Henry Calvert Simons was an American economist at the University of Chicago.
Background
Henry Calvert Simons was born on October 9, 1899 in Virden, Illinois, the younger of two children and only son of Henry Calvert Simons, a lawyer, and Mollie Willis (Sims) Simons. The boy's paternal grandfather, George W. Simons, had come from Brighton, England, in the early nineteenth century; after studying music in Cincinnati and marrying Sarah Calvert of Kentucky he had settled in Virden. Originally a church organist, he became a successful grain miller and merchant. Mollie Sims was also of Kentucky background, although born in Illinois.
Education
Simons graduated from the Virden high school and the University of Michigan (B. A. 1920), where he specialized in economics.
During summers and the academic year 1925-1926 he pursued graduate study, first at Columbia (1922) and then at the University of Chicago.
Career
For the next seven years after university he taught at the University of Iowa, initially as teaching assistant, then as instructor and assistant professor.
At Iowa Simons came under the influence of Frank H. Knight, and he followed that economist to the University of Chicago faculty in 1927. There Simons remained for the rest of his life, becoming associate professor in 1942 and professor in 1945. Until 1933 Simons was leading a life that could surely be called dilatory. Of undisputed intellectual brilliance, he had not completed his doctorate (and never did); a distinguished writer, he had published only three book reviews in a decade.
Yet it is obvious from the range and depth of his subsequent writings, beginning with a famous, unpublished memorandum on antidepression policy (1933), that the main lines of his thought were fully developed in the 1920's. The Great Depression, which destroyed so many careers, galvanized Simons'. Aroused by the nation's calamity and by the threat to political liberty he saw in the New Deal's economic planning, he devised a highly personal program of economic reform.
The initial, yet most comprehensive, formulation of this program was a powerfully written pamphlet, A Positive Program for Laissez Faire: Some Proposals for a Liberal Economic Policy (1934).
Simons advocated a strong, decentralized economy, achieved by a vigorous antitrust policy and statutory limitations on corporate size and reinforced by free international trade. Where competition was unattainable, industries were socialized (preferably by local governments). He was as strongly egalitarian as most socialists, and he proposed a radical reform of the tax system under which highly progressive personal income taxes would become the mainspring of the revenue system. The details of Simons' tax proposals were spelled out in a work that has become a classic of public finance, Personal Income Taxation (1938), subsequently elaborated in Federal Tax Reform (1950).
Although he viewed personal income taxation primarily as a means of reducing income inequality, he made proposals that transcended this approach. He had a comprehensive income concept (including in income capital gains, gifts, etc. ), and he made an influential case for income averaging. This program was the intellectual source of the famous Carter Commission on Taxation in Canada, whose proposals led to a restructuring of that nation's federal taxation much along Simons' recommendations.
Simons also argued with great force for the guidance of monetary policy by fixed rules rather than by administrative discretion, with the goal of establishing a stable price level. Under the gold standard, the rules were provided by the system itself. With a managed currency, the same goal could be achieved by restructuring and simplifying monetary institutions and thus strengthening control over money flows. He proposed that the federal government take primary responsibility for determining the money supply, reducing commercial banks to money warehouses through a 100 percent reserve requirement.
He also suggested reducing the variety of private forms of ownership and debt, as well as eliminating short-term governmental debt. Simons' natural antagonism to such nationalistic devices as tariffs, quotas, and exchange controls made him an internationalist in outlook.
Simons died in Chicago at the age of forty-six of an accidental overdose of sleeping pills.
Achievements
Simons was a major contributor (along with Frank Knight) to the formation of the "Chicago School" of economists, whose members share a belief in the importance of free markets and the need for quasi-constitutional rules to achieve stable monetary policy.
Politics
He was an early interventionist during World War II, and he envisioned a postwar federation of nations bound together by a commitment to both peace and free trade.
Simons does not fit neatly into the traditional categories of reform. His profound fear of the coercive propensities of an all-powerful state was shared by others as different as conservatives and anarchists. Yet he had a large faith in the competence and fairness of the state, as witnessed by his willingness to grant it ownership of public utilities, regulation of advertising, and administration of an egalitarian tax system. The greatest gap in his whole system, indeed, was the absence of a coherent, empirically testable theory of the state, although his posthumous essay, "Political Credo, " has brilliant political hypotheses.
Views
Quotations:
"Economics is primarily useful, both to the student and to the political leader, as a prophylactic against popular fallacies. "
"Attempting mischievous and salutary irritation of his peers . .. Keynes may only succeed in becoming an academic idol of our worst cranks and charlatans - not to mention the possibilities of the book as the economic bible of a fascist movement. "
"Private property in the instruments of production is an institutional device both for dispersing power and for securing effective organization of production. The only simple property system is that of a slave society with a single slave owner - which, significantly, is the limiting case of despotism and of monopoly. Departure from such a system is a fair measure of human progress. "
"The libertarian good society lies. .. in the maximum dispersion of property compatible with effective production or, as process, in progressive reconciliation of conflicts between equality and efficiency. Such process involves increasing dispersion both of wealth among persons and families and of proximate productional control among enterprises or firms. "
Connections
On May 30, 1941, he married Marjorie Kimball Powell; they had one child, Mary Powell.
