MEMORANDUM

economists worldwide. By way of introduction Neisser mentioned Leontief’s important
contributions in partial equilibrium analysis, “which he is now inclined to look down upon.”
Neisser gave a concise assessment of what Leontief’s assumption implied of qualifications
of the Walrasian equation system and critical and quite critical of Leontief’s inclination to
minimize significance of the qualifying assumptions. Neisser had no trouble recognizing
the importance of the pioneering effort:
“Who would not admire the ingenuity he shows in simplifying the Walras system
in such a way that it, for the first time, became available to quantitative determination?
It is much more important that such a work was attempted than that the first approach
is perfect in all respects.” (Neisser (1941)
As mentioned above Leontief had applied to the Harvard Committee in 1938 for a
project on governmental receipts and expenditures in their relation to American industries.
Leontief acknowledged of having the government transactions fully integrated. After the
sabbatical year Leontief applied again at the first opportunity in February 1942 for a
continuation of the project of integrating government transactions, and gave it the
following comment:
“The project constitutes an extension of my analysis of the “Structure of
American Economy” (published by the Harvard Press in 1941). This latter line of
research has been taken over by a governmental agency (Department of Labor) which
is extending it on a large scale. The same might happen in some future time to the
subject of the present project. For obvious reasons I prefer, however, to develop the
basic approach to the new problem quite independently of any official sponsorship.”
Leontief’s preference of remaining in control of his project comes through here.
Government transactions were duly integrated in the 1939 accounts. BLS’ interest in inputoutput
tables and the cooperation with Leontief laid the foundation for an enormous boost
for input-output analysis which over the following three-four decades conquered all
continents. The Harvard Economic Research Project (HERP), established and directed by
Leontief in 1948, supported financially in the early years by Rockefeller Foundation and
the US Air Force.
The key to the success was the slight reformulation and reinterpretation of the input
output structure of the 1941 monograph which can tentatively be dated to have taken place
in 1943, resulting in the open Leontief model.
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