A History of Money and Banking in the United States: …

A HISTORY OF MONEY AND BANKING IN THE UNITED STATES:

THE COLONIAL ERA TO WORLD WAR II

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Richard Bleiberg; John Hamilton Bolstad; Mr. and Mrs. J.R. Bost; Mr. and Mrs. Willard Fischer; Douglas E. French; Albert L. Hillman, Jr.; L. Charles Hilton, Jr.;

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J. Terry Anderson, Anderson Chemical Company; Mr. and Mrs. Ross K. Anderson; Toby O. Baxendale; Robert Bero;

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A HISTORY OF MONEY AND BANKING IN THE UNITED STATES:

THE COLONIAL ERA TO WORLD WAR II

MURRAY N. ROTHBARD

Cover art: Wall Street, 1886. Permission for use of this print is granted to the Ludwig von Mises Institute by Old World Prints, Ltd.

Copyright ? 2002 by the Ludwig von Mises Institute

All rights reserved. Written permission must be secured from the publisher to use or reproduce any part of this book, except for brief quotations in critical reviews or articles. For information, write the Ludwig von Mises Institute, 518 West Magnolia Avenue, Auburn, Alabama 36849-5301; .

ISBN: 0-945466-33-1

CONTENTS

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Joseph T. Salerno PART 1

The History of Money and Banking Before the Twentieth Century . . . . . . . . . . . . . . . . . . . . . . . 45 PART 2

The Origins of the Federal Reserve . . . . . . . . . . . . . . . . . . . . . 179 PART 3

From Hoover to Roosevelt: The Federal Reserve and the Financial Elites . . . . . . . . . . 259 PART 4

The Gold-Exchange Standard in the Interwar Years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 347 PART 5

The New Deal and the International Money System . . . . . . . . . . . . . . . . . . . . . . . . 431

Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 491

5

INTRODUCTION

In this volume, Murray Rothbard has given us a comprehensive history of money and banking in the United States, from colonial times to World War II, the first to explicitly use the interpretive framework of Austrian monetary theory. But even aside from the explicitly Austrian theoretical framework undergirding the historical narrative, this book does not "look" or "feel" like standard economic histories as they have been written during the past quarter of a century, under the influence of the positivistic "new economic history" or "cliometrics." The focus of this latter approach to economic history, which today completely dominates this field of inquiry, is on the application of high-powered statistical methods to the analysis of quantitative economic data. What profoundly distinguishes Rothbard's approach from the prevailing approach is his insistence upon treating economic quantities and processes as unique and complex historical events. Thus, he employs the laws of economic theory in conjunction with other relevant disciplines to trace each event back to the nonquantifiable values and goals of the particular actors involved. In Rothbard's view, economic laws can be relied upon in interpreting these nonrepeatable historical events because the validity of these laws--or, better yet, their truth--can be established with certainty by praxeology, a science based on the universal experience of human action that is logically anterior to the experience of particular historical

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