By Allan H. Meltzer
Author note: ahead via Alan Greenspan
Allan H. Meltzer's huge background of the Federal Reserve approach tells the tale of 1 of America's such a lot influential yet least understood public associations. this primary quantity covers the interval from the Federal Reserve's founding in 1913 during the Treasury-Federal Reserve Accord of 1951, which marked the start of a bigger and vastly replaced institution.
To comprehend why the Federal Reserve acted because it did at key issues in its heritage, Meltzer attracts on assembly mins, correspondence, and different inner files (many made public purely in the course of the Nineteen Seventies) to track the reasoning at the back of its coverage judgements. He explains, for example, why the Federal Reserve remained passive all through lots of the fiscal decline that ended in the good melancholy, and the way the Board's activities helped to provide the deep recession of 1937 and 1938. He additionally highlights the impression at the establishment of people resembling Benjamin robust, governor of the Federal Reserve financial institution of latest York within the Twenties, who performed a key position within the adoption of a extra lively financial coverage via the Federal Reserve. Meltzer additionally examines the impression the Federal Reserve has had on overseas affairs, from makes an attempt to construct a brand new foreign economic climate within the Twenties to the Bretton Woods contract of 1944 that proven the foreign financial Fund and the area financial institution, and the failure of the London fiscal convention of 1933.
Written by way of one of many world's top economists, this magisterial biography of the Federal Reserve and the folks who assisted in shaping it is going to curiosity economists, crucial bankers, historians, political scientists, policymakers, and a person looking a deep figuring out of the establishment that controls America's handbag strings.
"It used to be 'an exceptional orgy of extravagance, a mania for hypothesis, overextended company in approximately all strains and in each element of the country.' An Alan Greenspan rumination in regards to the irrational exuberance of the past due Nineties? try out the 1920 annual document of the board of governors of the Federal Reserve. . . . to appreciate why the Fed acted because it did—at those serious moments and plenty of others—would require years of research, poring over letters, the mins of conferences and inner Fed records. the sort of activity may obviously deter so much students of financial historical past yet no longer, thank goodness, Allan Meltzer."—Wall highway Journal
"A seminal paintings that anybody attracted to the internal workings of the U. S. principal financial institution should still learn. a piece that students will mine for years to come."—John M. Berry, Washington Post
"An highly transparent tale approximately why, because the principles that truly trained coverage advanced, issues occasionally went good and occasionally went badly. . . . you can still in basic terms wish that we don't have to attend too lengthy for the second one installment."—David Laidler, magazine of monetary Literature
"A thorough narrative background of a excessive order. Meltzer's research is persuasive and acute. His paintings will stand for a new release because the benchmark background of the world's strongest monetary establishment. it's a magnificent, even awe-inspiring achievement."—Sir Howard Davies, occasions better schooling Supplement
Alice Hanson Jones Biennial Prize (2004)
Read Online or Download A History of the Federal Reserve: 1913-1951 (A History of the Federal Reserve, Volume 1) PDF
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Additional info for A History of the Federal Reserve: 1913-1951 (A History of the Federal Reserve, Volume 1)
See Dowd 1991. 18. Data in this and in the next several paragraphs are from Wood 1939, 191, and Viner 1965, 174. Viner uses price indexes developed in Silberling 1923, 232–33. I use the data from Gayer, Rostow, Schwartz 1978 instead. 19 One is that bankers found, as Thornton had insisted, that the Bank of England had no effective means of limiting its portfolio and the rate of monetary expansion in a period of inflation. 20 Since the usury law fixed the discount rate at 5 percent, the realized cost of borrowing was zero on average.
First, he provided a thorough discussion of the way the monetary arrangements of his day worked in practice and discussed some of the main implications of alternative arrangements and alternative monetary standards, including an inconvertible paper currency. He recognized that money produced by the banking system, paper credit, was part of the (circulating medium) means of payment. The effect of bank deposits on prices was the same as an increase in currency or gold. Second, he analyzed the monetary aspects of international exchange.
Thus it came to recognize a second problem of monetary management, a problem that was in fact the mirror image of the first. As long as the discount rate remained above the market rate, the bank could not take action to expand its portfolio. It eventually resolved this problem. Under pressure from the prime minister, it lowered the discount rate to 4 percent in 1822, the first change in fifty years. 21 The third main problem of monetary management that the bank faced during these years was the restoration of convertibility, or Resumption.