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The cover of A Monetary History of the United States 1867-1960

A Monetary History of the United States 1867-1960

Friedman, Milton, Schwartz, Anna Jacobson

How have changes in the quantity of money shaped American prices, income and crises from the Civil War to nineteen sixty?

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At a glance

Author
Friedman, Milton, Schwartz, Anna Jacobson

Why read it

  • You will see how the amount of money in an economy moves with prices and output over decades
  • You will learn how monetary politics, such as the fight over silver, shaped prices
  • You will understand how the Federal Reserve's choices in its first decades shaped booms, busts and the Great Contraction

Who it is for

  • Economics students who want the history behind monetary policy
  • Investors trying to read inflation and recession risks
  • Journalists covering central banks

The idea people argue about

Friedman and Schwartz's most contested claim is that the Great Contraction became so severe largely because monetary authorities allowed the money stock to collapse. A common objection is that bank failures and monetary contraction were symptoms of a broader economic breakdown rather than an independent cause that policy could readily reverse. The authors answer with timing, institutional episodes, and comparisons showing how Federal Reserve choices intensified banking panics and permitted reserves and deposits to shrink. They do not claim that money was the only disturbance or that every monetary change begins inside the central bank. Their stronger counterfactual is that different lender action and monetary expansion could have prevented the contraction from becoming as deep. The dispute concerns causal weight, since the historical sequence supports a powerful monetary mechanism without turning a complex depression into one decision or one date.

Three common misunderstandings

  1. The book does not say that every change in money is deliberately created by the Federal Reserve alone. It analyzes interactions among currency demand, bank reserves, deposits, gold flows, regulation, panics, Treasury action, and central bank policy.
  2. Its account of the Great Depression is not simply that the stock market crash automatically reduced the national money supply. Friedman and Schwartz emphasize successive banking crises, failures of lender support, deposit destruction, and policy choices over several years.
  3. The authors do not present a fixed quantity of money as sufficient for stable prosperity under every historical condition. Their history examines rates of monetary growth, institutional regimes, velocity, output, prices, and the changing channels through which money affects the economy.

Contents

  1. NATIONAL BUREAU OF ECONOMIC RESEARCH
  2. NATIONAL BUREAU OF ECONOMIC RESEARCH 1963
  3. RELATION OF THE DIRECTORS TO THE WORK AND PUBLICATIONS OF THE NATIONAL BUREAU OF ECONOMIC RESEARCH
  4. Table
  5. Charts
  6. Preface
  7. CHAPTER 1
  8. Introduction
  9. CHAPTER 2
  10. The Greenback Period
  11. 1. Composition of the Stock of Money in 1867
  12. 2. Changes in Money, Income, Prices, and Velocity
  13. 3. The Politics of Resumption
  14. 4. Factors Accounting for Changes in the Stock of Money
  15. 5. Special Problems Connected with the Greenback Period
  16. 6. Summary
  17. CHAPTER 3
  18. Silver Politics and the Secular Decline in Prices, 1879-97¹
  19. 1. Movements in Money, Income, Prices, and Velocity
  20. 2. The Politics of Silver
  21. 3. Factors Accounting for Changes in the Money Stock
  22. CHAPTER 4
  23. Gold Inflation and Banking Reform, 1897-1914
  24. 1. The Rebound, 1897 to 1902
  25. 2. Relatively Stable Growth, 1903-07
  26. 3. The Panic of 1907
  27. 4. Banking Reform in the Wake of Restriction of Payments
  28. 5. The Postpanic Period, 1908 to 1914
  29. 6. The Arithmetic of Changes in the Money Stock
  30. 7. A Retrospective Comparison
  31. CHAPTER 5
  32. Early Years of the Federal Reserve System, 1914-21
  33. 1. Changes in the Monetary and Banking Structure
  34. 2. Wartime and Postwar Inflation
  35. 3. The Contraction of 1920-21
  36. CHAPTER 6
  37. The High Tide of the Reserve System, 1921-29
  38. 1. The Course of Money, Income, Prices, and Velocity
  39. 2. Changes in Commercial Bank Operations
  40. 3. Development of Monetary Policy
  41. 4. Factors Accounting for Changes in the Money Stock
  42. 5. Summary
  43. CHAPTER 7
  44. The Great Contraction, 1929-33
  45. 1. The Course of Money, Income, Prices, Velocity, and Interest Rates
  46. 2. Factors Accounting for Changes in the Stock of Money
  47. 3. Bank Failures
  48. 4. International Character of the Contraction
  49. 5. Development of Monetary Policy
  50. 6. Alternative Policies
  51. 7. Why Was Monetary Policy So Inept?
  52. CHAPTER 8
  53. New Deal Changes in the Banking Structure and Monetary Standard
  54. 1. Changes in the Banking Structure
  55. 2. Changes in the Monetary Standard
  56. CHAPTER 9
  57. Cyclical Changes, 1933-41
  58. 1. Changes in Money, Income, Prices, and Velocity
  59. 2. Factors Accounting for Changes in the Money Stock
  60. 3. Changes in High-Powered Money

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