A Remembrance of Edward C. Harwood

Will Lissner

[Reprinted from the American Journal of Economics and Sociology, July 1982]

EDWARD CROSBY HARWOOD, economist, military engineer and founder of the American Institute for Economic Research in Great Barrington, Mass., was a participant in the work of the American Journal of Economics and Sociology since its founding. First as a reader and kindly critic, then as a contributor and member of the editorial board serving as a referee, he helped to assure the success of the effort. No matter how busy he was with his own enterprises -- he was a leading investment counselor, establishing an agency that served the investment needs of those with the lowest as well as the highest incomes -- he was always ready to help a younger scholar bring a research project to completion.

E. C. Harwood was born in Cliftondale, Mass., October 28, 1900. He was graduated from the United States Military Academy at West Point in 1920 and commissioned a second lieutenant. The army sent him to Rensselaer Polytechnic institute for further study of civil engineering and he was graduated in 1922, later taking master's degrees there in engineering and in business administration.

Colonel Harwood spent the rest of the 1920s in the Engineer Corps, advancing through the ranks. In 1930 he became associate professor of military science at the Massachusetts Institute of Technology. After two years he was appointed executive U.S. district engineer in Boston in charge of the Cape Cod Canal Improvement Program and in 1936 of flood control surveys in the northeast. He retired from the army for the first time in 1937.

He founded the American institute of Economic Research in 1933 to achieve several purposes. One was to inform the general public of the significance of national economic policies to create an informed electorate. Another was to provide investment advice based on unbiased economic research to persons in all income brackets. Later he founded American Institute Counselors, Inc., to carry on the latter service.

When the second world war impended, Colonel Harwood returned to active duty in 1940. He served at first at M.I.T., training ofhcers. In 1942 he was appointed executive of the engineering services of the European Theatre of Operations. Recalled to Washington in 1943 to serve for a time as chief of the mobilization division of the War Department, he was assigned later that year as corps engineer of the Army's XI Corps, and then in 1944 he was named chief of staff of the Army Service Command in the Southwest Pacific Theatre. For his services he was decorated with the Legion of Merit and the Bronze Star.

Retiring from the army for the second time in 1946, he resumed his work at the Great Barrington, Mass., institute that he had founded. He became a trustee of the Henry George School of Social Science and of the Progress Foundation, and treasurer of the Behavioral Research Council. But mainly he resumed the career in economic research interrupted by war.

In 1932 he had published a book, Cause and Control of the Business Cycle, which established his reputation as an economist contributing original ideas to the discipline even though his theory of the business cycle was found by his peers no more acceptable than any other. He published several books at that time critical of national economic policy or advising consumers on economic problems. One, What Will inflation and Devaluation Mean to You (1934), presaged his later activity as one of the first hard money advocates. He first advised his clients to buy South African gold mining shares in 1958. In 1979 advocates of the gold standard minted a one-ounce gold piece bearing his profile and his institute's motto, "For integrity there is no substitute."

His books in the period from 1955 to 1973 sought to develop a science of economics based on mathematical and philosophical analysis. This research was interrupted when he found it advisable to go to Switzerland to make arrangements for gold investments by his clients. Then the Securities and Exchange Commission and the Internal Revenue Service began efforts to prosecute him for his activities. For a time he was handicapped by injunctions and government efforts to avoid trial. When the cases came to trial the charges were dismissed with prejudice to the government.

His interest in the Reconstruction of Economics (the title of a book he published in 1955) went beyond the development of the theory. In one period he collaborated with the Robert Schalkenbach Foundation in a program to develop what he considered fully trained economists. The program took selected high school seniors through college and graduate school and postgraduate study for two years beyond the doctorate. Besides the usual training in economics, the participants received wide training in the social sciences, in philosophy, particularly the philosophy of science, and in mathematics and statistics. From one point of view -- the government's -- the program was highly successful: it produced individuals who were badly needed to fill jobs as the scientific members of research teams devoted to developing new weapons systems. Few who completed most of the program were willing to take jobs at much less pay in the field of economics.

I met Ed only a few times but they were enough to make us lifelong friends. When I founded this JOURNAL in 1941, Ed came down from Cambridge to ask how he could help. He took me to dinner at the old Vanderbilt Hotel in New York and when I outlined the project he gave his cordial approval. He served unofficially as a referee and, though he was up to his ears in work helping to win the war, he managed to turn out a classical article, "The Full Significance of Freedom," which we published in the January, 1945 issue.

He always had time for our concerns and our problems, even though our communication had to be limited to correspondence. Soon after his return to civilian life he joined our editorial board and though his enterprises in Great Barrington and in Switzerland had first claim upon him, he always managed to serve our readers, too. We have lost a good friend, an erudite collaborator, and a courageous crusader for justice and liberty. To his wife and his family, who are carrying on his work, we extend our deepest condolences.