Cover

pdf iconDownload PDF
 

Title Page, Copyright, Dedication

pdf iconDownload PDF

pp. i-vi

Contents

pdf iconDownload PDF

pp. vii-viii

read more

Foreword

James K. Galbraith

pdf iconDownload PDF

pp. ix-xii

Money assembles the threads of high human folly, in the form of bankers, central bankers, speculators, and the political figures and the professors they own or, at least, give a persuasive appearance of owning. Nothing gave my father so much pleasure as to weave these threads.

This is a serious history, although not a work of original research. It is a narrative based on wide reading, a skeptical eye,...

read more

Acknowledgments

pdf iconDownload PDF

pp. xiii-xvi

This book was, in an innocent way, its own progenitor. Initially it was to have been a long essay on the problems of economic management and monetary stabilization, and their origins. It was a timely undertaking. I could draw on a lifetime of reading, casual or otherwise, for these are matters of which an economist is expected to have knowledge—and I had always found the history of money, early and late, exceedingly engaging. So...

read more

CHAPTER 1 Money

pdf iconDownload PDF

pp. 1-7

Not very long ago one of the investigations into the typically intricate affairs of the 37th President of the United States turned up a more than normally interesting transaction. Mr. Charles G. Rebozo, Mr. Nixon’s good and reticent friend, had received for the then President’s benefit, political or personal, $100,000 from the even more reticent entrepreneur, Mr. Howard Hughes. This considerable sum, it was claimed, had...

read more

CHAPTER 2 Of Coins and Treasure

pdf iconDownload PDF

pp. 8-20

Money is a very old convenience but the notion that it is a reliable artifact to be accepted without scrutiny or question is, in all respects, a very occasional thing—mostly a circumstance of the last century. For some four thousand earlier years there had been agreement on the use of one or more of three metals for purposes of exchange, these being silver, copper and gold, with silver and gold being also once used in the natural combination...

read more

CHAPTER 3 Banks

pdf iconDownload PDF

pp. 21-32

There are three progenitors of money: mints; treasury secretaries or finance ministers, these being the source of paper money; and banks of one description or another. In their claim to precedence banks come next after mints and are likewise an exceedingly old idea. Banking had a substantial existence in Roman times, then declined during the Middle Ages as trade became more hazardous and lending came into conflict with...

read more

CHAPTER 4 The Bank

pdf iconDownload PDF

pp. 33-51

The miracle of money creation by a bank, as John Law showed in 1719, could stimulate industry and trade, give almost everyone a warm feeling of well-being. Parisians had never felt more prosperous than in that wonderful year. And, as Law also showed, the further result could be a terrible day of reckoning. Here, in the briefest form, was framed the problem that was to occupy men of financial genius or cupidity for the next two...

read more

CHAPTER 5 Of Paper

pdf iconDownload PDF

pp. 52-66

If the history of commercial banking belongs to the Italians and of central banking to the British, that of paper money issued by a government belongs indubitably to the Americans. Bank paper and government paper have, of course, much in common. The notes loaned out by a bank retain full parity of purchasing power with the gold or silver to which they promise title so long as they can be exchanged for the metal. And...

read more

CHAPTER 6 An Instrument of Revolution

pdf iconDownload PDF

pp. 67-77

With independence the ban by Parliament on paper money became, in a notable modern phrase, inoperative. And however the colonies might have been moving toward more reliable money, there was now no alternative to government paper. It cannot be said that it was an alternative that was embraced with much reluctance. Before the First Continental Congress assembled, some of the colonies (including Massachusetts)...

read more

CHAPTER 7 The Money War

pdf iconDownload PDF

pp. 78-96

Nothing, as has been noted, more reliably stirs an interest in stable prices and sound money than an experience of inflation. And this interest is notably enhanced after a complete collapse of the currency such as the one that occurred during the American Revolution or, a matter we will later discuss, in Germany in 1923. Accordingly, while the new American Republic came into existence on a flood of worthless money, its early years...

read more

CHAPTER 8 The Great Compromise

pdf iconDownload PDF

pp. 97-117

In the accepted, and it must be added, far from inspired view of the monetary history of the United States, the years after 1832 were deplorable. Free banking, the resulting bank failures, then greenbacks, agitation for more greenbacks and the pressure, partly successful, for the coinage of cheap silver combined with the recurrent panics to make the financial system of the United States, as Andrew Carnegie held, “the worst in the civilized...

read more

CHAPTER 9 The Price

pdf iconDownload PDF

pp. 118-134

There can never have been a time when it was as good to be rich as in the late years of the last century, the first decade of the present one. There was no income tax, the Civil War impost having been obliterated soon after the war. There was the rewarding contrast with the vast majority which was still very poor. Writing in 1899, Thorstein Veblen observed that property was then “the most easily recognized evidence of a...

read more

CHAPTER 10 The Impeccable System

pdf iconDownload PDF

pp. 135-155

The Federal Reserve System is treated by nearly all economists with reverence. On no matter is their instruction of the young in the subtlety and benignity of established institutions more admiring—or, in broad effect, more successful. Corporations are flawed by an instinct for monopoly. Trade unions interfere with the market, urge trade restrictions, resist new technology and thus obstruct progress, and they can fall victim to extortionists and racketeers. The regulatory agencies of the...

