Yale and the monetary interpretation of the Great Depression

Vol. 33, No. 4, Winter, 1993, pages 305-349 of lkonomics and F-, Cqyright 8 1993 Trwtees of the Universityof Illinois All lights of reproductionill ally form reserved. ISSN 00335797 The Qnsnterly l&view

Yale and the Monetary Interpretation of the Great Depression FRANK G. STEINDL Oklahoma State University

The moneta? interpretation of the Great Depression is intimately associated with Friedman and Schwartz. Their analytical core consists of three elements: (a) thedocumentation of the sharp fall in the monq, stock; (6) the Federal Reserve’s role then& and (c) the monetary mechanism whereby the Federal Reserve could have increased the money suppt$ This research investigates the moneta? interpretation of the Great Dtpression by Irving Fisher and his two best Yale students, Harry Gunnison Brown, then at Missouri, and James Harvey Rogers, recently returned to Yale fi-om Missouri. Their writings are examined in relation to F&S with the view to identafying whether they anticipated their analytical core. Though there are many parallels between the Yale writings of the thirties and F&S-including discussions of confusion in policymaking and of the importance of Benjamin Strong-I conclude that the Yale thesiswas not that of Ftidman and Schwartz. Interestingly, each of the threefailed to consider one and each a dz@rtmt one of the three principal points of their core: Fisher, the role of the Federal Reserve in causing the &cline in monqr; Brown, the behavior of the money stock; and Rogers, the monqr supply mechanism.

The Great Depression, not suffered

the singular defining

for lack of interest.

One of the more prominent

explanations

of Friedman

(1963)

previously Among

and Schwartz

held interpretations the leading

the Yale “school,” students” relation

monetary

The approach message”

1989).

interpretation change

from

economists

of that time were those associated

with

prominent

professionally,

their

and op-ed articles. In the present

Harvey Rogers,

(Temin

whose analysis was a fundamental

by which I mean

to the monetary

to the present

of its depth is the monetary

Irving

(Ryan 1987, p. 1)) Harry Gunnison

and James

event in the lives of many, has

of the Great Depression.’

Yale. Not only were they nationally views in essays, speeches

economic

Studies of it continue

recently

returned

interpretation

study, the contributions

and his two “favorite

of

and ablest

Brown, then at the University of Missouri, to Yale from Missouri,

are examined

in

of the Great Depression.

consists first of identifying

(1982; 1983) -ofFriedman

Fisher

they also expressed

the analytical core-the

Patinkin

“central

and Schwartz’s analysis of the Great Contraction 305

306

QUARTERLY REVIEW OF ECONOMICS AND FINANCE

and then examining This is done because Patinkin’s though

hypothesis the present

hypothesis

what is here called the Yale school in connection one of the principal regarding inquiry

multiple

concerns discovery

is concerned

with that core.

of this paper relates

to “testing”

in science-Merton

multiples-

with analyses

three

decades

apart.

His

is:

that scientific research is less redundant-and as a corollary, that the individual scientist is more important-than the by-now familiar long list of multiple discoveries might lead us to believe; that upon closer scrutiny there frequently turn out to be significant differences between so-called multiple discoveries; and that even when there are points of similarity, there are significant differences in the extent to which these points were incorporated into the respective central messages of the researchers in question-and hence significant differences in the extent to which they influenced or might have influenced the path of scientific development (1982, p. 92). Before

turning

to that task, a bit of biographical

discussion

of the three

economists

and their ties to Yale and each other is useful.

THE

YALE SCHOOL

The biographical

details of Fisher

and his life-long

available in his son’s biography

(1956),

Monissen

and in Miller’s essay celebrating

“the Centennial

connection

for the Yale Community,

overdue,

to this man who lived to fulfill his early promise

economist’-perhaps member”’ (1948,

and especially Yale economists,

and to be judged

by his peers

the profession’s

(1967, p. 2). The penultimate

Tobin

(1987),

of the birth of Irving Fisher [ ,] a fitting

occasion

of his discipline

with Yale are readily

(1989, pp. 210-216),

to pay tribute,

of deepening

the foundations

as ‘the country’s

‘most talented encomium

long

greatest

and certainly

scientific

its most versatile

was from Schumpeter’s

memorial

p. 219): For whatever else Fisher may have been-social philosopher, economic engineer, passionate crusader in many causes that he believed to be essential to the welfare of humanity, teacher, inventor, businessman--I venture to predict that his name will stand in history principally as the name of this country’s greatest scientific economist.

From

the end of World War I, Fisher

from his professional,

academic

the Great Depression,

disastrous

opportunity,

ripe for impassioned,

ten policy advice to Roosevelt

increasingly

studies to his crusades. as it was to his financial evangelical-like

(Allen

1977).

Fisher

channeled

his energies

And crusader fortunes,

away

he was, so that

was a magnificent

activity, including

verbal and writ-

did not have many students.

