Spotlight: Gold's Standardbearer

Lewis Lehrman was not appointed to a post with the Reagan administration, though his name came up repeatedly. M.S. Forbes of Forbes magazine describes Lehrman as "a tough successful businessman turned economic thinker. He has the brains and money market experience to make a substantial contribution to the formulation and execution of policy." The Wall Street Journal wanted to see him in the Federal Reserve or the Treasury. Rowland Evans and Robert Novak, in the Washington Post, rated him higher than William Simon or Alan Greenspan.

Scuttlebutt has it that the reason for Lehrman's omission from the list of economic advisors was a schism within the free-market camp between Friedman monetarists and supply-siders. The big bone of contention is one four-letter word—G-O-L-D. The monetarists want a restricted money supply first and foremost, achieved through a conservative Federal Reserve policy. Lehrman, a supply-sider, wants a return to the gold standard, and he has emerged as one of the most articulate and persuasive of gold's advocates.

Lewis Lehrman's grandfather was an immigrant grocer. Lehrman's father, also a grocer, saved his pennies to send his son to the best school. So Lewis, with the help of scholarships, went to Yale and then Harvard for his master's degrees in history and government. In the process, he developed an interest in one Jacques Rueff, a French philosopher and economist who advised Charles de Gaulle and inspired his distrust of paper money and enthusiasm for the concept of a common market for Europe. Lehrman eventually visited Rueff in Paris and came to be treated like the son Rueff never had.

Lehrman taught for a short while at Harvard but decided that he loved the world of business, and its rewards, more than the world of academia. Drawing on his experience in the family grocery business, he applied the techniques of high-volume, low-overhead supermarkets to the drug business and was instrumental in the establishment of the highly successful Rite Aid Drug Store chain, which now has over 1,000 stores in 16 states. In 1972 he started another ongoing business, the Lehrman Corporation, which works with small companies to supply venture capital and investment counseling.

Lehrman abdicated the presidency of Rite Aid in 1977 for the chairmanship of the executive committee in order to give more attention to the Lehrman Institute, a public policy think tank he established with the fortune he made in the '70s. Located in New York, the Lehrman Institute has attracted attention for its work on both national and New York State issues.

Free-market economist, author, and superstar Jude Wanniski described a different aspect of the Institute when he told REASON that it was Lehrman's "quickest way to get a world-class education, where you could choose the topic you wanted to know about and then have the best minds from all over the world travel to your table, where you could sit and listen while everyone debated and argued."

Today, the institute supports a number of ongoing research projects by its fellows and nearly 100 conferences a year. Lehrman attempts to bring into his conferences, in addition to the usual professorial sort, businesspeople, lawyers, bureaucrats, and a host of nonacademics. One of the institute's major projects is the translation and publication of at least four volumes of Jacques Rueff's work. Lehrman is convinced that Rueff will play the part in the '80s that John Maynard Keynes played in the transformation of international economic policy in the '30s.

Rueff was a classical liberal, and Lehrman labels himself in the same way. He is a believer in a government limited to "the defense of persons and their property." When it comes to specific issues, he is sometimes more conservative than libertarian. "There are areas where I get into disagreement with my libertarian friends," he says, "such as the question of addictive drugs and the more advanced forms of pornography." He is chairman of the Economic Advisory Council of the New York Republican State Committee and is seriously considering running for governor in 1982; people think he could win.

That Lehrman can make waves is evidenced by the now-famous "economic Dunkirk" paper in which Director of the Office of Management and Budget David Stockman and Rep. Jack Kemp (R-N.Y.) called for Reagan to declare, immediately upon taking office, a national economic emergency. The paper was written and issued as the result of two memorandums written by Lewis Lehrman. They warned that unless Reagan acted quickly in three areas—monetary reform, budget restraint, and a substantial reduction in marginal tax rates—his plans would fall on the same rocks as have dashed Margaret Thatcher's policies. In addition, Lehrman renewed his call for the reinstitution of the gold standard.

What does "the gold standard" mean? First, government would relinquish its monopoly on issuing money. Second, the Bureau of Weights and Measures, as with the inch or the quart, would set a standard of measurement. "In the absence of a government monopoly on money," explains Lehrman, "private money could compete. I have no doubt that gold money would emerge as the choice of the market. It has over and over in commercial civilization." Lehrman confidently told REASON that we will see the gold standard established before 1990. "The 1988 elections will be fought over the gold issue."

Lehrman says that his wife and five children are the most important things in his life. He is in top physical shape and has run the New York Marathon. His philosophy is American Revolutionary; his appearance, European royalty. Jude Wanniski laughed as he told of watching Lehrman on his estate in Connecticut. Lehrman keeps a stable there and runs the hounds with his family. According to Wanniski, Lehrman could appear in any men's magazine, wearing bright red riding pants and jacket, black English riding boots and crop, "except for his lucky felt fedora, easily 20 years old." Wanniski goes on, "He's a radical, a revolutionary. But you don't see that behind the gentry. He's my kind of bomb thrower."

Patrick Cox is a free-lance writer.