George Pratt Shultz (/ʃʊlts/SHUULTS; December 13, 1920 – February 6, 2021) was an American economist, businessman, diplomat and statesman. He served in various positions under two different Republican presidents and is one of the only two persons to have held four different Cabinet-level posts, the other being Elliot Richardson.[1] Shultz played a major role in shaping the foreign policy of the Ronald Reagan administration, and conservative foreign policy thought thereafter.
Shultz left the Nixon administration in 1974 to become an executive at Bechtel. After becoming president and director of that company, he accepted President Ronald Reagan's offer to serve as United States secretary of state. He held that office from 1982 to 1989. Shultz pushed for Reagan to establish relations with Soviet leaderMikhail Gorbachev, which led to a thaw between the United States and the Soviet Union. He opposed the U.S. aid to Contras trying to overthrow the Sandinistas by using funds from an illegal sale of weapons to Iran. This aid led to the Iran–Contra affair.
Shultz was born December 13, 1920, in New York City, the only child of Margaret Lennox (née Pratt) and Birl Earl Shultz. He grew up in Englewood, New Jersey.[10] His great-grandfather was an immigrant from Germany who arrived in the United States in the middle of the 19th century. Contrary to common assumption, Shultz was not a member of the Pratt family associated with John D. Rockefeller and the Standard Oil Trust.[11]
After attending the local public school, he transferred to the Englewood School for Boys (now Dwight-Englewood School), through his second year of high school.[12] In 1938, Shultz graduated from the private preparatory boarding high school Loomis Chaffee School in Windsor, Connecticut. He earned a bachelor's degree, cum laude, at Princeton University, New Jersey, in economics with a minor in public and international affairs. His senior thesis, "The Agricultural Program of the Tennessee Valley Authority", examined the Tennessee Valley Authority's effect on local agriculture, for which he conducted on-site research.[13] He graduated with honors in 1942.[10][11]
Shultz was President Richard Nixon's Secretary of Labor from 1969 to 1970. He soon faced the crisis of the Longshoremen's Union strike. The Lyndon B. Johnson Administration had delayed the walkout with a Taft–Hartley injunction that expired, and the press pressed him to describe his approach. He applied the theory he had developed in academia: he let the parties work it out, which they did quickly. He also imposed the Philadelphia Plan, which required Pennsylvania constructionunions to admit a certain number of black members by an enforced deadline—a break with their past policy of largely discriminating against such members. This marked the first use of racial quotas in the federal government.[19]
Shultz became the first director of the Office of Management and Budget, the renamed and reorganized Bureau of the Budget, on July 1, 1970.[21] He was the agency's 19th director.[22]
Secretary of the Treasury
Shultz was United States Secretary of the Treasury from June 1972 to May 1974. During his tenure, he was concerned with two major issues, namely the continuing domestic administration of Nixon's "New Economic Policy", begun under Secretary John Connally (Shultz privately opposed its three elements), and a renewed dollar crisis that broke out in February 1973.[11][23]
Domestically Shultz enacted the next phase of the NEP, lifting price controls begun in 1971. This phase was a failure, resulting in high inflation, and price freezes were reestablished five months later.[23]
Meanwhile, Shultz's attention was increasingly diverted from the domestic economy to the international arena. In 1973, he participated in an international monetary conference in Paris that grew out of the 1971 decision to abolish the gold standard, a decision Shultz and Paul Volcker had supported (see Nixon Shock). The conference formally abolished the Bretton Woods system, causing all currencies to float. During this period Shultz co-founded the "Library Group", which became the G7. Shultz resigned shortly before Nixon to return to private life.[23]
In 1974, he left government service to become executive vice president of Bechtel Group, a large engineering and services company. He was later its president and a director.[26]
Under Shultz's leadership, Bechtel received contracts for many large construction projects, including from Saudi Arabia. In the year before he left Bechtel, the company reported a 50% increase in revenue.[27]