His

307

YALE AND THE GREAT DEPRE!BION classes were small and he directed Harry G. Brown’s and James

“only six dissertations”

(Miller 1967, p. 13)) ofwhich

H. Rogers’s were two.

Brown began his graduate work atYale in 1907, received his Ph.D in 1909 and then joined

the Yale faculty as an Instructor,

at Missouri,

where he remained

remaining

until 1915 when he took a position

the rest of his life, retiring

in 1950. He died in 1975

Power

at the age of 95. While at Yale, he worked closely with Fisher on The Purchasing

ofMonqr

(1911/1971).

recognition

Fisher’s

of Mr. Brown’s

Brown’s principal

indebtedness

assistance,

subsequent

to Brown

I have placed

work was in taxation,

appears his name

specifically

single tax. His monetary writings, especially his textbook reflect

however the strong influence

in the preface: as an advocate

(Brown

“In

on the title-page.” 1936),

of the

continued

to

of Fisher. Other details of Brown’s life and work

are in Ryan (1987). Rogers enrolled

received

two degrees

He continued University

his studies

was the chairman,

remaining

of South

Economy

at the University

returning

He then returned

where he remained

and at the

of Missouri where Brown

toYale as Sterling

Professor

Library Association’s

to government

Roosevelt’s

of Political

crash in Rio de

America Weighs Her Gold, a well received

in the American

of President

of Chicago

until his death at age 53 in an airplane

works of 1931.” He was a consultant circle

and then

to receive his Yale Ph.D. in economics

the faculty at the University

in 1939.’ In 1931, Rogers published

book which was included

Carolina

and master’s degrees.

there until 1930, except for a year overseas in World War

I and three years at Cornell.

inner

the University

in mathematics

of Geneva under Pareto,

in 1916, after which he joined

Janeiro

from

atYale in 1907, where he received his second bachelor’s

list of “fifty notable

and in particular

advisers.3 Additional

a member

biographical

of the

details

are

given in R. C. J. (1939).

THE ANALYTICAL In examining logical

the monetary

approach

identifying recognized Patinkin comments

CORE OFTHE MONETARY INTERPRETATION contributions

of Patinkin

carefully

(1982;

a scholar’s

scientific

as such by the individual calls the “central constitute

is followed. contribution,

scholar.

message.“4

a scholar’s

of the foregoing

1983)

Thus,

scientific

The analytical oped in Steindl

core of Friedman

(1988;

Currie of Harvard,

1991),

Marriner

and later the first professional

where

incidental

contribution.

the methodo-

constitutes

remarks

This approach the job

is on

that contribution

Such a contribution neither

the more casual, and usual, one of leaving to readers to which earlier writings anticipate

economists,

In this, the emphasis

is what

nor sundry

contrasts

of deciding

with

the extent

later work. and Schwartz’s monetary

on Lloyd Mints and the Chicago Eccles’s intellectual economist

mentor

interpretation school,

at the Federal

in the White House.

is devel-

and Lauchlin Reserve Board

QUARTERLY REVIEW OF ECONOMICS AND FINANCE

308

Of the three components (on a monthly 35 percent

of that analytical

basis) of the sharp decline

for MP--from

mid-1929

to early-1933.5

Monetary History, this was a most surprising subsequently

low nominal

the Federal

Reserve

the prevailing impotent

opinion

The second internal

into

vicissitudes, Reserve

That

could,

such

standable

the early

generated

a decrease

stock.

It is this to which Schwartz the quantity

The

monetary

Reserve

surprising,

targeting,

high-powered

actually shocking.

such that the Federal

the in

money

Reserve

and this could have

H through

open

on the money stock of the currency

of this money supply mechanism

the money

summarizes,

forces produced

in the quantity judgment

market

drain and the in W [Steindl

is that under a policy

supply does not vary with the demand

“Our main theme

the contraction

of money

resulting

was that the Federal

consequences Their

of the banking

analytical

stands in contrast a monetary

for loans,

explanation.

(1934)

and Government

stock

directly

banking

nor

bank

decline

Our ancillary

System could have prevented

the monetary

p. 7).

of it in interpreting

by examining

the Federal

monetary

and saw a ten-fold

Reserve’s

increase

reserves purchases

nor

the

examined monetary

he observed

actions

to identify holdings

(sixty-seven

to the end of 1933.6 To him this implied

and money. He neither

that the large open-market

eco-

crises.

Securities

in the supply of reserves

money

concluded

by the unprecedented

attempt in his Austrian interpretation

He proceeded

rate) from mid-1929

increase

[four]

crises but failed to do so” (1981,

of Acceptances annual

the

core and the importance

to Robbins’s

was that the effect of whatever

was magnified from

Reserve

percent the

perhaps

within narrow limits.

As Schwartz nomic

underwas one

actions

could have been more than offset by increases

(1988, p. 70)]. The importance

of

(1981, p. 6).

“a money supply mechanism

The negative influence

of monetary

of the

was the process by which the decline

by increasing

except

was

refers when she points out that “we did not discover

been

decline

prevailing,

policy in a contraction

that Federal

the money stock to whatever level it desired,

deposit-reserve

policy

in the money stock.

