A history of money and banking in the United States : the colonial era to World War II

This book is to history what Fox news is to reporting. While Rothbard does not purport to present a "fair and balanced" historical account, the innocent sounding title masks what is in reality standard libertarian distrust of government and reverence of free market principles. Especially in light of recent events, the policies that Rothbard is indirectly arguing for, complete governmental abstention in the economy, seem immature and dangerous. And on the issue of the gold-standard, a venerable holy grail of the Austrian school, I am still not convinced of its' merits. Why should growth in our money supply be held hostage to output of world mines? How is that better then fiat money? As many economists have recognized, a country's recovery from the great depression coincided with their decision to abandon the gold standard. Does it mean anything that no countries today follow a gold standard? There must have been a reason that the gold standard argument has consistently lost - perhaps it is just bad policy. Notwithstanding all that, this book, as pimped by the other reviews, still has plenty of plusses. But while this book is good, an unequivocal five stars it is not. PS. A much better, and somewhat less partisan version of banking and history of monetary policy, is "Monetary Policy in the United States" by Timberlake. But I would recommend starting with a more balanced, more accessible and more comprehensive review of monetary policy such as "Money, Banking and Monetary Policy" by Kreps. PPS. Isn't it ironic that free-marketers want a fixed valuation of money (government solution to the problem of the value of currency) and that those from the pro-government camp want a floating valuation of money (a market solution to the problem of value of currency)? INTRODUCTION 7 Part 1 A HISTORY OF MONEY AND BANKING IN THE UNITED STATES BEFORE THE TWENTIETH CENTURY 47 SHILLING AND DOLLAR MANIPULATIONS 49 GOVERNMENT PAPER MONEY 51 PRIVATE BANK NOTES 56 REVOLUTIONARY WAR FINANCE 59 THE BANK OF NORTH AMERICA 62 THE UNITED STATES: BIMETALLIC COINAGE 65 THE FIRST BANK OF THE UNITED STATES: 1791–1811 68 THE WAR OF 1812 AND ITS AFTERMATH 72 THE SECOND BANK OF THE UNITED STATES, 1816-1833 82 THE JACKSONIAN MOVEMENT AND THE BANK WAR 90 THE JACKSONIANS AND THE COINAGE LEGISLATION OF 1834 104 DECENTRALIZED BANKING FROM THE 1830S TO THE CIVIL WAR 111 A FREE-MARKET “CENTRAL BANK” 114 A FALSE START 115 OPERATION BEGINS 116 THE COUNTRY BANKS RESIST 117 SUFFOLK’S STABILIZING EFFECTS 118 THE SUFFOLK DIFFERENCE 120 THE SUFFOLK’S DEMISE 121 THE CIVILWAR 122 GREENBACKS 123 THE PUBLIC DEBT AND THE NATIONAL BANKING SYSTEM 132 THE POST–CIVIL WAR ERA: 1865–1879 147 THE GOLD STANDARD ERA WITH THE NATIONAL BANKING SYSTEM, 1879-1913 159 PRICES, WAGES, AND REALWAGES 161 INTEREST RATES 163 A BURST IN PRODUCTIVITY 164 CAPITAL FORMATION 165 1896: THE TRANSFORMATION OF THE AMERICAN PARTY SYSTEM 169 Part 2 THE ORIGINS OF THE FEDERAL RESERVE 183 THE PROGRESSIVE MOVEMENT 183 UNHAPPINESS WITH THE NATIONAL BANKING SYSTEM 185 THE BEGINNINGS OF THE “REFORM” MOVEMENT: THE INDIANAPOLIS MONETARY CONVENTION 188 THE GOLD STANDARD ACT OF 1900 AND AFTER 202 CHARLES A. CONANT, SURPLUS CAPITAL, AND ECONOMIC IMPERIALISM 208 CONANT, MONETARY IMPERIALISM, AND THE GOLD-EXCHANGE STANDARD 218 JACOB SCHIFF IGNITES THE DRIVE FOR A CENTRAL BANK 234 THE PANIC OF 1907 AND MOBILIZATION FOR A CENTRAL BANK 240 THE FINAL PHASE: COPING WITH THE DEMOCRATIC ASCENDANCY 254 CONCLUSION 