Arthur F. Burns, 83, former chairman of the Federal Reserve Board, economic adviser to five presidents and former U.S. ambassador to West Germany, died yesterday at Johns Hopkins Hospital in Baltimore of complications after triple heart bypass surgery in April.
An economist by profession who had taught at Columbia and Rutgers universities, Burns served as chairman of the Council of Economic Advisers during the Eisenhower administration. He was credited with transforming the council into a kind of economic general staff for the White House.
The Kennedy and Johnson administrations called on him for advice on economic matters, and from 1981 to 1985, he served as U.S. ambassador to West Germany.
Burns was chairman of the Federal Reserve Board, which regulates the nation's supply of money, from 1970 to 1978. He was especially influential during the two-year presidency of Gerald Ford, and in 1975 he met with the president 48 times at the White House.
In a White House statement, President Reagan said Burns was "among the most brilliant economists of his generation . . . a wise and skillful diplomat, as well as a trusted adviser."
To the nation's business and banking community, Burns was a symbol of fiscal stability who struggled to check inflation and curb government spending. On Capitol Hill he was held in a kind of veneration normally reserved for presidents, even by representatives and senators who disagreed with his economic policies.
He was a jealous protector of the Fed's independence from other agencies of the government and he was not afraid to disagree with the White House.
In 1977, Burns' opposition helped kill a proposal by President Jimmy Carter for a $50 per person tax rebate. He drew the wrath of the Nixon White House in 1971 with a call for wage and price controls, an act that brought a bitter personal attack -- and subsequently an apology -- from White House aide Charles Colson. Burns was accused in 1972 of having deliberately promoted an easy money policy in an effort to assist President Richard Nixon's reelection, a charge he vigorously denied.
With his omnipresent pipe, his shock of unruly silver hair and his deliberate and cautious manner of speech, Burns appeared every inch the university professor that he had been. He was once described as the slowest talker and fastest thinker in Washington.
As an economist he was a pioneer in the study and theory of business cycles. While he doubted that economic fluctuations could ever be eliminated, he did believe that they could be held within tolerable limits. He opposed large expansions or contractions in the money supply, and he believed that economic trends could be forecast by studying such basic indicators as construction starts and stock prices.
He was a conservative who also believed that the federal government should act as an employer of last resort, and he opposed taxing any income less than $3,500. "Why tax poverty?" was his reasoning.
Burns once told a congressional committee that while he believed efforts to assist the poor were commendable, "What I find missing in much of our thinking today is that we forget that there is such a thing as the middle class, that the great energies of our people are largely concentrated in that class and that, when we start manipulating taxes and so on, we tend to ignore that class."
To some Democrats on Capitol Hill, including former House speaker Thomas P. (Tip) O'Neill Jr. (D-Mass.), Burns was the living embodiment of tight-fisted, tight-money Republican economics. This was one of the key factors in President Carter's decision not to reappoint him to a third four-year term as Fed chairman in 1978.
Blunt and outspoken, Burns covered a variety of economic issues in public discussions. During the Nixon presidency, he criticized the president for not moving faster to settle foreign trade problems. In October 1977, two months before Carter announced he would not be reappointed, Burns assailed the president's economic policies as ineffective, and he rejected White House criticism of the Fed's credit-tightening policies.
The Fed, he said, had no intention "of letting the money supply grow at a rate that will add fuel to the fires of inflation." Those remarks were taken as a direct response to suggestions from the White House that Federal Reserve Board policies were threatening to block the nation's economic recovery.
Carter's announcement that Burns would be replaced by G. William Miller, chairman of the board of Textron Inc., capped months of speculation in the news media and aggressive lobbying by the business community, which wanted Burns reappointed.
But White House aides said at the time that it was the Fed's tightening of the money supply and credit, coupled with Burns' criticism of the Carter administration, that led to the president's decision.
Born Arthur Frank Burnseig in Stanislau in a part of the Austro-Hungarian Empire that is now in the Soviet Ukraine, Burns came to the United States when he was 10. He grew up in Bayonne, N.J., where his father operated a paint contracting business. He won a scholarship to Columbia University and worked as a house painter, waiter, shoe salesman, postal clerk and seaman to pay for his room and board.
