Numbers appearing in square brackets (ex. ) within the transcript indicate the pagination in the original, hardcopy version of the oral history interview.
Opened January, 1972
Oral History Interview with
September 11, 1970
by Jerry N. Hess
HESS: Mr. Bean, to begin, will you give me a little of your personal background: Where were you born, where were you educated, and what are a few of the positions that you have held?
BEAN: Well, I was born way back in 1896 in Lithuania, came over to the United States in 1906 following my father's migration here a year earlier.
I like to say that the reason why I'm here in your presence is the Russo-Japanese war, as my father migrated as a result of that war. And if that hadn't happened I don't know where I'd be today. But we came to the United States, settled in New England.
I entered first grade at the age of ten, because I'd had no schooling prior to that except lessons in the Old Testament, that's all of the education that we had at that time. Went to the schools of Laconia, New Hampshire;
grade school, high school; graduated in 1916.
From there I went on to the University of Rochester, New York, entered the class of 1920, and graduated in 1919 a year ahead of my class, in part because I had a little bit of military service which gave me some credits, and partly because I felt I wanted to get through with my education as soon as possible, which is the effect the war had I think, on some of us youngsters of that day.
My interests, professional interests, at that time were unsettled in a sense, because I didn't know whether I wanted to go into business, or science, or law, or what, so I took courses that would permit me to go into any direction I chose. I concentrated in chemistry partly because I needed -- I felt if I could pass all of the exams in chemistry I would have enough credits to graduate in less than three years, and I did. But I dropped chemistry and went into -- as a livelihood after college, into the labor management field.
HESS: What attracted you to that field?
BEAN: Well, it is partly economics and partly because it had to do with one of the low income groups of the country, a little bit of sociological interest. And to prepare myself more thoroughly for that new profession
that was opening up known as labor management, I decided to go to the Harvard Business School because it had a course in factory management.
While I was at the Harvard Business School the depression of 1920-21 developed and this new activity known as labor management got a setback because management became less interested in dealing with labor unions, more interested in mere employment problems and that didn't appeal to me. So, at that juncture a classmate at Harvard who was destined to go to the Bureau of Agricultural Economics in Washington, induced several of us in that class to take Civil Service examinations.
HESS: What was his name?
BEAN: Schoenfeld, William A. Schoenfeld. He later became our agricultural attache in Germany, he was Assistant Chief of the Bureau of Agricultural Economics for a little while. But anyway, as a result of taking examinations in agricultural economics, for which I had no background whatever, I found myself at the top of the list, one of three at the top and was invited to come down here, and given a job and I took it and stayed on that job for thirty years; 1923 to 1953. I started out as a junior assistant agricultural economist.
HESS: What were your duties at first?
BEAN: Well, I was going to say I worked for awhile under that title and then a little later got a raise and a promotion, and a year or two later another raise and another promotion; after each promotion you dropped one of the words in the title. You dropped the "Junior," then you dropped the "Assistant," and then you dropped the "Agricultural," and you became a pure Economist. And finally came the Republican administration in 1953 and they dropped the "Economist." In other words, at that time I was Economic Adviser to Secretary [Charles F.] Brannan, having been Economic Adviser previously to Secretary [Clinton P.] Anderson, and before his day to Secretary [Henry Agard] Wallace. But the new administration felt that it wanted an economist of its own. So, my job was rewritten so they could bring in somebody else and I decided to leave the Government, which I did.
Now, the work that I was engaged in was agricultural economic research for the first ten years, with specialization in the interrelations between agriculture and business. By the time I came to the Department in 1923, the Bureau of Agricultural Economics was already fairly well organized, a new postwar entity, and most of the
jobs were already filled in research in commodities. The one spot that was still to be filled had to do with the relation of business conditions, the general economic conditions of the country to agriculture. And since I had just come from the Harvard Business School it was assumed that I was the person to fill that spot. So, that opened up for me a wide range of interests because agriculture touches the rest of the world in many ways.
So, in the pursuit of relations between agriculture and the rest of the economy, I was able to get involved in business cycles, in wage levels, in general income, farm income, price movements, export-import trade, financial conditions, stock market, weather conditions, all of the things that could possibly have a bearing on agricultural prices, became part of my terrain.
If you were to ask what were specific accomplishments in those first ten years, I was one of the men involved in what has since become known as the agricultural outlook. Once a year the Department of Agriculture gathers together economists, extension officers from all over the country, for a few days. An attempt is made to foresee what the agricultural developments would be for the next year so that farmers can gauge their acreage programs. And that service to farmers was
initiated almost the day when I joined the Department in 1923.
The first conference was held within the first month, and my assignment that year was to draw up a report on the balance of international payments as one of the items for understanding what kind of business activity the country would be in in the coming year.
