he returned from China, Currie also became President Roosevelt’s point man for setting up an American volunteer air force (the AVG, more commonly known as the Flying Tigers) to fight for China in the war against Japan. He was instrumental in organizing a training program for Chinese pilots, and in pointing out the potential role of Chinese aviation in defending Singapore and the Philippines against Japanese attack – and perhaps also in the strategic bombing of targets in Japan. In July 1942, Currie was sent on a second mission to China, this time as President Roosevelt’s special representative. 5
In September 1943, Currie was “loaned” to the Board of Economic Warfare, and the next month, after the consolidation of several wartime economic agencies into the Foreign Economic Administration (FEA), he was appointed its Deputy Administrator. 6 At the FEA, Currie played a major role in recruiting or recommending economists and others for jobs throughout the Roosevelt administration. In 1944-1945, he took part in loan negotiations with the United States’ British and Soviet allies, as well as in preparations for the United Nations Monetary and Financial Conference at Bretton Woods, New Hampshire (July 1-22, 1944), which led to the creation of the World Bank and the International Monetary Fund. In early 1945, Currie headed a tripartite (American, British and French) mission to Berne, Switzerland to persuade the Swiss to freeze Nazi bank balances and stop further shipments of German supplies through Switzerland to the Italian front.
After the end of World War II, Currie did not take a place in the Truman administration, but moved to New York to establish his own import-export business, Lauchlin Currie & Co. The company was not particularly successful, however. In 1949, Currie was appointed to head the first of the World Bank’s general country surveys, in Colombia, and after the publication of his report in 1950, he was invited by the Colombian government to return as adviser on implementing the report’s recommendations. He remained in the country, married a Colombian in 1954 and was granted Colombian citizenship. He worked as a top-level adviser to successive Colombian governments until his death in 1993, except during two periods – first, from 1953-1958, under a military dictatorship, when he was a full-time dairy farmer in Colombia, and again from 1966 to 1971, when he was a visiting professor in the United States, Canada and Great Britain.
Currie was hired by the World Bank in 1949 despite earlier allegations of Soviet espionage made by two defectors from the Communist cause – Elizabeth Bentley and Whittaker Chambers. Bentley claimed that Currie, whom she had never seen, had been part of an espionage ring headed by Nathan Gregory Silvermaster. Currie denied these allegations on August 13, 1948 before the House Sub-Committee of Un-American Activities (HUAC). He also appeared before a grand jury in New York in December 1952 and again denied allegations of Soviet espionage. No criminal charges were ever brought against him. In 1952-1953, Currie was also called to appear before the McCarran Committee. In 1954, his passport was not renewed, due to his continuing residence in Colombia, and the Canadian-born Currie lost his American citizenship.
Currie was identified as a source appearing under the cover name “Page” in several World War II Soviet intelligence cables, which were among the communiqués partially decrypted in the course of the Venona operation. This identification was confirmed in a late 1949 report by a Soviet foreign intelligence operative, Anatoly Gorsky, who was an intelligence resident in Washington D.C. in 1944-1945, under the alias of Anatoly Gromov. Among other things, Gorsky used to meet with Currie under his (Gorsky’s) official cover as an authorized representative of the Soviet Society for Cultural Contacts (VOKS).
Watch for alerts on this website to see if Lauchlin Currie was indeed a Soviet agent, as he is often described.
- The Fabian Society is an organization of British socialist intellectuals which has existed since 1884 and advocates the gradual transformation of a capitalist society into a socialist one. Since 1900, it has been affiliated with the British Labor Party. ↩
- See Roger Sandilands. The Life and Political Economy of Lauchlin Currie: New Dealer, Presidential Adviser, and Development Economist. Durham, NC: Duke University Press, 1990. ↩
- See Roger Sandilands, Op. Cit. ↩
- The New York Times, January 23 and March 11, 1941. ↩
- http://www.warbirdforum.com/currie.htm ↩
- The New York Times, September 1 and October 27, 1943. ↩