[Book] A Monetary History of the United States, 1867-1960

Writing in the June 1965 issue of theEconomic Journal, Harry G. Johnson begins with a sentence seemingly calibrated to the scale of the book he set himself to review: "The long-awaited monetary history of the United States by Friedman and Schwartz is in every sense of the term a monumental scholarly achievement--monumental in its sheer bulk, monumental in the definitiveness of its treatment of innumerable issues, large and small . . . monumental, above all, in the theoretical and statistical effort and ingenuity that have been brought to bear on the solution of complex and subtle economic issues." Friedman and Schwartz marshaled massive historical data and sharp analytics to support the claim that monetary policy--steady control of the money supply--matters profoundly in the management of the nation's economy, especially in navigating serious economic fluctuations. In their influential chapter 7,The Great Contraction--which Princeton published in 1965 as a separate paperback--they address the central economic event of the century, the Depression. According to Hugh Rockoff, writing in January 1965: "If Great Depressions could be prevented through timely actions by the monetary authority (or by a monetary rule), as Friedman and Schwartz had contended, then the case for market economies was measurably stronger." Milton Friedman won the Nobel Prize in Economics in 2000 for work related toA Monetary Historyas well as to his other Princeton University Press book,A Theory of the Consumption Function(1957).

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Preface xxi
Introduction 3 (12)
The Greenback Period 15 (74)
Composition of the Stock of Money in 1867 16 (13)
Division Between Currency and Deposits 16 (1)
Division of Deposits Between National and 16 (4)
Other Banks
Composition of the Currency 20 (5)
The Role of Gold 25 (4)
Changes in Money, Income, Prices, and 29 (15)
Velocity
The Politics of Resumption 44 (6)
Factors Accounting for Changes in the Stock 50 (8)
of Money
Special Problems Connected with the 58 (27)
Greenback Period
The Premium on Gold 58 (3)
The Premium and Purchasing-Power Parity 61 (4)
Discrepancies Between Actual and 65 (13)
Hypothetical Purchasing-Power Parity
Price of Gold
The Stock of Gold 78 (1)
The Economics of Resumption 79 (6)
Summary 85 (4)
Silver Politics and The Secular Decline in 89 (46)
Prices, 1879-97
Movements in Money, Income, Prices, and 95 (18)
Velocity
The Cyclical Expansion from 1879 to 1882 97 (2)
The Cyclical Contraction from 1882 to 1885 99 (3)
Relative Stability from 1885 to 1891 102(2)
The Disturbed Years from 1891 to 1897 104(9)
The Politics of Silver 113(6)
Factors Accounting for Changes in the Money 119(16)
Stock
Ratio of Deposits to Currency 122(1)
Ratio of Deposits to Reserves 123(1)
Changes in High-Powered Money 124(1)
Treasury Cash 125(3)
Silver Legislation 128(7)
Gold Inflation and Banking Reform, 1897-1914 135(54)
The Rebound, 1897 to 1902 138(14)
Changes in Money, Income, Prices, and 138(2)
Velocity
The Shift in the Recorded Balance of Trade 140(2)
Why Should Capital Exports Have Occurred? 142(7)
Central-Banking Activities of the Treasury 149(3)
Relatively Stable Growth, 1903-07 152(4)
The Panic of 1907 156(12)
Banking Reform in the Wake of Restriction 168(5)
of Payments
The Postpanic Period, 1908 to 1914 173(1)
The Arithmetic of Changes in the Money Stock 174(9)
A Retrospective Comparison 183(6)
Early Years of the Federal Reserve System, 189(51)
1914-21
Changes in the Monetary and Banking 189(7)
Structure
Wartime and Postwar Inflation 196(35)
Period of U.S. Neutrality 205(11)
Period of Wartime Deficits 216(5)
Postwar Inflation 221(10)
The Contraction of 1920-21 231(9)
The High Tide of the Reserve System, 1921-29 240(59)
The Course of Money, Income, Prices, and 241(3)
Velocity
Changes in Commercial Bank Operations 244(5)
Development of Monetary Policy 249(21)
The 1921 Annual Report on Principles of 249(2)
Monetary Policy
The Tenth Annual Report on Principles of 251(3)
Monetary Policy
The Dispute Over Control of Speculation 254(12)
by ``Direct Pressure''
Bills Versus Government Securities 266(2)
Relation of Discount Rate to Other Rates 268(1)
International Considerations 269(1)
Bank Suspensions 269(1)
Factors Accounting for Changes in the Money 270(26)
Stock
Deposit-Reserve Ratio 276(2)
Deposit-Currency Ratio 278(1)
Composition of High-Powered Money 278(1)
Gold Movements and Gold Sterilization 279(8)
Other Movements in High-Powered Money 287(5)
Seasonal Movements 292(4)
Summary 296(3)