For the first conference chiefly experts from the outside were brought in. One of the experts happened to be a young man by the name of Henry Wallace. There were economists from western banks, New York City banks, from industry and colleges and so on. But after that first year or so, the experts in the Department took over. We all developed our own sense of competence in our specialization, and ever since then the outlook conferences have been held by experts in the Department, commodity experts primarily, with the guidance and discussions of outsiders as well. It has become a well established, well recognized service, a contribution to economic understanding of farm problems and related general problems.
HESS: What other accomplishments come to mind?
BEAN: The next one that comes to my mind is the preparation of an index of agricultural prices. The Department at
that time had no general measure of what prices farmers received for their products. There was information which was gathered once a year as of December 1. But I was asked to construct a monthly index of prices received by farmers. That led me to scouting around the country to see where we could obtain records of prices that farmers received, and one of the contacts that that led me to was Henry Wallace in Iowa. I bring in this name here because from then on I had an almost continuous association with him and it meant a great deal to me.
HESS: When did you first meet Mr. Wallace?
BEAN: It must have been in 1923. I don't recall whether I had already gone out to check with him on the availability of local prices in Iowa as they might have been published in his paper, his father's paper, called Wallace Farmer, or whether I met him at the end of the year at a meeting here in Washington of the American Statistical Association.
From then on he used to come to Washington quite regularly during the years when his father was Secretary of Agriculture. He was then interested in statistics, agricultural prices. He had written a book on the corn-hog price ratio, as a determinant of hog production, a forecaster of hog production. So he used to look us up and visit around the Department of Agriculture with fellow statisticians
and I was fortunate enough to be one of them. So, I originated that particular index and it is still going today. As you read it in the press, the farm index has gone up so many points, and the index of prices the farmers pay and it's paid in a certain manner. The first of these indexes I take credit for.
That was followed by initiating a series known as "Farm Income." We had no adequate measure of what farmers were getting for their crops. In those days the Department used to tally, at the end of the year, the value of crops produced in terms of prices prevailing in December of each year. No recognition of the fact that farmers probably sold their stuff at either lower or higher prices before that. And the livestock was nothing more than the value of livestock inventory as of January 1. Neither of these were good measures of farmer's income. So, my next assignment was to develop an annual report on farmer's income. That's still alive, it has been greatly expanded. This led to estimating farmer's expenditures as well. So now when you read that the farmer's net income has gone up, say, from sixteen billion dollars a year, to seventeen billion dollars a year, it's based on that work we did in the late 1920s.
The next item of contribution had to do with
establishing fairly definite evidence of the interplay between agricultural income and non agricultural income. The dependence of, say, the dairy farmers, on factory payrolls. That type of relationship I developed in the late '20s, and that also has been substantially expanded so that the Department publishes currently, comparisons between farmer's income per capita with non-agricultural income per capita.
As a result of working in this field of statistical relationships, I developed an improvement on what was known then as multiple correlation. I don't know whether you are at all statistically inclined. Today if you knock on the Government door and ask for a job and you use certain phrases like "computers," "programming," and model-building," you're readily accepted. In the early 1920s if you approached a statistical office in a government agency and you said, "multiple correlation," you were almost in, because those were the key marks of standing in the profession. Well, I did quite a bit of work in that corner of statistical analysis, and developed what has now become known as the Bean Shortcut Graphic Method of Multiple Curvilinear Correlation.
HESS: Got your name on the title.
BEAN: And that field has since been greatly elaborated with the advent of high speed computers, but there's
much that lends itself better to graphic correlation, as against the highly technical, sophisticated electronic computer operations. And it is, I think, being used by many statisticians and researchers in government and business. But I rather think that my work is partly responsible for that. I published articles on the subject in December 1929 , and December 1930, and recently these articles and associated articles have appeared in book form (Kelley Publishers, N.Y.).
Well, this takes us to about 1929, 1930, '31. Then came the great depression, and maybe I ought to mention one item by tooting one's horn. As Mr. Paul Appleby, the administrative assistant to Henry Wallace and later Under Secretary, once said, "Louis, if you don't toot your own horn, who will?"
In January of 1929, in connection with our annual agricultural outlook, I was about the only one in the Department of Agriculture who argued that come the fall of 1929, in other words the crop season of 1929-30, farmers would be experiencing a letdown in business activity and in the demand for their products. I was not able to say that the recession would be a minor one or a deep one.
HESS: But you did look for a recession at that time? What
were the indicators that you saw?
BEAN: Well, let me first say that, from the standpoint of Government, I, through the Department of Agriculture, was the only voice that prophesied a downturn. It was unusual for a government agency to allow that kind of a forecast to get into print.
The factors that led me to that conclusion were, first, a familiarity with certain studies the Harvard Economic Committee had been publishing. In those days there was a group of Harvard economists who had studied economic statistics and economic history, had put together various indicators which they called the A, B, C curves. The