258 Part 3 FROM HOOVER TO ROOSEVELT: THE FEDERAL RESERVE AND THE FINANCIAL ELITES 263 THE EARLY FED, 1914–1928: THE MORGAN YEARS 264 THE HOOVER FED: HARRISON AND YOUNG 271 THE ADVENT OF EUGENE MEYER, JR. 278 MEYER IN THE HOOVER ADMINISTRATION 286 THE NEW DEAL: GOING OFF GOLD 297 BANKING AND FINANCIAL LEGISLATION: 1933-1935 308 MARRINER S. ECCLES AND THE BANKING ACT OF 1935 331 EPILOGUE: RETURN OF THE MORGANS 343 Part 4 THE GOLD-EXCHANGE STANDARD IN THE INTERWAR YEARS 351 THE CLASSICAL GOLD STANDARD 352 BRITAIN FACES THE POSTWAR WORLD 356 RETURN TO GOLD AT $4.86: THE CUNLIFFE COMMITTEE AND AFTER 359 AMERICAN SUPPORT FOR THE RETURN TO GOLD AT $4.86: THE MORGAN CONNECTION 368 THE ESTABLISHMENT OF THE NEW GOLD STANDARD OF THE 1920S 381 BULLION, NOT COIN 381 THE GOLD-EXCHANGE STANDARD, NOT GOLD 384 THE GOLD-EXCHANGE STANDARD IN OPERATION: 1926-1929 400 DEPRESSION AND THE END OF THE GOLD-STERLING-EXCHANGE STANDARD: 1929-1931 424 EPILOGUE 431 PART 5 THE NEW DEAL AND THE INTERNATIONALMONETARY SYSTEM 437 THE BACKGROUND OF THE 1920S 437 THE FIRST NEW DEAL: DOLLAR NATIONALISM 450 THE SECOND NEW DEAL: THE DOLLAR TRIUMPHANT 476 EPILOGUE 486 Index 491 In what is sure to become the standard account, Rothbard traces inflations, banking panics, and money meltdowns from the Colonial Period through the mid-20th century to show how government's systematic war on sound money is the hidden force behind nearly all major economic calamities in American history. Never has the story of money and banking been told with such rhetorical power and theoretical vigor. You will treasure this volume. From the introduction by Joseph Salerno: ''Rothbard employs the Misesian approach to economic history consistently and dazzlingly throughout the volume to unravel the causes and consequences of events and institutions ranging over the course of U.S. monetary history, from the colonial times through the New Deal era. One of the important benefits of Rothbard's unique approach is that it naturally leads to an account of the development of the U.S. monetary system in terms of a compelling narrative linking human motives and plans that often-times are hidden, and devious, leading to outcomes that sometimes are tragic. And one will learn much more about monetary history from reading this exciting story than from poring over reams of statistical analysis. Although its five parts were written separately, this volume presents a relative integrated narrative, with very little overlap, that sweeps across three hundreds years of U.S. monetary history.'' Shows through detailed historical investigation how sound money and banking have been the font of prosperity and freedom in American history, and how loose credit, paper money, and inflation have led to social and economic calamity. In chronicling how the gold standard was attacked and destroyed, Rothbard departs from the conventional method of merely assembling money-supply data to name the special interests that benefited from the destruction. Rothbard's story is informed by the Austrian School of economics.--From publisher description. Introduction / -- Joseph T. Salerno -- pt. 1. The history of money and banking before the twentieth century -- -- pt. 2. The origins of the Federal Reserve -- -- pt. 3. From Hoover to Roosevelt : the Federal Reserve and the financial elites -- -- pt. 4. The gold-exchange standard in the interwar years -- -- pt. 5. The New Deal and the international money system. Previously published as a paperbound edition. c2002. Includes bibliographical references and index