On July 16, 1982, Shultz was appointed by President Ronald Reagan as the 60th U.S. Secretary of State, replacing Alexander Haig, who had resigned. Shultz served for six and a half years, the longest tenure since Dean Rusk's.[30] The possibility of a conflict of interest in his position as secretary of state after being in the upper management of the Bechtel Group was raised by several senators during his confirmation hearings. Shultz briefly lost his temper in response to some questions on the subject but was nevertheless unanimously confirmed by the Senate.[31]
Shultz relied primarily on the Foreign Service to formulate and implement Reagan's foreign policy. As reported in the State Department's official history, "by the summer of 1985, Shultz had personally selected most of the senior officials in the Department, emphasizing professional over political credentials in the process [...] The Foreign Service responded in kind by giving Shultz its 'complete support,' making him one of the most popular Secretaries since Dean Acheson."[30] Shultz's success came from not only the respect he earned from the bureaucracy but the strong relationship he forged with Reagan, who trusted him completely.[32]
Diplomatic historian Walter LaFeber states that his 1993 memoir, Turmoil and Triumph: My Years as Secretary of State, "is the most detailed, vivid, outspoken, and reliable record we probably shall have of the 1980s until the documents are opened".[33]
Relations with China
Shultz inherited negotiations with the People's Republic of China over Taiwan from his predecessor. Under the terms of the Taiwan Relations Act, the United States was obligated to assist in Taiwan's defense, which included the sale of arms. The Administration debate on Taiwan, especially over the sale of military aircraft, resulted in a crisis in relations with China, which was alleviated only in August 1982, when, after months of arduous negotiations, the United States and the PRC issued a joint communiqué on Taiwan in which the United States agreed to limit arms sales to Taiwan and China agreed to seek a "peaceful solution".[34]
Relations with Europe and the Soviet Union
By the summer of 1982, relations were strained not only between Washington and Moscow but also between Washington and key capitals in Western Europe. In response to the imposition of martial law in Poland the previous December, the Reagan administration had imposed sanctions on a pipeline between West Germany and the Soviet Union. European leaders vigorously protested sanctions that damaged their interests but not U.S. interests in grain sales to the Soviet Union. Shultz resolved this "poisonous problem" in December 1982, when the United States agreed to abandon sanctions against the pipeline and the Europeans agreed to adopt stricter controls on strategic trade with the Soviets.[35]
A more controversial issue was the NATO Ministers' 1979 "dual track" decision: if the Soviets refused to remove their SS-20 medium range ballistic missiles within four years, then the Allies would deploy a countervailing force of cruise and Pershing II missiles in Western Europe. When negotiations on these intermediate nuclear forces (INF) stalled, 1983 became a year of protest. Shultz and other Western leaders worked hard to maintain allied unity amidst anti-nuclear demonstrations in Europe and the United States. In spite of Western protests and Soviet propaganda, the allies began deployment of the missiles as scheduled in November 1983.[35]
U.S.–Soviet tensions were raised by the announcement in March 1983 of the Strategic Defense Initiative, and exacerbated by the Soviet shoot-down of Korean Air Lines Flight 007 near Moneron Island on September 1. Tensions reached a height with the Able Archer 83 exercises in November 1983, during which the Soviets feared a pre-emptive American attack.[36]
Following the missile deployment and the exercises, both Shultz and Reagan resolved to seek further dialogue with the Soviets.[35][37]
When General SecretaryMikhail Gorbachev of the Soviet Union came to power in 1985, Shultz advocated that Reagan pursue a personal dialogue with him. Reagan gradually changed his perception of Gorbachev's strategic intentions in 1987, when the two leaders signed the Intermediate Range Nuclear Forces Treaty.[38] The treaty, which eliminated an entire class of missiles in Europe, was a milestone in the history of the Cold War. Although Gorbachev took the initiative, Reagan was well prepared by the State Department to negotiate.[39]
Two more events in 1988 persuaded Shultz that Soviet intentions were changing. First, the Soviet Union's initial withdrawal from Afghanistan indicated that the Brezhnev Doctrine was dead. "If the Soviets left Afghanistan, the Brezhnev Doctrine would be breached, and the principle of 'never letting go' would be violated", Shultz reasoned.[38] The second event, according to Keren Yarhi-Milo of Princeton University, happened during the 19th Communist Party Conference, "at which Gorbachev proposed major domestic reforms such as the establishment of competitive elections with secret ballots; term limits for elected officials; separation of powers with an independent judiciary; and provisions for freedom of speech, assembly, conscience, and the press."[38] The proposals indicated that Gorbachev was making revolutionary and irreversible changes.[38]