He earned a master's degree and a doctorate in economics at Columbia where he studied under Wesley Mitchell, one of the early analysts of business cycles and founder of the National Bureau of Economic Research, a private organization for research in the social sciences.
Burns was on the economics faculty at Rutgers and later at Columbia while simultaneously investigating the rise and fall of business productivity at the National Bureau of Economic Research, where he became director of research in 1948.
In March 1953, President Dwight D. Eisenhower brought Burns to Washington as his chief economic adviser and later as chief of the reconstituted Council of Economic Advisers. In that role he helped frame administration policy on taxes, government spending and public works.
Shortly after taking office, Burns predicted that the Fed's tight-money policy would bring on a recession. To offset this, he recommended tax cuts and easier credit policies, which were thought to have sparked the economic boom of 1955.
In 1960 he predicted that a tight-money policy then in effect would cause a recession. Without steps to correct this, Burns said, the Democrats would win the presidential election. Nixon, in his book, "Six Crises," said Eisenhower's failure to heed Burns' warning cost him the election that year.
Burns was on President Kennedy's Advisory Committee on Labor Management Policy. For President Johnson at mid-term, he outlined a series of economic problems, including an overheated capital goods boom, rising interest rates, a declining stock market, excessive inventories, wages lagging behind profits and a shrinking trade surplus. He told the president to curb domestic spending and reduce the rate of credit expansion to help correct these problems.
After serving as an adviser in the 1968 Nixon presidential campaign, Burns joined the White House staff in the newly created Cabinet-level post of counselor to the president shortly after Nixon's inauguration. One year later Nixon named him to the first of two four-year terms as chairman of the Federal Reserve Board.
Among his first official acts were dispensing with the board's fleet of limousines in favor of smaller cars. Unlike his predecessor, William McChesney Martin Jr., Burns announced he would be the first to vote on issues before the Federal Open Market Committee, the body that implements the Fed's policy for easing or tightening the money supply.
"A chairman who sits there until everyone else has made his position known and then votes with the majority -- what kind of leadership is that?" said Burns.
His first two years at the Fed coincided with what was then a high rate of inflation of more than 5 percent. Its momentum was broken in August 1971, when Nixon imposed wage and price controls. Then late in 1973, the Organization of Petroleum Exporting Countries began a series of dramatic increases in oil prices. Several economists urged the Fed to expand the money supply sufficiently to accommodate the oil increases -- and surging food prices -- although such a course would also build a higher price structure into the entire economy.
Instead, Burns chose not to accommodate inflation, which hit 12 percent in 1974, forcing painful adjustments on the economy, including a severe recession in 1974 and 1975. The recession reduced the inflation rate sharply, but it stayed about 5 percent.
Burns still had six years remaining of his original 14-year appointment as a member of the Federal Reserve Board when Carter declined to reappoint him chairman in 1978, but Burns opted to leave the board.
During his four years as Reagan's ambassador in Bonn, Burns was as blunt and outspoken as he had been during his years at the Fed.
"You're called a diplomat if you confront facts vaguely or obliquely," he said in an interview with The Washington Post. "That has become the meaning of the word, and I think it's awful."
Before various West German audiences, Burns discussed the possibilities of America's deciding to withdraw its troops from West Germany, expressed concern about young Germans' unfamiliarity with U.S. affairs and their own nation's history, and said he was disappointed in Bonn's hesitant backing of U.S. policy in El Salvador and its reserved reaction to repression in Poland.
He tried to meet regularly with groups of young Germans, and he acted as a private and unofficial adviser to Chancellor Helmut Schmidt. The West German press referred to him more than once as "that great old man of American politics."
In a formal statement, Secretary of State George P. Shultz called Burns a "gifted economist and a distinguished public servant," who "dedicated himself to democratic values and free market principles."
Federal Reserve Chairman Paul A. Volcker said he was a "staunch supporter of the Federal Reserve as an institution," and had a "profound influence throughout the institution and on U.S. economic policy for eight years."
Burns is survived by his wife of 57 years, Helen Burns of Washington; two sons, David Burns of New York City and Joseph Burns of Washington; and two sisters, Pearl Schwartz of Potomac and Jean Rubin of Bayonne.