read more

CHAPTER 11 The Fall

pdf iconDownload PDF

pp. 156-169

With the creation of the Federal Reserve System the long struggle of the United States to perfect a sensible, conservative monetary system was over. Everywhere in the industrial countries money of whatever kind was now exchangeable, without pretense or delay, into gold. Silver was for silver-plating. It was especially important that the Americans, the most reckless and experiment-prone of people where money was concerned, the...

read more

CHAPTER 12 The Ultimate Inflation

pdf iconDownload PDF

pp. 170-189

The tendency, indeed a principal purpose, of the gold standard was to unite the economic performance and policies of nations. This, during its brief rule, it did. Were business good in Britain and prices accordingly strong, goods flowed in for sale and gold flowed out to pay for them. This outflow observed and its effect accentuated by the Bank of England led to a reduction in the reserves of the commercial banks, an increase...

read more

CHAPTER 13 The Self-Inflicted Wounds

pdf iconDownload PDF

pp. 190-210

As France chose the line of least resistance in the decade of great monetary dispersion, so Britain chose that of the greatest. The French experience was better, although this is not proof of superior wisdom. France, as we have seen, has a tendency to rise above all misfortune. Britain, with her heavy dependence on external trade, is a difficult country to manage. British economic policy, accordingly, needs to be better than that of most...

read more

CHAPTER 14 When the Money Stopped

pdf iconDownload PDF

pp. 211-228

There is a case that, for its effect on the anxieties of people and in consequence on their behavior, the Great Depression is the most important event in the century so far—at least for Americans. Neither of the two wars had a similar effect on so many; the release of atomic energy, while it may have induced some added measure of caution among the pathologically belligerent, was of yet less consequence. The journeys to the moon...

read more

CHAPTER 15 The Threat of the Impossible

pdf iconDownload PDF

pp. 229-249

In the most quoted line of his First Inaugural Address, Franklin Roosevelt adverted to the highly operative role of fear in economic affairs. He had reference to the way in which fear of loss of jobs, farms, dwellings, bank deposits or a business was causing people to behave with an unreasoning caution that made everything worse. Even on March 4, 1933, he could have adverted to the continuing effects of the fear of inflation which,...

read more

CHAPTER 16 The Coming of J. M. Keynes

pdf iconDownload PDF

pp. 250-271

In 1935, at the age of fifty-two, John Maynard Keynes might well have been considered at the peak of a reasonably remarkable career. His views of the Versailles Treaty had been vindicated, although they had also encouraged the Germans in resisting the reparations which had helped the vindication. He had assuredly been right, on Churchill and the return to gold. In 1930, he had published what he had intended as his masterwork, the two-volume A Treatise on Money....

read more

CHAPTER 17 War and the Next Lesson

pdf iconDownload PDF

pp. 272-292

The educational role of catastrophe in the first half of the present century was obviously considerable. The First World War showed how fragile was the monetary structure that had been erected on gold—a structure which, by 1914. nearly all who presumed to expert knowledge on the matter believed to have solved the age-old problem of money. With the August guns the gold standard disappeared; it was never in any satisfactory...

read more

CHAPTER 18 Good Years: The Preparation

pdf iconDownload PDF

pp. 293-309

The twenty years from 1948 through 1967 may well be celebrated by historians as the most benign era in the history of the industrial economy, as also of economics. The two decades were without panic, crisis, depression or more than minor recession. In only two years, 1954 and 1958, did output fail to expand in the United States. It was during these decades that the new term Gross National Product, or GNP, entered the...

read more

CHAPTER 19 The New Economics at High Noon

pdf iconDownload PDF

pp. 310-326

In the years following World War II in the United States, a reference to Keynes, rather more than one to Marx who was a less relevant menace, was thought to arouse conservative antagonism that might otherwise be silent, exclude moderate acquiescence that might otherwise be had. Though the Keynesian result was acceptable, the name of Keynes was a red flag.

In 1947, Seymour Harris of Harvard University, the most diligent of all the Keynesian evangelists and one of the most...

read more

CHAPTER 20 Where It Went

pdf iconDownload PDF

pp. 327-347

The circumspect historian ends his work well before the present; then he takes his seat with the others for the day’s parade. A solemn reason is offered for this: History cannot be written too soon, perspective must be gained. The tactical advantage of this restraint is even greater. Of current happenings people are often informed. They will question the historian’s interpretation, even perhaps his facts. His professional advantage is thus...

read more

CHAPTER 21 Afterword

pdf iconDownload PDF

pp. 348-360

Could it be better? The answer is yes.

Proof begins with the people who manage money. If anything is evident from this history, it is that the task attracts a very low level of talent, one that is protected in its highly imperfect profession by the mystery that is thought to enfold the subject of economics in general and of money in particular. Inadequacy is protected further, we have seen, by the fact that...

Index

pdf iconDownload PDF

pp. 361-374