Justin Martin was a staff reporter for Fortune magazine from 1992 to 1998, then became a freelance writer, contributing articles on economic topics to Newsweek, Individual Investor, ESPN Magazine, and Worth.
Earlier books dealing with Alan Greenspan devote little space to his personal life. Steven K. Beckner’s Back from the Brink: The Greenspan Years (1996) allots only eighteen pages to Greenspan’s career prior to becoming chairman of the Federal Reserve; 405 detailed pages chronicle his first nine years in office. In contrast, Martin uses ten of fifteen chapters and 151 of 233 pages on Greenspan’s pre-Federal Reserve life, drawing on extensive interviews with relatives, friends, and business and government associates to narrate his subject’s youth and to document his career.
Greenspan was born in New York City on March 6, 1926. His father, Herbert Greenspan, a self-educated financier, was of German-Jewish descent; his mother, Rose Goldsmith, was the daughter of Polish Jews. Greenspan’s parents divorced when he was five years old, and Greenspan had little further contact with his father. Alan was raised by his mother, to whom he remained devoted throughout her life; Martin notes that he phoned her every morning until her death in 1995. After the divorce Rose and her son lived with her parents in the Washington Heights section of Manhattan, where Alan attended the public schools. Rose’s father was a cantor at a Bronx synagogue, but Martin records that Alan reacted unfavorably to his grandfather’s orthodox piety and as a teenager proclaimed himself a secular Jew.
Following high school, Greenspan entered the Juilliard School of Music to study clarinet and saxophone, but dropped out after two years to join the Henry Jerome Band in 1944. Greenspan failed his army draft physical when X rays revealed a spot on his lung. Martin records that a year of touring with the band convinced Greenspan that he did not have a future as a professional musician. While traveling with the band he began reading books about business and finance, and in 1945 entered the School of Commerce at New York University, earning a B.S. in economics, summa cum laude, in 1948, and an M.A. in 1950. Greenspan took night classes at Columbia University and pursued a doctorate part time at New York University, being awarded a Ph.D. in 1977.
In 1948 Greenspan accepted a position doing economic research at the National Industrial Conference Board in New York City. His analyses and predictions of the future impressed William Townsend, an elderly Wall Street bond trader; in 1953 he offered Greenspan a partnership in a projected economics consulting firm. Townsend-Greenspan & Company became a major success, attracting important corporate clients willing to pay for Greenspan’s analyses of government-collected data and his projections of future developments affecting various industries. Townsend died in 1958, but Greenspan kept the partnership name as the firm, which made Greenspan a millionaire by the late 1960’s, grew from three employees to over thirty before closing in 1987. Martin asserts that Greenspan was ahead of his time in trusting female workers with major responsibilities—Greenspan boasted that he hired first-class women economists for much less that it would have cost him to employ men with comparable skills.
Martin asserts that the most important people influencing Greenspan’s economic ideas and practices were economist Arthur Burns and social philosopher-novelist Ayn Rand. At Columbia, Greenspan took Burns’s seminar on business cycles. Burns’s use of rigorous statistical analyses to describe cyclical changes in the economy fascinated Greenspan; he has used techniques learned from Burns ever since. Burns adopted the young student as a protégé, encouraging him to develop his talent for statistical analysis. After Burns moved to Washington, first as chairman of the Council of Economic Advisers under President Dwight D. Eisenhower, then as chairman of the Federal Reserve for President Richard M. Nixon, Burns encouraged Greenspan’s involvement in politics and aided his growth in influence.
In 1952 Greenspan married Joan Mitchell, an attractive young painter, but the marriage was not a success and the pair had the union annulled after less than a year. They remained friends, and his former wife introduced a reluctant Greenspan to Ayn Rand’s circle of devotees. Born Alisa Rosenbaum in 1905 in Russia, Rand hated the Communist regime and changed her name after emigrating in 1926 to the United States, where she planned to publish her anti-Soviet views without endangering relatives remaining in Russia. When Greenspan joined her circle, she had already published the best-selling The Fountainhead (1943), dramatizing the philosophy she called “Objectivism,” stressing individualism and the significance of rational selfishness. Martin notes that Greenspan was particularly impressed by her emotional defense of extreme laissez-faire capitalism as he read...
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