Half of the members of the research staff of the Cowles Commission have been drawn into
public service or other work essential to the war effort. The financial resources of the
Commission and the energies of the remaining staff members have been devoted, insofar as
is possible, to a study of price controls and rationing in order to appraise these means
of maintaining stability in our war economy. Research capacities not convertible to war
purposes have been used in projects of long-term significance.
SURVEY OF PRICE CONTROL AND RATIONING
Early in 1942 plans were initiated by the research staff of the Cowles Commission for a
survey of price control and rationing methods. As a natural development from previous
collaboration, the Committee on Price Determination, organized under the auspices of the
Price Conference of the National Bureau of Economic Research, decided to join in the
enterprise. When a request for funds was submitted to the Rockefeller Foundation, its
Board made a grant to the University of Chicago for use in the project.
The survey of the impacts of price control on business is being conducted by means of
rather exhaustive interviews with sellers and buyers, supplemented by the analysis of the
releases of the Office of Price Administration and other publications. Many interviews
with manufacturers and retailers have thus far been completed and are in the process of
tabulation. From these much is being learned regarding the effectiveness of price
regulations, the impact of these controls on business operations, and their resultant
effects on the supply of goods and services. The findings will be published in article, in
pamphlet, and finally in book form.
During 1942 this survey of price control was directed by Theodore O. Yntema who took an
active part in planning the program and in the research work of the project. Leonid
Hurwicz was the associate director of the project; during the first half of the year he
was actively in charge of its administration, and during the latter part of the year he
continued to act as consultant and advisor. In recent months H. Gregg Lewis has aided in
guiding the study and Bernice Levenfeld has assumed increased responsibility for the work
of the office staff and the interviews. Forrest Danson assisted in revising the
questionnaire and conducted many interviews.
It is hoped that this project can be continued to make possible a comparison of the
effectiveness of price and rationing regulations and their effects at various stages of
conversion to the war effort and at various stages of accumulation of excess funds in the
hands of consumers.
OTHER WORK OF THE YEAR
Forrest Danson has been in charge of computational work on various projects and has
continued studies of common-stock prices. Since July much of his time has been devoted to
interviews for the study of price control.
Harold T. Davis has completed the manuscript (about 500 pages) of Alexandria, the
Golden City, which emphasizes the development of mathematics and science in that
center. He has also finished the manuscript of Vol. 3 of his Tables of the Higher
Mathematical Functions, which is devoted to The Legendrian and Related Functions
(about 400 pages). He has in progress a study of The Mathematical Interpretation of
History, a survey of economic data from about 600 B.C. to the present time and an
interpretation of their meaning in observed historical movements. In addition he is
completing a Bibliography of Tables of the Elementary Functions, the report of a
subcommittee of the Committee on Mathematical Tables and Aids to Computation of the
National Research Council.
Leonid Hurwicz was engaged during the first half of the year in: 1. Problems of
business-cycle theory and time series (with Oscar Lange, as described below), and 2.
Problems of price determination (as executive secretary of the Committee on Price
Determination of the National Bureau of Economic Research).
Oscar Lange's research during 1941 centered around three problems: 1. The statistical
testing of recent business-cycle theories, 2. Price flexibility, employment, and economic
stability, and 3. Problems of welfare economics. The investigation on the statistical
testing of recent business-cycle theories was carried out by Professor Lange and Mr.
Hurwicz, under the joint auspices of the Cowles Commission and the Social Science Research
Committee of the University of Chicago. This research was chiefly concerned with the
statistical evidence for the existence of short cycles and was carried on by means of
correlogram analysis and of the harmonic dial. The statistical part of this research has
been substantially finished and the investigation is now in the stage of studying the
economic interpretation of the results. The study on price flexibility, employment, and
economic stability was concerned with the problem whether and under what conditions
flexibility of price of factors of production serves to obtain full employment, and what
policies have to be taken in the cases when flexibility of factor prices fails to achieve
that result. In welfare economics the work was concerned with giving a systematic
mathematical demonstration of the established propositions in this field.
Dickson H. Leavens, in addition to his editorial and administrative work, has continued to
study developments affecting silver. He has also been studying price controls in Great
Britain in connection with the study of price control.
H. Gregg Lewis has been engaged in the completion of his study of the demand for steel. He
(with Mr. Hurwicz) has also been supervising the preparation of a report on the interviews
made under the auspices of the Committee on Price Determination in 1941 to ascertain the
important factors affecting the pricing policies of business men.
