Kindleberger: a sad loss (CITS Debt Watch Supplement)

As most of you will recognize, I often cited Kindleberger's
magnificent book, "Manias, Panics and Crashes: A History
of Financial Crises." (see Stein's article below)

And, he and I had been on parallel tracks, as he, too,
was collecting materials for a book on the real estate
boom.

Such a fine person, very astute, I hope each of you will
have a quiet moment in his memory.

WCP

["fair use," "teachable moment," "archival," Section 107(a), 1976
Copyright Act and 1998 Digital Millennium Act]

Charles Kindleberger; economist probed mayhem in markets

By Charles Stein, Globe Staff, 7/8/2003

Charles Kindleberger of Lexington, a longtime economics professor at
the Massachusetts Institute of Technology who wrote a classic book on
financial meltdowns, died of a stroke yesterday at Mount Auburn
Hospital in Cambridge. He was 92. 

Dr. Kindleberger's 1978 book, "Manias, Panics and Crashes: A History
of Financial Crises," traced the history of financial bubbles from the
Dutch tulip mania of the 17th century through the Great Depression.
Dr. Kindleberger argued that although the facts change over time, the
basic story remains the same: Investors get overly excited about some
new development and in a speculative orgy, bid prices up to levels
that don't make sense. When reality eventually intervenes, investors
panic, prices plummet, and disaster ensues.

"His point was that what goes on in people's heads has important
economic effects on life," said Robert Solow, professor emeritus of
economics at MIT and a colleague of Dr. Kindleberger. 

"Manias, Panics and Crashes" was regularly reissued after financial
disasters. It was reprinted most recently in 2000 after the rise and
fall of dot-com stocks, a development that could have come straight
from the pages of Dr. Kindleberger's book. A reader of the book would
not have been surprised, for instance, by the Enron and WorldCom
scandals. Such swindles, Dr. Kindleberger wrote, were a staple of all
financial bubbles.

Dr. Kindleberger wrote "Manias" at age 67, only part way through a
career that lasted 65 years and produced about 30 books. "He had a
marvelously long and productive run," said Paul Samuelson, also
professor emeritus of economics at MIT.

Dr. Kindleberger was writing articles, reviewing manuscripts, and
revising books until very recently, according to his colleagues. At
the age of 90, he wrote a piece about investing. His advice: Don't put
too much money in the stock market. Just last year he was clipping
articles on home prices for a possible study on whether a bubble had
developed in the housing market, and was still driving a 1989 Ford
Escort.

Dr. Kindleberger was born in New York in 1910. He he received his
bachelor's degree from the University of Pennsylvania and a doctorate
from Columbia University. For 10 years he worked in a variety of
government positions, including a stint at the Federal Reserve Board.
During the war he worked for the Office of Strategic Services, the
forerunner of the Central Intelligence Agency.

After the war, according to Samuelson, Dr. Kindleberger was "one of
the backroom creators" of the Marshall Plan, a massive aid package
that allowed Europe to rebuild its economy. "I had a tremendous sense
of gratification from working on it so hard," Dr. Kindleberger once
told an interviewer about his contribution to policy.

Dr. Kindleberger taught at MIT for 33 years. Initially his specialty
was international trade. He later switched to growth economics and
still later to economic and financial history.

"It was in economic history that he really found his comparative
advantage," said Jagdish Baghwati, an international trade specialist
at Columbia University and one of a number of well-known economists
who trained under Mr. Kindleberger.

Mr. Kindleberger had little interest in the math-heavy approach to
economics that eventually came to dominate the field. "You learned
technique from others. What you learned from Charlie were ideas," said
Baghwati.

Married for 59 years to the late Sarah Miles Kindleberger, he leaves
four children: Charles P. III of St. Louis, Richard S. of Cambridge,
Sarah of Lincoln, and E. Randall of Machias, Maine; and five
grandchildren.

A reception will be held in his memory for family and friends from 3
to 5 p.m. Saturday at the Brookhaven retirement community in
Lexington. 

This story ran on page D17 of the Boston Globe on 7/8/2003. c
Copyright 2003 Globe Newspaper Company. 

-- 


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   Research Affiliate, Comparative Media Studies, MIT
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