New Administration: Disciple of Growth

President-elect Kennedy seemed to promise to make the Treasury a fortress of moderation when, fortnight ago, he plucked Wall Street Republican C. Doug las Dillon out of the Eisenhower State Department for his Treasury Secretary.

But last week he opened the White House gates to an economic philosophy of another hue when he chose his chairman of the influential three-man Council of Economic Advisers. The chairman: Walter Wolfgang Heller, 45, a smiling, polysyllabic professor of economics at the University of Minnesota, who ranks among the nation's most articulate believers in Government-planned growth of the U.S. economy.

"Human Capital." Like Harvard University Economist John Kenneth (The Affluent Society) Galbraith, Heller believes that a steady growth rate in the economy is a national necessity. Such growth, as he sees it, probably will require a "forced draft" of new capital investment. The Federal Government (aided by state and local governments), rather than private enterprise, should be in charge of the increased investment — concentrating on such fields as education, scientific research, health and other forms of "human capital."

To promote growth, Heller is ready to accept — in preference to high unemployment — a "tolerable" amount of inflation, but does not define how much is tolerable. He hopes that foreign competition and an attack on domestic monopolies and labor featherbedding will help keep wages and prices in line. If they do not, "we should not shrink from selective controls" over such fields as consumer credit, mort gage rates and depreciation allowances —but not necessarily over prices and wages. He is for lower interest rates to spur the economy, for a broader taxation base to pay for the new projects. On the budget: "You run a big surplus to fight inflation; you run a big deficit to fight recession."

Private Affluence. Over the years, affable Walter Heller has developed enough private affluence to afford a redwood four-level contemporary home in St. Paul, Minn, and a sporty Peugeot. Born in Buffalo of German immigrant parents, he graduated from Ohio's Oberlin College ('35), earned his doctorate at the University of Wisconsin six years later—just seconds after his wife got her Ph.D. in physiology. Rejected for military service, Heller joined the Treasury Department in 1942 as an economic consultant. After the war he went back to teaching but kept up his profitable sideline as an economist at large. For a year (1947-48), he was an adviser to the U.S. military government in Germany. In 1951, as a consultant to the Treasury Department, Heller helped draft special Korean-war legislation that raised corporate taxes from 45% to 52% (where they stayed), raised excise duties on a wide range of goods, including beer and liquor, cigarettes, gasoline, auto parts, etc. (still taxed).