Jacob Marschak has in process a study, "Demand Analysis," based on budget data,
market data, and other data relevant to each of the particular commodity groups studied,
such as meat, food as a whole, housing, etc. The knowledge of the interrelation between
savings and the demand for the various commodity groups at given prices and given
distribution of income may, together with the available findings of financial statistics,
contribute to an "Econometrics of Taxation," under both wartime and peacetime
conditions. As a side line and a prerequisite for the demand studies, a study of the
statistical genesis of income-distribution functions has been undertaken. Another study is
concerned with "Probabilities in Economics" and analyzes problems of risk and of
Jacob L. Mosak made final revision in his manuscript for Cowles Commission Monograph No. 7, General-Equilibrium
Theory in International Trade, which is in press for publication in the summer of
PARTICIPATION IN THE WAR EFFORT
The Commission and its staff have contributed to the prosecution of the war both by
direct participation of individuals in war work and by concentration of Commission
resources in the survey of price control.
Joel Dean continued on leave of absence throughout the year to act as director of
rationing of gasoline and fuel oil in the Office of Price Administration. Jacob L. Mosak
also continued on leave of absence as head of the fiscal and monetary section of the
research division of the Office of Price Administration. Leonid Hurwicz, after teaching in
the electronics program of the U.S. Army Signal Corps at the Illinois Institute of
Technology, joined the faculty of the Institute of Meteorology of the University of
Chicago where, in addition to teaching statistics, he is engaged in statistical and other
research activities. John H. Smith resigned from the Commission to take a position in the
Bureau of Labor Statistics of the United States Department of labor where he is working on
problems of price index numbers of war goods. Theodore O. Yntema took leave of absence
from the Commission during the spring quarter to act as special consultant in the War
Shipping Administration, continuing in this capacity half time during the summer quarter.
OUTSIDE ACTIVITIES OF STAFF
Participation of the staff members in the war effort has been described in the
preceding section. Other outside activities of staff members are noted below.
Oscar Lange is on leave of absence from the University of Chicago and the Cowles
Commission to act as visiting professor in Columbia University during the academic year,
During the winter quarter while on half-time leave of absence from the University,
Professor Yntema made an economic study of wages in the steel industry for the Inland
Steel Company and an analysis of marginal costs of producing steel for the McLouth Steel
COOPERATION IN RESEARCH
The major research project of the Commission, the survey of price control, is being
undertaken with the co-operation of the University of Chicago and the Committee on Price
Determination organized under the auspices of the Price Conference of the National Bureau
of Economic Research. Professor Marschak has been appointed chairman of this Committee on
Price Determination; Messrs. Dean and Yntema, the former co-chairmen, will continue as
members of the Committee.
The technical problems in the analysis and tabulation of common stocks to appraise their
stability as media of in, vestment for insurance companies and savings banks has been
explored and a joint project in this field is under consideration by the National Bureau
and the Commission.
On November 1st Theodore O. Yntema resigned from his position as research director of
the Cowles Commission and accepted an appointment as research director of the Committee
for Economic Development. In this capacity he will study the conditions conducive to full
employment after the war. Professor Yntema is on leave of absence from the Commission and
the University; he will remain on the staff of the Commission as a research associate.
Jacob Marschak has accepted appointment as research director of the Cowles Commission and
as professor of economics in the University of Chicago, taking up these positions in
January, 1943. Professor Marschak was born in Kiev, Russia, and studied at the Technical
College at Kiev from 1915 to 1918 and at the University of Berlin in 1919. He received the
degree of Ph.D. from the University of Heidelberg in 1922 and the degree of M.A. by decree
from the University of Oxford in 1935. He was assistant professor at the University of
Heidelberg until 1933; Chichele lecturer in economics at All Souls College, Oxford,
19331935; reader in statistics and director of the Institute of Statistics, Oxford
University, 19351939; professor of economics, Graduate Faculty of Social and
Political Science, New York, 19391942. He is a fellow of the Econometric Society. He
is the author of Die Lohndiskussion and Die Elastizitšt der Nachfrage, 1931, and
the co-author of Kapitalbildung (with W. Lederer, London, 1936) and of
"Studies in the Mobility of Labour" (with H. Makower and H. W. Robinson, Oxford
Economic Papers, 19391940); he has also published a number of articles.