Middle East diplomacy
In response to the escalating violence of the Lebanese civil war, Reagan sent a Marine contingent to protect the Palestinian refugee camps and support the Lebanese Government. The October 1983 bombing of the Marine barracks in Beirut killed 241 U.S. servicemen, after which the deployment came to an ignominious end.[30] Shultz subsequently negotiated an agreement between Israel and Lebanon and convinced Israel to begin partial withdrawal of its troops in January 1985 despite Lebanon's contravention of the settlement.[40]
Shultz was known for outspoken opposition to the "arms for hostages" scandal that would eventually become known as the Iran-Contra Affair.[42] In 1983 testimony before Congress, he said that the Sandinista government in Nicaragua was "a very undesirable cancer in the area".[43] He was also opposed to any negotiation with the government of Daniel Ortega: "Negotiations are a euphemism for capitulation if the shadow of power is not cast across the bargaining table."[44]
Shultz was an early advocate of the presidential candidacy of George W. Bush, whose father, George H. W. Bush, was Reagan's vice president. In April 1998, Shultz hosted a meeting at which George W. Bush discussed his views with policy experts including Michael Boskin, John Taylor, and Condoleezza Rice, who were evaluating possible Republican candidates to run for president in 2000. At the end of the meeting, the group felt they could support Bush's candidacy, and Shultz encouraged him to enter the race.[47][48]
In a 2008 interview with Charlie Rose, Shultz spoke out against the U.S. embargo against Cuba, saying that U.S. sanctions against the island country were "ridiculous" in the post-Soviet world and that U.S. engagement with Cuba was a better strategy.[51]
In 2003, Shultz served as co-chair (along with Warren Buffett) of California's Economic Recovery Council, an advisory group to the campaign of California gubernatorial candidate Arnold Schwarzenegger.[52]
In later life, Shultz continued to be a strong advocate for nuclear arms control.[45] In a 2008 interview, Shultz said: "Now that we know so much about these weapons and their power, they're almost weapons that we wouldn't use, so I think we would be better off without them."[45] In January 2008, Shultz co-authored (with William Perry, Henry Kissinger, and Sam Nunn) an op-ed in The Wall Street Journal that called on governments to embrace the vision of a world free of nuclear weapons.[53] The four created the Nuclear Threat Initiative to advance this agenda, focused on both preventing nuclear terrorist attacks and a nuclear war between world powers.[54] In 2010, the four were featured in the documentary film Nuclear Tipping Point, which discussed their agenda.[55]
In January 2011, Shultz wrote a letter to President Barack Obama urging him to pardon Jonathan Pollard. He stated, "I am impressed that the people who are best informed about the classified material Pollard passed to Israel, former CIA Director James Woolsey and former Chairman of the Senate Intelligence Committee Dennis DeConcini, favor his release".[56]
Shultz was a prominent advocate of efforts to fight anthropogenic climate change.[45] Shultz favored a revenue-neutral carbon tax (i.e., a carbon fee and dividend program, in which carbon dioxide emissions are taxed and the net funds received are rebated to taxpayers) as the most economically efficient means of mitigating climate change.[4][6] In April 2013, he co-wrote, with economist Gary Becker, an op-ed in the Wall Street Journal that concluded that this plan would "benefit all Americans by eliminating the need for costly energy subsidies while promoting a level playing field for energy producers."[2] He repeated this call in a September 2014 talk at MIT[3] and a March 2015 op-ed in The Washington Post.[4] In 2014, Shultz joined the advisory board of the Citizens' Climate Lobby, and in 2017, Shultz cofounded the Climate Leadership Council, along with George H. W. Bush's Secretary of State James Baker and George W. Bush's Secretary of the TreasuryHenry Paulson.[5] In 2017, these Republican elder statesmen, along with Martin S. Feldstein and N. Gregory Mankiw, urged conservatives to embrace a carbon fee and dividend program.[6]
In 2016, Shultz was one of eight former Treasury secretaries who called on the United Kingdom to remain a member of the European Union ahead of the "Brexit" referendum.[57]