The Great Contraction, 1929-33 299(121)
The Course of Money, Income, Prices, 301(31)
Velocity, and Interest Rates
The Stock Market Crash, October 1929 305(3)
Onset of First Banking Crisis, October 308(5)
1930
Onset of Second Banking Crisis, March 1931 313(2)
Britain's Departure from Gold, September 315(7)
1931
Beginning of Large-Scale Open Market 322(2)
Purchases, April 1932
The Banking Panic of 1933 324(8)
Factors Accounting for Changes in the Stock 332(19)
of Money
The Stock Market Crash, October 1929 334(8)
Onset of First Banking Crisis, October 342(1)
1930
Onset of Second Banking Crisis, March 1931 343(2)
Britain's Departure from Gold, September 345(2)
1931
Beginning of Large-Scale Open Market 347(2)
Purchases, April 1932
The Banking Panic of 1933 349(2)
Bank Failures 351(8)
Role of Bank Failures 351(2)
Origin of Bank Failures 353(4)
Federal Reserve System's Attitude 357(2)
International Character of the Contraction 359(3)
Development of Monetary Policy 362(29)
The Stock Market Crash, October 1929 363(4)
From the Stock Market Crash to Britain's 367(13)
Departure from Gold, 1929-31
Britain's Departure from Gold, September 380(4)
1931
Open Market Purchase Program of 1932 384(5)
The Banking Panic of 1933 389(2)
Alternative Policies 391(16)
January 1930 to End of October 1930 392(1)
January 1931 to End of August 1931 393(2)
September 1931 to End of January 1932 395(4)
The Problem of Free Gold 399(8)
Why Was Monetary Policy So Inept? 407(13)
New Deal Changes in The Banking Structure and 420(73)
Monetary Standard
Changes in the Banking Structure 420(42)
Emergency Measures 421(1)
Opening of Banks 422(1)
Effect on Number and Deposits of Banks 422(5)
Fate of Unlicensed Banks 427(1)
Effects on Money Stock Measures 428(6)
Reform Measures Affecting the Banking 434(1)
Structure
Federal Insurance of Bank Deposits 434(8)
Other Changes 442(3)
Changes in the Structure and Powers of 445(4)
the Federal Reserve System
Policies of Banks 449(13)
Changes in the Monetary Standard 462(31)
Gold Policy 462(21)
The Silver-Purchase Program 483(8)
Composition of the Currency 491(2)
Cyclical Changes, 1933-41 493(53)
Changes in Money, Income, Prices, and 493(6)
Velocity
Factors Accounting for Changes in the Money 499(7)
Stock
Changes in High-Powered Money 506(5)
Federal Reserve Policy 511(23)
Changes in the Deposit-Reserve Ratio 534(9)
Role of Monetary Factors in the 1937 543(3)
Contraction and Subsequent Recovery
World War II Inflation, September 1939-August 546(46)
1948
U.S. Neutrality, September 1939-November 550(7)
1941
Period of Wartime Deficits, December 557(17)
1941-January 1946 Price Movements
Behavior of Velocity 558(3)
Proximate Determinants of the Rise in the 561(6)
Money Stock
Basic Determinants of the Rise in the 567(4)
Money Stock
Effect of War Loan Drives 571(3)
From the End of the War to the Price Peak, 574(11)
August 1945 - August 1948
The Balance of Payments 585(7)
Revival of Monetary Policy, 1948-60 592(47)
Behavior of Money, Income, Prices, and 596(5)
Velocity
Factors Accounting for Changes in the Money 601(19)
Stock
Decline in the Money Stock, January 604(6)
1948-November 1949
The Korean War Period 610(2)
The Crisis in Early 1953 612(2)
The Period from 1954 to 1960 614(6)
Developments in Monetary Policy 620(17)
The Treasury-Federal Reserve Accord 623(4)
Policy Criteria to Replace Support of 627(5)
Government Bond Prices
``Bills Only'' or ``Bills Preferably'' 632(5)
Why the Stable Rate of Growth of the Money 637(2)
Stock?
The Postwar Rise in Velocity 639(37)
Changes in the Return on Alternative Assets 645(14)
Interest Rates 648(9)
Rates of Change in Prices 657(2)
Development of Money Substitutes 659(13)
Combined Effect of Factors So Far Considered 672(1)
Expectations About Stability 673(3)
A Summing Up 676(25)
Relation Between the Stock of Money and 676(2)
Other Economic Variables
Stability of Monetary Relations 678(8)
Independence of Monetary Changes 686(9)
Deceptiveness of Appearances 695(6)
Appendixes 701(108)
A. Basic Tables 703(73)
B. Proximate Determinants of the Nominal 776(33)
Stock of Money
1. Classification of Types of Money, by 776(4)
Holders
2. Simplified Cross-Classification 780(4)
3. Specie Standard with No Money Issued 784(5)
by Monetary Authorities
4. A Pure Fiduciary Standard 789(1)
5. A Mixed Specie and Fiduciary Standard: 790(3)
A Special Case
6. A More General Case of a Mixed Specie 793(1)
and Fiduciary Standard
7. Contribution of the Determinants to 794(2)
Changes in the Stock of Money
8. Contribution of Components to Changes 796(13)
in High-Powered Money
Director's Comment 809(6)
Indexes 815