Leonid Hurwicz became a research associate of the Commission in January, 1942, as reported
in the Decennial Report, 19321941.
The death on January 17, 1942, of Herbert E.
Jones, who had been on the research staff of the Commission since 1936, was also
reported in the same place.
John H. Smith resigned from the staff of the Commission in the summer of 1942 to accept a
position as statistical consultant in the office of the chief statistician, Bureau of
Labor Statistics, United States Department of Labor.
George Katona, Ph.D., University of Gottingen, 1921, joined the staff in January, 1943, as
associate director of the study of price control and rationing and assumed the
administrative direction of the project. Dr. Katona was associate editor of Der
Deutsche Volkswirt (The German Economist), Berlin, from 1926 to 1933, as well as
German correspondent of the Wall Street Journal, New York, from 1929 to 1933, and
worked as economic adviser in New York from 1934 to 1938. In 1938 and 1939 he obtained
grants-in-aid for psychological research from the Carnegie Corporation of New York. As
fellow of the John Simon Guggenheim Foundation from 1940 to 1942 he conducted
investigations in war economics. He was connected with the New School for Social Research,
New York, from 1935 as a research associate and later as lecturer. He is the author of
numerous articles in economic and psychological journals and of the following books: Zur
Psychologie des Vergleichens und der Relationserfassung, Leipzig, 1934; Organizing
and Memorizing Studies in the Psychology of Learning and Teaching, New York, 1940; War
Without Inflation, The Psychological Approach to Problems of War Economy, New
THE ECONOMETRIC SOCIETY IN 1942
The Cowles Commission offices have continued as the headquarters of the Econometric
Society, an international society for the advancement of economic theory in its relation
to statistics and mathematics, founded in 1930. Members of the Commission staff holding
offices in the Society are Alfred Cowles, Harold T. Davis, Oscar Lange, and Dickson H.
Leavens. Mr. Cowles is secretary and treasurer of the Society and business manager of its
quarterly journal, Econometrica, now beginning its eleventh year. Professor Davis
is an associate editor of Econometrica. Professor Lange has been elected acting
editor to serve while it is impossible to communicate with Professor Ragnar Frisch, of the
University of Norway, who has been editor since the foundation of the journal and whose
present term expires December 31, 1944. Mr. Leavens is managing editor of the journal.
During 1942 Volume 10 of Econometrica was published, consisting of two regular
issues and one double issue, totalling 340 pages. The regular mailing list includes 238
subscribers, chiefly libraries, and 721 members of the Society, of whom 158 subscribers
and 340 members are in the United States and the remainder in foreign countries. Because
of the war, it is impossible to mail copies to many of these countries, but a sufficient
quantity is being printed to supply those who may wish to complete their files after the
It was planned to hold meetings of the Society in Cleveland and New York, December
2930, 1942, in connection respectively with the meetings of the Allied Social
Science Associations and the American Association for the Advancement of Science, and a
program was prepared by Professor Lange and Mr. Leavens as program committee. At the end
of November, however, in order to comply with the request of the Office of Defense
Transportation all these meetings were cancelled.
Monographs of the Cowles Commission were published during 1942, but Monograph No. 7, General-Equilibrium
Theory in International Trade, by Jacob L. Mosak, is in press for publication in the
summer of 1943. This book will give a definitive theory of international trade constructed
on the foundations of theoretical economics laid by J. R. Hicks and others during the last
During the year members of the staff have published 20 books, papers, and monographs, and
have presented 10 papers before scientific societies, as follows:
|HAROLD T. DAVIS
College Algebra, revised and enlarged edition, Prentice-Hall,
1942, xix + 470 pp.
Outline of An Encyclopedia of Mathematical Functions, in 20
Volumes, 49 pp. (Mimeographed).
"Some Problems in Econometrics," presented at Lake Forest
College, March 10, 1942.
Dinner with Archimedes," presented at Crawfordsville, Indiana,
April 24, 1942, before the Indiana Section of the Mathematical Association of America
(abstract in American Mathematical Monthly, Vol. 49, November, 1942, p. 582). Also
presented at Chicago, October, 1942, before the Men's Mathematics Club of Chicago.
"A Mathematical Theory of Income and Its Consequences,"
presented at Crawfordsville, Indiana, April 25, 1942, before the Indiana Section of the
Mathematical Association of America (abstract in American Mathematical Monthly,
Vol. 49, November, 1942, p. 582).