From 2011 to 2015, Shultz was a member of the board of directors of Theranos, a health technology company that became known for its false claims to have devised revolutionary blood tests.[7][58][59] He was a prominent figure in the ensuing scandal. After joining the company's board in November 2011, he recruited other political figures, including former secretary of state Henry Kissinger, former secretary of defense William Perry, and former U.S. senator Sam Nunn. Shultz also promoted Theranos founder Elizabeth Holmes at major forums, including Stanford University's Institute for Economic Policy Research (SIEPR), and was on record supporting her in major media publications. This helped Holmes in her efforts to raise money from investors.[60][61]
Shultz's grandson, Tyler Shultz, joined Theranos in September 2013 after graduating from Stanford University with a degree in biology.[62][63] Tyler was forced to leave the company in 2014 after raising concerns about its testing practices with Holmes and his grandfather. George Shultz initially did not believe Tyler's warnings and pressured him to keep quiet.[64][65] Shultz continued to advocate for Holmes and Theranos.[64] Tyler eventually contacted reporter John Carreyrou (who went on to expose the scandal in The Wall Street Journal), but as summarized by ABC Nightline, "it wasn't long before Theranos got wind of it and attempted to use George Shultz to silence his grandson."[66] Tyler went to his grandfather's house to discuss the allegations, but was surprised to encounter Theranos attorneys there, who pressured him to sign a document.[66] Tyler did not sign any agreements, even though George pressured him to: "My grandfather would say, like, things like 'Your career would be ruined if [Carreyrou's] article comes out.'"[66] Tyler and his parents spent nearly $500,000 on legal fees, selling their house to raise the funds, in fighting Theranos' accusations of violating the NDA and divulging trade secrets.[66]
When media reports exposed controversial practices there in 2015, the company moved their non-technical directors like Shultz to a "Board of Counselors" and replaced them with a technical board. In 2016 Theranos' "Board of Counselors" was "retired".[67] Theranos was shut down on September 4, 2018.[68] In a 2019 media statement, Shultz praised his grandson for not having shrunk "from what he saw as his responsibility to the truth and patient safety, even when he felt personally threatened and believed that I had placed allegiance to the company over allegiance to higher values and our family. ... Tyler navigated a very complex situation in ways that made me proud."[66]
Other memberships held
Shultz had a long affiliation at the Hoover Institution at Stanford University, where he was a distinguished fellow and, beginning in 2011, the Thomas W. and Susan B. Ford Distinguished Fellow; from 2018 until his death, Shultz hosted events on governance at the institution.[69][70] Shultz was chairman of JPMorgan Chase's international advisory council.[50] He was co-chairman of the conservative Committee on the Present Danger.[50]
Together again with former secretary of defense William Perry, Shultz was serving on the board of Acuitus at the time of his death.[77] And he has been member of the advisory board of the Peter G. Peterson Foundation.
Family
While on a rest and recreation break in Hawaii from serving in the Marines in the Asiatic-Pacific Theater during World War II, Shultz met military nurse lieutenant Helena Maria O'Brien (1915–1995). They married on February 16, 1946, and had five children: Margaret Ann Tilsworth, Kathleen Pratt Shultz Jorgensen, Peter Milton Shultz, Barbara Lennox Shultz White, and Alexander George Shultz.[10][78] O'Brien died of pancreatic cancer in 1995.[79]
In 1997, Shultz married Charlotte Mailliard Swig, a prominent San Francisco philanthropist and socialite.[80][81] They remained married until his death. Shultz was a member of an Episcopal church.[82]
President Joe Biden reacted to Shultz's death by saying, "He was a gentleman of honor and ideas, dedicated to public service and respectful debate, even into his 100th year on Earth. That's why multiple presidents, of both political parties, sought his counsel. I regret that, as president, I will not be able to benefit from his wisdom, as have so many of my predecessors."[87]
Honors and prizes
2016 – Presidential Medal of Honor, San Francisco State University[88]
Honorary degrees were conferred on Shultz from the universities of Columbia, Notre Dame, Loyola, Pennsylvania, Rochester, Princeton, Carnegie Mellon, City University of New York, Yeshiva, Northwestern, Technion, Tel Aviv, Weizmann Institute of Science, Baruch College of New York, Williams College, Hebrew University of Jerusalem, Tbilisi State University in the Republic of Georgia, and Keio University in Tokyo.[94]
Shultz, George P. Issues on My Mind: Strategies for the Future, Hoover Institution Press, ISBN9780817916244, 2013.
