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SIMON, WILLIAM 1927-

ENERGY CZAR, 1973-1974; SECRETARY OF THE TREASURY, 1974-1977

A Relative Unknown

When William Simon was appointed chief of the new Federal Energy Office on 4 December 1973, he was a relatively unknown Wall Street bond trader stepping into one of the most important jobs in the country. His decisiveness and candor in allocating American energy resources during the Arab oil embargo—and during the winter of 1973-1974—soon made him a house-hold name. Unlike fellow Nixon administration officials, Simon made a habit of openness with the press and responsiveness to the public, which lessened, perhaps, the seeming omnipotence of the "energy czar." And while William Simon did not end the energy crisis, his level-headed administration of the emergency made him one of the most respected bureaucrats among the various governmental agencies overseeing American industry, paving the way for his appointment as secretary of the treasury in 1974.

Background

Grandson of a French-immigrant textile tycoon who lost virtually everything in the Depression, Simon's father was a New Jersey insurance broker. When Simon was eight, his mother died. He, his brother, and two sisters attended the Blair Academy and Newark Academy, where Simon earned a reputation as a popular athlete. Upon graduating he entered the army, swimming with the army team in the Pacific Olympics. Simon attended Lafayette College in Easton, Pennsylvania, after being discharged, once again becoming known more for his success as pledge master of Delta Kappa Epsilon and as a swimmer than for his academic achievements. Having married Carol Girard, a Marymount College coed, in his sophomore year, Simon abandoned plans for law school and took a job on Wall Street.

Wall Street Whiz

Simon quickly established himself as one of the sawiest municipal-bond traders on Wall Street. Moving to Salomon Brothers as its chief of federal bonds and securities, Simon oversaw the tremendous expansion of the firm in the 1960s. In 1969 he became the first president of the Association of Primary Dealers in United States government securities, and a member of the Salomon Brothers management committee. Simon's income was reportedly over $3 million a year by 1972, and he had earned a celebrated reputation in the financial community. He began to advise state and city governments on bond purchases and eventually came to the attention of George Shultz, treasury secretary in the Nixon administration. In 1972 ShultzGeorge Shultz asked him to join the government as deputy secretary of the treasury, and, putting his assets in a blind trust, Simon and his family moved to Washington.

Energy Policy

As deputy secretary of the treasury, one of Simon's responsibilities was to chair the Interagency Oil Policy Committee, and he began to study the energy problems in the United States. Before the oil embargo Americans gorged themselves on cheap energy, consuming nearly a third of the world's fuel while only having 6 percent of the world's population. The 1973 oil embargo only made a bad situation worse. The Nixon administration responded to the emergency by creating the Federal Energy Office and appointing former Colorado governor John Love as its first head. When Love resigned because of the administration's preoccupation with Watergate, Simon stepped into the job, announcing at the press conference on his appointment that "We have become a nation of great energy wastrels. We have been accustomed to an overabundance of cheap energy. That day is over. This country now faces the choice between comfort and convenience, or jobs."

Problems

As FEO chair, Simon immediately confronted a seemingly endless array of problems. Sixty different federal agencies oversaw parts of the nation's energy policy; Simon coordinated their efforts and assembled a staff of one thousand people. He prioritized energy resources to industry in order to limit the oil embargo's impact on the economy and urged citizens to lower their thermostats to 68 degrees and drive under 55 MPH in order to conserve fuel. Few appreciated his efforts. The Pentagon balked when he allocated 1.5 million barrels of military jet fuel for commercial use (they only delivered half), and the oil companies, while appreciating government incentives for resource development, took Simon's mandatory allocation program to court. The public viewed much of the energy program skeptically, convinced that the oil companies were purposely holding back supplies and driving up the price of fuel. They had reason to be suspicious: oil-company fuel inventories were nearly 9 percent higher in 1974 than they were in 1973, and Nobel Prize-winning economist Wassily Leontief, consumer advocate Ralph Nader, and ecologist Barry Commoner all charged the oil companies with price gouging. Simon responded to these suspicions by attempting to secure government statistics on private fuel inventories, and when the oil companies refused to cooperate, Simon took his difficulties to the public and assessed fines against companies that deliberately falsified their disclosures. He also set the Internal Revenue Service on the trail of gas stations artificially increasing prices or creating shortages. He only reluctantly and temporarily regulated prices, preferring voluntary controls and the self-regulating mechanisms of the market. Such a philosophy earned him the criticism of many, especially after the oil companies posted profits during the oil shortage 46 percent higher on average than the previous year. Oilmen, testifying before Congress, argued that many of these profits were the results of overseas sales and that the figures ignored the credit squeeze investors placed on oil companies after the embargo, but many in the public remained unconvinced.

Secretary of the Treasury

Simon sidestepped the controversy over oil-company profits by developing an ambitious plan to wean the United States from its foreign imports and develop new sources of energy. He was one of the chief forces behind the Nixon administration's Project Independence, designed to develop new fuel resources for the nation. Because of Watergate, the program was neglected during the remainder of Nixon's term. Under the supervision of Vice-president Nelson Rockefeller, President Ford proposed a similar program in 1975, but it failed to pass in Congress. Ultimately, no long-term U.S. energy policy was established during the 1970s, but Simon's handling of the fuel emergency earned him (by unanimous vote in the Senate) the office of secretary of the treasury in April 1974. Continuing as secretary under Gerald Ford, Simon negotiated a grain export arrangement with the Soviet Union and advocated fiscal restraint. Stressing traditional Republican economic policies, he opposed federal loans to bail out New York City and emphasized the limits of federal economic assistance to the underprivileged. Simon left government service with the defeat of Ford in 1976, but his efforts to plan a coherent American energy policy resulted in the creation of the Energy Research and Development Administration and other energy programs important in the coming decade.