A Master Tacker Departs

"With the changing political winds, one who sets sail directly toward his distant goal would never get there. The skill lies in tacking."

George Shultz is a golfer, not a sailor, but he likes to describe his practice as an economic manager in nautical terms. A confirmed free-marketeer in an Administration whose economic policies blow hither and yon, Shultz learned to become a master tacker, but he never really learned to like it. Last week, after 22 tiring months as Treasury Secretary and more than five years in top economic posts, Shultz announced that he will resign and leave the Government in May.

His departure is unlikely to change Administration economic policy much. The White House did not immediately announce a successor, but the leading candidate by far is Energy Czar William E. Simon (the only other names being mentioned are Roy Ash, director of the Office of Management and Budget, and John Dunlop, head of the Cost of Living Council). Simon is both a free-market advocate and an ardent admirer of Shultz, who persuaded him to come to Washington 15 months ago as No. 2 man at Treasury. Simon still nominally holds that post even while running the Federal Energy Office--a job that stands to lose some of its urgency and importance with the lifting of the Arab oil embargo. Should Simon indeed go to the top at Treasury, the next energy chief could well be Dunlop, whose Cost of Living Council is soon to be pruned back severely.

Neither Simon nor any other successor as Treasury chief could quickly re-establish Shultz's primacy in economic policymaking. Shultz has been not only Treasury Secretary but an assistant to Nixon and the Administration's first formally designated economic coordinator. Even if his successor also gets those titles, other Administration figures like Ash and Secretary of Agriculture Earl Butz are sure to grab for some of the authority that Shultz exercised.

Shultz, a mild-mannered and courteous man who nevertheless argued his free-market principles with surpassing stubbornness, came to that authority by his loyalty to the President and skill at tacking; he is the last member of the original Nixon Cabinet still in high office. Shultz was dean of the University of Chicago Graduate School of Business when he was named the Administration's first Secretary of Labor in 1968. After serving with quiet competence in that job, he was put in charge of the newly created Office of Management and Budget in 1970.

He soon became one of the two or three people most influential in shaping the Administration's early policy of trying to stop inflation by gradually slowing the economy and resisting controls--a policy that he liked to describe as "steady as she goes." That policy was reversed in August 1971, when Treasury Secretary John Connally sold the President on wage-price controls. But instead of sulking, Shultz tacked by helping to set up the control mechanism. He was rewarded for his loyalty by being promoted to Treasury Secretary, succeeding Connally in May 1972.

Since then Shultz has won a few and lost a few. He foresaw shortages of both food and energy and kept pressure on the President to end restrictions on farm output and oil imports--two steps that were belatedly taken within the past 14 months. And he persuaded finance ministers of the world money powers last year to let currency-exchange rates float in response to supply and demand, a practice that has provided a measure of stability for the international monetary system.

On the other hand, Shultz's basic abhorrence of controls, coupled with his occasional willingness to go along with them as a political necessity, helped to produce the erratic lurches from Phase to freeze that have marked Nixonian economic policy. Shultz recommended the abrupt lifting of the relatively successful Phase II controls in January 1973, a monstrously mistimed move that permitted inflation to gather renewed momentum. Last summer he reluctantly went along with the Administration's hasty and unsuccessful second price freeze but soon began working to remove controls again. The Administration has decided to drop them this spring, marking a victory for Shultz -- how big a one will be determined by how well his successor does in getting the nation's 10% inflation rate under control.

Last year he was depressed by the Watergate scandals and President Nixon's inattention to economic policy; one of Washington's worst kept secrets was that he wanted to leave, but would probably wait for the energy crisis to abate and controls to be phased out before announcing his departure. Now 53, he will take occasional assignments for the White House, but says, "I don't have any idea, really," of what he will do for a full-time job. Displaying the integrity that even his bitterest critics admire, he refused to consider the subject until he actually announced his resignation.

Shultz's economic policies may not have always been effective, but his candor, honesty and tacking ability are assets that the Administration will miss.

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