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Armen Alchian and the H-Bomb

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Armen Alchian is an economist of Armenian descent who was born in California in 1914. He earned a Ph.D. from Stanford and went on to work with the Army Air Corps. This eventually led to a position as an economist in the RAND Corporation. RAND gets it’s name for being a Research and Development think tank that originally did research exclusively for the US Armed Forces.

One of the things Armen is best known for is his work studying how prices are influenced. He developed many models and offered many analyses of the work of other economists. These skills served him well in the 1950s while working with RAND. The first test of an H-bomb was carried out in 1952, with Armen being employed by RAND during the bomb’s development.

The year before its creation, the people in the economics department were understandably curious about how the bomb was made. As you can expect the physicists and engineers would not tell them, due to the sensitivity of the information. Armen told them he would figure it out himself. He looked at documents from the Department of Commerce, and cross-referenced that with information about who dealt in which metals that could be in the H-bomb. He watched the stock prices of these companies for the 6 months leading up to the bomb test.

This gave him his answer. The stock price of Lithium Corp of America jumped from around $3 to $13 (and fell back down after the test). He wrote a memo inside of RAND about his discovery and was asked to withdraw it. He then sat on this story for decades before sharing it, to preserve this dangerous secret at a time when it was not common knowledge.

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