Part I Correspondence Between Frank H. Knight, Walter B. Smith, and F. Taylor Ostrander, 1933–1937

Ostrander went to Chicago at the urging of his Williams professor Walter B. Smith who had studied with Frank Knight at Chicago in the early 1920s. He took four courses from Knight: the history of economic thought, economic theory, current tendencies, and economics from an institutional standpoint (his notes taken in these courses have appeared in volume 22B and 23B in this series). At the beginning of the academic year in which he was a graduate student at Chicago, Ostrander’s major professor at Williams, Walter Buckingham Smith, wrote Knight introducing Ostrander to him. Ostrander did not know of this exchange of letters until he read a draft of this piece that I had sent him. The letters are useful in regard to Knight’s legendary pessimism and candor.September 30, 1933Dear Professor Knight:I am writing to tell you that we are sending you a graduate student named Ostrander from Williams. To a considerable extent he is coming to the University of Chicago on my recommendation. I particularly want him to work with you and with Professor Viner and with Professor Douglas. I’ll be interested to see what you do with him. In my opinion he has “promise.”Mr. Ostrander graduated here in 1932 and spent last year in Oxford. He seems to have survived a year at Oxford. Usually a year or two there is pretty hard for an American to get over. Ostrander, contrary to the usual rule, seems to have benefited rather than deteriorated under the direction of his English tutors.Ostrander is much interested in theoretical economics. My hope is that you will be able to do for him what I think you have a unique capacity to do. I hope that you can make him see economic theory not as a body of neat precepts nor as dogmas that one must learn but rather as a critical philosophizing about the categories. Needless to say, I’m not trying to tell you what you should teach your students. I’m merely telling you that I think that Ostrander is an intelligent enough person to understand you if you do in the class room what you used to do when I listened to you. He will understand; and he won’t reproach you if your lectures don’t enable him to get up a good note book.I spent the year before last in Berkeley at the University there and got very well acquainted with your brother M.M. Needless to say, that was one of the most valuable things that happened to me while I was there. I don’t understand why some eastern institution does not make M.M. a good offer and take him away from Berkeley where he is highly esteemed by all but sadly overlooked on pay-day.Do you ever come east? If you do we would be delighted to entertain you and Mrs. Knight here in Williamstown. I would like ever so much to be able to talk with you about economics. If you should come this way you may be sure that we would be very glad to see you.Sincerely yours,[signed] Walter SmithOctober 5, 1933Dear Smith:(I don’t know how I ought to address you, but can’t bring myself to “Professor” you, even though you did me.) I was just going to write you anyway when your letter came in the mail. Your man Ostrander arrived last week, and I had a couple of hours’ talk with him, business being slack on the first day of registration. He impressed me quite favorably. One thing he may have gotten in Oxford or in part from his eastern bringing up (we have a Princeton boy who is fully as bed [sic]) is an extremely deferential air which is embarrassing to me. I very much appreciate your comments, and I am, of course, quite set up at your sending him to us as against Harvard.By all means, any possible opportunity to get together and talk about economics. I am so depressed that it is really serious for my work. I have to fight the conviction that anything in any degree fundamental is impossible, hopeless. On one hand I agree very largely with the “rebels” that rationalistic economics doesn’t amount to a terrible lot, even if it were sound. But on the other hand the little that it does have to say about social relations and problems seems to me as peculiarly fundamental as it is limited in scope. But I suspect that man, in his well known capacity of “political animal,” is an inveterate romanticist, and will never see things in balance or perspective. He will either be a rationalist to the point of romanticism – the “Enlightenment” attitude – or else insist on scorning all fundamentals and transforming the world by wish[ful] thinking or some magic formula.I wonder what you think about current developments. I hope it may partly be due to a run-down physical condition, but actually my feeling is that we are seeing from day to day the “finish” of all we have educated ourselves to call the principal cultural fruits of western civilization. What gripes me is less this fact than the fact that I cannot rationally oppose the abolition of liberty and [the] establishment of tyranny. I feel that the regime of liberty has been a failure, or an experiment with negative results, that it has shown the incapacity of large masses of people to reach any sound conclusion by thinking and discussion – indeed the inevitability of their ending up by selling out to some hero-prophet. If this is the wrong view of events, I wish you would give me any possible help in reaching a view in which my own kind of person and of activity would have any place. I wonder if your failure to write may be based on a feeling similar to this one of my own, which is making it increasingly difficult for me to pretend to try to fan the wi[nd] of culture history into a new direction with a hen feather of words. Indeed, it is making it take an actual moral struggle a good deal of the time to open the door and go into an economics classroom and hold forth.Sincerely,Frank H. KnightNovember 24, 1933Dear FH:Thank you ever so much for your letter about Ostrander. You will be interested to know that Ostrander writes with the very greatest enthusiasm for your course. I am sure that you are doing him a lot of good. Before the year is over I would be interested to have your opinion of him and of his capacities to undertake the arduous job of being an economist. He has seemed promising to me. If this promise seems not to be fulfilled in your opinion, I should feel disposed to tell him so and urge him to resume his plans for going to the Harvard Law School.Your remarks about being depressed over the apparent disillusion of the existing economic order I very much sympathize with. Not only am I troubled about that but I am also very much troubled about the intellectual confusion and the lack of good sportsmanship on the part of the better trained economists these days. President Roosevelt seems to me to be willing to listen to reasonable and constructive suggestions and he has shown an extraordinary disposition to do some social experimenting. In the face of this extraordinary state of affairs it seems to me that the great body of well trained economists has contented themselves with growling quietly to one another and saying nothing in public. From the standpoint of maintaining one’s prestige that is in some ways the wise policy for it enables one to say “I told you so” when things in the world of business fact go wrong. It does seem to me, however, that under the circumstances economists ought to make their position known, that is[,] to point out where they think the existing policies are leading, the important and possibly conflicting goals of different lines of economic policy and certain long run changes in the set up of our legal economic structure. If the economists can’t do that much then it seems to be that they are confessing that their field is in such a state of intellectual confusion that it is practically worthless, or else they are confessing that they are a timid lot of thin-blooded academics who have no right to object if this country is run by the Babbitts.This letter comes to you to find out if there is any possibility of starting a movement or making the opinion of the economists heard. Personally I think we ought to speak out or else publicly admit that the study and teaching of economics is a racket.Sincerely yours,[signed] Walter Smith