In “A Monetary History of the United States, 1867-1960,” Nobel laureate Milton Friedman and co-author Anna Schwartz provide a meticulously researched, comprehensive analysis of the United States’ monetary policy throughout almost a century. The book, first published in 1963, has gained significance over the years as it continues to be a point of reference for economists, policymakers, and scholars alike. The authors delve into the role of money supply in shaping the US economy and analyze the effects of policy decisions on key historical events, such as the Great Depression.
The book is divided into three main sections: the first addresses the methodology and data collection, the second offers a chronological account of the monetary history, and the third presents the authors’ conclusions and policy recommendations. This structure allows the reader to gain both a general understanding of the subject matter and a detailed account of the monetary policy during specific periods.
Friedman and Schwartz’s analysis is based on extensive empirical research, which they use to craft their narrative. The authors utilize a variety of sources, including government documents, banking records, and personal correspondence, to construct their argument. This attention to detail ensures the book’s lasting relevance and credibility, making it a must-read for anyone interested in understanding the intricacies of the US monetary system.
In the first section, Friedman and Schwartz lay the groundwork for their study, explaining their methodology and the importance of examining the money supply. They emphasize the need to define the money stock clearly and consistently and offer a detailed account of the data used in their analysis. This section serves as an essential primer for understanding the authors’ findings and the development of the US monetary system.
The second section forms the core of the book, providing an in-depth analysis of the US monetary history from 1867 to 1960. The authors discuss key events and policy changes, including the establishment of the Federal Reserve System, the impact of the gold standard, and the response to various financial crises. They also offer valuable insights into the relationship between money supply and economic fluctuations, as well as the implications of monetary policy for inflation, unemployment, and overall economic stability.
One of the most compelling aspects of this book is the authors’ examination of the Great Depression. Friedman and Schwartz assert that the Federal Reserve’s misguided monetary policy, characterized by a significant contraction of the money supply, played a crucial role in the severity and duration of the economic downturn. Their argument has influenced subsequent discussions on the role of monetary policy during financial crises and has led to a reassessment of the conventional wisdom surrounding the Great Depression.
The third and final section of the book presents the authors’ conclusions and policy recommendations. They argue that stable monetary growth is essential for economic stability and that policymakers should focus on maintaining a predictable money supply. This perspective has had a lasting impact on monetary policy and has been embraced by central banks around the world.
Despite the book’s many strengths, some critics argue that its focus on money supply as the primary determinant of economic activity is somewhat narrow. They contend that other factors, such as fiscal policy and international trade, also play crucial roles in shaping economic outcomes. Furthermore, some readers might find the book’s dense, technical language challenging, particularly those without a background in economics.
Nevertheless, “A Monetary History of the United States, 1867-1960” remains a classic work in the field of monetary economics. Its detailed account of the evolution of the US monetary system and the role of money supply in the economy offers valuable lessons for policymakers and economists alike. Friedman and Schwartz’s work has had a profound impact on our understanding of monetary policy and its relationship with economic stability, making this book an essential read for anyone interested in the subject matter.
In conclusion, “A Monetary History of the United States, 1867-1960” is a seminal work that has shaped the field of monetary economics and continues to inform policy discussions today. Friedman and Schwartz’s exhaustive research, compelling arguments, and detailed analysis provide a thorough understanding of the role of money supply in the US economy. While the book’s technical language may be challenging for some readers, its insights are invaluable for those interested in monetary policy and economic history.
By revisiting the monetary fundamentals that have influenced the United States’ economic trajectory, Friedman and Schwartz’s work offers a unique perspective on the role of money supply in economic fluctuations. As policymakers and scholars continue to debate the appropriate role of central banks in today’s world, “A Monetary History of the United States, 1867-1960” remains a foundational text that informs and enriches these discussions.
In a world that has since experienced significant financial crises, such as the 2008 global recession, this classic work has gained even more importance. It serves as a reminder of the potential consequences of mismanaged monetary policy and provides guidance for contemporary policymakers seeking to promote economic stability and growth. For students, professionals, and anyone with an interest in economic history, “A Monetary History of the United States, 1867-1960” is a must-read, offering an unparalleled window into the complexities of America’s financial past.