DURHAM, N.C.—A few
days after Lawrence Summers was forced out of the presidency of Harvard
University in February 2006, he got an emotional, typed letter of
consolation from his uncle.
"I grieve for you," Nobel
Prize-winning economist Paul Samuelson wrote to his nephew, who had
clashed with the faculty and caused a storm by making impolitic remarks
about women in science.
"Mob psychology can be much the same
on college campuses as elsewhere," Mr. Samuelson said. He counseled his
nephew to avoid bitterness.
"I am mindful of negative aspects of grudges and of acting rashly in anger," Mr. Summers replied several weeks later.
The exchange emerges from a collection
of the late Mr. Samuelson's correspondence at the David M. Rubenstein
Rare Book and Manuscript Library at Duke University. His letters open a
window into the unusual family life of Mr. Summers, a former U.S.
Treasury secretary and one of the people President Barack Obama is
considering as a successor to Ben Bernanke when his term as Federal
Reserve chairman ends in January.
Mr. Summers is a scion of economist
elites. His parents were accomplished academic economists, and two
uncles won Nobel Prizes in the field, Mr. Samuelson and Kenneth Arrow.
Mr. Arrow, brother of Mr. Summers's
mother, Anita, took young Larry for spins in a red convertible during
visits by the Summers family to California, where Mr. Arrow lived at the
time. Later, in Cambridge, Mass., Mr. Arrow hosted Mr. Summers for
dinners when the young man was a Harvard doctoral student. "He liked to
debate. He liked to argue. He was very well-informed," Mr. Arrow said in
an interview.
The late Mr. Samuelson, who wrote a best-selling economics textbook
and stood as the chief intellectual adversary of free-market economist
Milton Friedman for decades, was the brother of Mr. Summers's late
father, Robert, who used a different surname.
When Larry Summers was 10 years old,
Mr. Samuelson asked him to figure out where the Fahrenheit and Celsius
scales converge (at minus-40 degrees), Mr. Summers recalled at a 2010
memorial service for his uncle.
Mr. Samuelson's correspondence reveals
dashes of humility from his brash nephew and a sometimes tender
behind-the-scenes connection. They also reveal occasional friction
between the demanding professor and his protégé, and regrets over Mr.
Summers's fate at Harvard.
Mr. Samuelson expressed mixed feelings
about the relationship between Mr. Summers and Robert Rubin, a former
U.S. Treasury secretary who would become a Summers mentor in the Clinton
administration.
"Rubin taught Larry some tact—but
nobody could keep his shirt tails firmly tucked in," Mr. Samuelson said
of his famously argumentative and sloppily dressed nephew in a May 2008
letter to Stanley Fischer, a former Massachusetts Institute of
Technology professor.
But Mr. Samuelson believed Mr. Rubin,
who was a member of Harvard's governing board, had failed to properly
advise Mr. Summers when he was Harvard president. In particular, his
uncle was upset about the handling of Harvard economics professor Andrei
Shleifer, one of the issues that contributed to faculty unhappiness
with Mr. Summers.
In 2004, a federal judge ruled in a
civil case that Mr. Shleifer, a close friend of Mr. Summers, conspired
to defraud the U.S. government over a finance project in Russia. Mr.
Summers recused himself from matters related to the finance project when
he became president of the school in 2001, according to Harvard. Still,
Mr. Shleifer was courted for jobs at other universities before the
ruling, and Mr. Summers spoke to a Harvard dean in favor of keeping his
friend on staff, according to a 2002 deposition for the case.
"Rubin should have compelled Larry to
stay out of the Andrei Shleifer Moscow business," Mr. Samuelson confided
to Mr. Fischer in the 2008 letter.
Mr. Summers and Mr. Shleifer didn't comment on the Samuelson letter.
Mr. Samuelson later confided to Mr. Fischer he understood why Mr.
Obama put Mr. Summers in a top White House post in 2008 rather than
nominating him to be Treasury secretary. "Why rock the boat with a
non-risk-free skipper," he said. "Congressional confirmation would have
been hectic."
To Mr. Summers, the uncle's praise
could be over the top. "I never told you how great I thought you were at
the Treasury," Mr. Samuelson wrote in 2001. "So I'll just say you were
only perfect—in there with Hamilton and Gallatin," a reference to
Alexander Hamilton and Albert Gallatin, who led the Treasury under
George Washington, Thomas Jefferson and James Madison.
In the summer of 2008, Mr. Summers and
Mr. Samuelson exchanged foreboding notes as the U.S. veered toward
financial crisis. "Before we are out of the mess the Federal
purse—Treasury and the Federal Reserve Board—is going to lose amounts
that dwarf previous real estate failures," Mr. Samuelson wrote in a July
29, 2008, letter.
"We agree situation is grave," Mr. Summers responded a few weeks later, "the government will have to do much more."
They clashed over the fate of struggling mortgage giants Fannie Mae and Freddie Mac, which were bolstered by a government backstop in July 2008 and later taken over completely by the U.S. Treasury.
Mr.
Samuelson found "strange and harmful" his nephew's skepticism about the
government backstop for the firms. Mr. Summers, a longtime critic of
the two firms, wrote back that shareholders and management of Fannie and
Freddie didn't deserve taxpayer support.
Friction had emerged earlier in 2006, when Mr. Summers praised the
late Mr. Friedman in a New York Times column. Friedman was "the most
influential economist" of the second half of the 20th century, Mr.
Summers said.
"For your eyes only," Mr. Samuelson
wrote to his nephew of Mr. Friedman, "I had to grade him low as a macro
economist" and "stubbornly old fashioned."
Write to Jon Hilsenrath at jon.hilsenrath@wsj.com
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