I’ve just come across some intriguing mentions of a mysterious machine in a folder of correspondence between Lionel Robbins and the Economics Department at LSE. The first mention is in a letter from James Meade to A P Lerner (copied to Robbins) ‘Phillips [A W Phillips] has talked to me about this knotty problem of getting his machine to Chicago in time for the December meeting of the American Economic Association’, 1950. The next mention is a couple of Department circulars. The one below gives instructions on how to gain access to the machine.
Reference no. Robbins/temp/152
This was followed by another circular a few weeks later saying that demand for access has been so high that all staff in the Economics and Statistical Departments are to be given their own key. So what is the Phillips Hydraulic machine and why was it so popular?
Well, a google search let me know it was also known as the Moniac machine. Still none the wiser? No me neither. So away I went to do some research. My first port of call was LSE Library on Flickr to see if we had any photos of Phillips and the machine and I was in luck – not only are there photographs of Phillips and the machine but there’s plenty of information on the purpose of the machine and on the designer, A W Phillips.
Reference no: IMAGELIBRARY/6
Phillips originally trained as an engineer in his native New Zealand in the 1930s. He arrived in London in 1938, joined the RAF at the outbreak of war, and was captured and spent most of the war in a Japanese POW camp. After the war he returned to the UK and studied at LSE getting a BSc (Econ) in 1949. He was very interested in economics and in order to understand the Keynesian model better he used his engineering training, and a small grant of £100, to work on a representation of the Keynesian model using tanks of water – a hydraulic representation.
“In the machine he constructed, the circular flow of income was represented by water being pumped round a series of clear plastic tubes, with outflows representing savings, taxes and imports, and inflows representing investment, government spending and exports. The model had three tanks representing the stock of money, one for transaction balances and one for foreign-held sterling balances. The whole system determined the level of income, the rate of interest, imports, exports and the exchange to an accuracy (astonishing at the time) of +two per cent. The time path of income and the other variables was traced out by plotter pens making it possible to analyse the quantitative effects of economic policy.
The machine, in the jargon, was a hydraulic representation of an open economy IS-LM model with an explicit underlying dynamic structure. It was this very Heath Robinson prototype which, with the enthusiastic support of James Meade (then Professor of Commerce at the School), Phillips demonstrated to Lionel Robbins’ seminar in November 1949. Those attending gazed in wonder at this large (7ft high x 5ft wide x 3ft deep) ‘thing’ in the middle of the room. Phillips, chain smoking, paced back and forth explaining it in a heavy New Zealand drawl, in the process giving one of the best lectures on Keynes that anyone in the audience had ever heard. Then he switched the machine on. And it worked! According to Lord Robbins’ recollections, “there was income dividing itself into consumption and saving…Keynes and Robertson need never have quarreled if they had had the Phillips Machine before them”", ‘The Phillips Machine Project’ by Nicholas Barr, LSE Magazine, June 1988, No75, p.3.
So you can see from the above reflections that the machine was considered quite revolutionary for its time and signified an important step forwards in the understanding and teaching of economic theory.
The story continues in the correspondence. In another letter from James Meade, this time to the Director of LSE, and copied to Robbins, he expresses his worries about the financial situation of A W Phillips who he says has ‘lived practically on air for six months’ while making the first machine. Meade says that although Phillips has now been offered an appointment at LSE he feels that they should help to reimburse him for time already spent on the machine. There is no letter laying out what the reimbursement was but plenty of correspondence about how deserving Phillips was of both financial assistance, and a post at LSE, so it was nice to see that he was well appreciated at LSE. The last letter from Phillips to Robbins in the folder I’ve just finished is dated Sunday 7th October. Phillips says he is looking forward to starting at LSE on 5th November and has enjoyed his recent holiday. There is quite a bit of correspondence between Lionel Robbins and A W Phillips (known as Bill Phillips) in the Lionel Robbins collection and when the new catalogue is up online all these instances of correspondence will be easy to find via the online catalogue.
One of the Phillips Machines is now on display at the Science Museum and you can see some photos of it on their website or even better, go visit it yourself!