Shultz, George P. and Shoven, John B. Putting Our House in Order: A Guide to Social Security and Health Care Reform. New York: W.W. Norton, ISBN9780393069617, 2008
Shultz, George P. Economics in Action: Ideas, Institutions, Policies, Hoover Institution on War, Revolution and Peace, Stanford University, ISBN9780817956332, 1995.
Shultz, George P. Turmoil and Triumph: My Years as Secretary of State, New York: Scribner's, ISBN9781451623116, 1993.
Shultz, George P. U.S. Policy and the Dynamism of the Pacific; Sharing the Challenges of Success, East-West Center (Honolulu), Pacific Forum, and the Pacific and Asian Affairs Council, 1988.[104]
The U.S. and Central America: Implementing the National Bipartisan Commission Report: Report to the President from the Secretary of State, U.S. Department of State (Washington, D.C.), 1986.[105]
Risk, Uncertainty, and Foreign Economic Policy, D. Davies Memorial Institute of International Studies, 1981.[106]
(With Kenneth W. Dam) Economic Policy beyond the Headlines, Stanford Alumni Association, ISBN9780226755991, 1977.
(With Albert Rees) Workers and Wages in an Urban Labor Market, University of Chicago Press, ISBN0226707059, 1970.
(With Arnold R. Weber) Strategies for the Displaced Worker: Confronting Economic Change, Harper (New York), ISBN97808371885531966.
(Editor and author of introduction, with Robert Z. Aliber) Guidelines, Informal Controls, and the Market Place: Policy Choices in a Full Employment Economy, University of Chicago Press (Chicago), 1966.[107]
(Editor, with Thomas Whisler) Management Organization and the Computer, Free Press (New York), 1960.[108]
Automation, a new dimension to old problems by George P. Shultz and George Benedict Baldwin (Washington: Public Affairs Press, 1955).[109]
(Editor, with John R. Coleman) Labor Problems: Cases and Readings, McGraw (New York), 1953.[110]
Pressures on Wage Decisions: A Case Study in the Shoe Industry, Wiley (New York), ASINB0000CHZNP 1951.
(With Charles Andrew Myers) The Dynamics of a Labor Market: A Study of the Impact of Employment Changes on Labor Mobility, Job Satisfaction, and Company and Union Policies, Prentice-Hall (Englewood Cliffs, NJ), ISBN9780837186207,1951.
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^Greider, William (December 9, 1982). "The Boys From Bechtel". Rolling Stone. Archived from the original on August 22, 2016. Retrieved August 11, 2016.
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^Walter LaFeber, review in American Historical Review (Oct. 1993), p. 1203.
^"Reagan's Foreign Policy". Short History of the Department of State. United States Department of State, Office of the Historian. Archived from the original on February 20, 2019. Retrieved February 13, 2009.
^ abc"The United States in Europe". Short History of the Department of State. United States Department of State, Office of the Historian. Archived from the original on March 14, 2019. Retrieved February 13, 2009.
^"Gorbachev and Perestroika". Short History of the Department of State. United States Department of State, Office of the Historian. Archived from the original on December 5, 2018. Retrieved February 13, 2009.
^"George P. Shultz". United States Department of State, Office of the Historian. Archived from the original on December 5, 2018. Retrieved February 13, 2009.
^Oded, Eran (2002). "Arab-Israel Peacemaking." The Continuum Political Encyclopedia of the Middle East. Ed. Avraham Sela. New York: Continuum. p. 135
^"George P. Shultz"(fee, via Fairfax County Public Library). Contemporary Authors Online. Detroit, MI: Gale. 2010. GALE|H1000090903. Archived from the original on December 16, 2019. Retrieved February 7, 2012.. Gale Biography In Context. (subscription required)
^Shultz, George Pratt; Coleman, John Royston (1953). Labor Problems: Cases and Readings. McGraw-Hill. Archived from the original on February 8, 2021. Retrieved February 8, 2021.
Coleman, Bradley Lynn and Kyle Longley, eds. Reagan and the World: Leadership and National Security, 1981–1989 (University Press of Kentucky, 2017), 319 pp. essays by scholars
Hopkins, Michael F. "Ronald Reagan's and George HW Bush's Secretaries of State: Alexander Haig, George Shultz and James Baker." Journal of Transatlantic Studies 6.3 (2008): 228–245.
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Pee, Robert, and William Michael Schmidli, eds. The Reagan administration, the cold war, and the transition to democracy promotion (Springer, 2018).
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