"Luncheon with Euclid," presented at Evanston, October, 1942,
before the Women's Mathematics Club of Chicago.
"Dinner with Cleopatra," presented at Chicago, November 17,
1942, before Phi Delta Kappa.
"Mathematical Patterns in History," presented at Evanston,
December 2, 1942, as retiring address of the president of the Northwestern University
Chapter of Sigma Xi.
"Direct Control of Machinery Prices," Harvard Business
Review, Vol. 20, Spring, 1942, pp. 277289.
(With R. Warren James) "The Long-Run Behavior of Costs in a Chain
of Shoe Stores: A Statistical Analysis," The Journal of Business, Vol. 15, No.
2, Part 2, April, 1942, 54 pp.
(As editor, with E. M. Hoover) Readings in the Social Control of
Industry, Series of republished articles on economics, Vol. 1, Philadelphia,
Blakiston, 1942, 494 pp.
"Department-Store Cost Functions," in Lange, McIntyre, and
Yntema, Editors, Studies in Mathematical Economics and Econometrics, In Memory of Henry
Schultz, Chicago, The University of Chicago Press, 1942, pp. 222254.
(As Editor, with Francis McIntyre and Theodore O. Yntema) Studies in
Mathematical Economics and Econometrics, In Memory of Henry Schultz, Chicago, The
University of Chicago Press, 1942, 292 pp.
"Say's Law: A Restatement and Criticism," in ibid.,
"Theoretical Derivation of Elasticities of Demand and Supply: The
Direct Method," Econometrica, Vol. 10, JulyOctober, 1942, pp.
"The Foundations of Welfare Economics," Econometrica,
Vol. 10, JulyOctober, 1942, pp. 215228.
"Planning in the Post-War World," presented at the University
of Chicago, July 1, 1942, before Second Annual Conference for Teachers of the Social
Sciences in Secondary Schools and Junior Colleges.
"Special Interests Hammer at Price Control: War Savings,
Rationing, Can Close 'Inflationary Gap," New Leader, Vol. 25, No. 24,
June 13, 1942 p. 4.
"Taxation, Borrowing, not Wage Freezing, Can Close Inflation
Gap," New Leader, Vol. 25, No. 25, June 20, 1942, p. 4.
"Total War and Economic Trends," presented at Chicago, August
25, 1942, as a public lecture of the Social Science Division of the University of Chicago.
"Economic Nationalism versus World Organization," presented
at New York, October 7, 1942, in conference at the Rand School of Social Sciences.
"Economic Planning, the Market, and Freedom," presented at
New York, October 27, 1942, in conference at Institute of World Economics.
DICKSON H. LEAVENS
"Silver [Review of 1941]," Engineering and Mining Journal,
Vol. 143, February, 1942, pp. 5556.
"Report of the Chicago Meeting [of the Econometric Society],
September 24, 1941," Econometrica, Vol. 10, January 1942, pp.
"Report of the New York Meeting [of the Econometric Society],
December 2730, 1941, and of the Dallas Meeting, December 2930, 1941." Econometrica,
Vol. 10, April, 1942, pp. 169191.
(With John J. Croston) "Gold and Silver," chapter in The
Mineral Industry during 1941, New York, McGraw-Hill, 1942, pp. 201271.
JACOB L. MOSAK
"On the Interpretation of the Fundamental Equation of Value
Theory," in Lange, McIntyre, and Yntema, Editors, Studies in Mathematical
Economics and Econometrics, In Memory of Henry Schultz, Chicago, The University of
Chicago Press, 1942, pp. 6974.
JOHN H. SMITH
"Weighted Regressions in the Analysis of Economic Series," in
Lange, McIntyre, and Yntema, Editors, Studies in Mathematical Economics and
Econometrics, In Memory of Henry Schultz, Chicago, The University of Chicago Press,
1942, pp. 151164.
THEODORE O. YNTEMA
"Henry Schultz: His Contributions to Economics and
Statistics," in ibid., pp. 1117.
(As Editor, with Oscar Lange and Francis McIntyre) Studies in
Mathematical Economics and Econometrics, In Memory of Henry Schultz, Chicago, The
University of Chicago Press, 1942, 292 pp.
"Price Controls," in Chester W. Wright, Editor, Economic
Problems of War and Its Aftermath, Chicago, the University of Chicago Press, 1942, pp.