The

could have increased purchases.

may be that

and power struggles

incredulous.

finding

of money was produced”

accomplished

that the money

that monetary

the sharp decline

seemed

What we did illuminate

Lastly, they developed

that

of policy was not

were surprised

real bills orientation

in the money stock was certainly

fact of sharp decline.

notion

as indicators

contended

in producing

did, happen

the money

of the

the falling and

message was the careful documentation

view stated that the appropriate

of increasing

supply. The

substitutes

1960s

debates,

that resulted and

because

the famous “leading a horse to water” aphorism.

of the central

thinking,

perhaps

reason why economists

recovery-

element

the Federal

the money

Another

in promoting

for Ml and

For many at the time

finding,

rates were not perfect

doctrine.

percent

rates in the early 1930s were taken as evidence

had increased

supply and interest part of received

interest

core, the first was tbe documentation

in the money stock-29

a rapid

the behavior base.

of

He simply

“should be a sufficient

YALE AND THE GREAT DRPRFSSION refutation

309

of the charge that the [Federal Reserve has] deliberately brought about

deflation” (p. 17). In assessing the views of the Yale school, I do not wish to be restrictively strict. For instance, no one can be expected to have articulated the Federal Reserve’s behavior and rationale in the detail that Friedman and Schwartz provided, After all, many of the documents they used were not available, the Hamlin and the Harrison papers for instance. At the other extreme, I do not wish to be too generous in assessing their positions. For example, taking as “proof’ that the quantity of money declined because the price level fell without any reference

to the actual behavior of the money stock is

not acceptable evidence.

THE MONETARY INTERPRETATION OF IXLE Irving Fisher From his first professional PurchasingPowerofMonqr reinforced

publication in the mid-1890s through the definitive

(1911; second edition 1922) to the Great Depression, Fisher

by his empirical findings, held fast in his views of the appropriateness

of

the quantity theory as an explanation of the behavior of prices. And it was the behavior of prices that was the source of his work on interest rates and deflation and depression. This technical work served as the basis for his essays and exhortations public. He was a reformer, a crusader, and thus his nonprofessional evangelical

to the general writings had an

tone, a theme vividly clear in Allen’s (1977) discussion of him and his

dealings with Roosevelt. His earliest views on the causes and cures of the depression were presented in congressional

testimony in April 1932 (U.S. Congress 1932a), (U.S. Congress 1932b),

(U.S. Congress 1932c). Later that year (September)

he spelled out his debt-deflation

theory of great depressions, which was “first stated in my lectures at Yale in 1931, and . .. fully set forth in my Booms and Depressirms” (1933a, p. 350). His extended testimony on the Goldsborough levels-amounted

bill-a

bill to stabilize wholesale prices at their 1921-1929

largely to a tour through the debt-deflation theory (U.S. Congress

1932a, esp. pp. 351-362).

The book is a curious admixture of elementary-layperson

economics , scientific evidence, treatise and hortatorical tract.’ The following year he published in the inaugural volume of Econometrica his “present ‘creed’ on the whole subject of so-called ‘cycle theory’ [which] consists of 49 ‘articles’ some of which are old and some new,” the now famous “Debt-Deflation Theory of Great Depressions” (1933a, p. 337), an essentially autobiographical

theory.’

The theory has many elements, some of which are real and others monetary. Whether the theory is at base best classified as one or the other is not important for my purposes. I concentrate

on the monetary aspects of it.

QUARTERLY REVIEW OF ECONOMICS AND FINANCE

310

The initiating,

motivating

which leads to attempts

impulse in the cycle was the “over” accumulation

to liquidate

such debts. The principal

of debt,

manifestation

is “distress

selling and ... contraction of deposit currency, as bank loans are paid off, and to a slowing down of velocity

of circulation.

This contraction

of deposits

and of their velocity,

by distress selling, causes . . . afallin the lewelofpn’ces” (1933a,

precipitated decline

in prices then increases

selling,

thereby

liquidations,

giving rise to a “vicious spiral” (1932,

the 234.25

measured

in 1929

Committee,

the real value of debt which induces

billions

dollars”

“Gentlemen,

p. 92).

[of debt] of 1929 became

(1932,

p. 108).

distress

“In a word, despite

all

over 302 billions in 1932, if

As he testified

there has been no liquidation

p. 342). The

further

to the House

Banking

since 1929. We are more in

debt than we were then. This is the mystery of the depression.

People

think that they

are getting

should

go on because

out of debt, and they wonder

there has apparently the depression, central

theme

inflation; Fisher rather those

been some liquidation”

policy should

recent

be directed

to raising

which

“means

inflation

great and rapid deflation”

1932a, p. 363). To combat

the price level, and this is the

which

times,

currency

a practice

abundantly

and deposits

he initially

(U.S. Congress

aware of the behavior

his comments

on deposits,

in the demand

connection in a curious illustrating

graph

His debt-depression of deposits

(1932, [Currency]

accounts

of Fisher of deposit

to borrow

relating

is inverted, (1933a,

these borrowed

. ..” (1936,

p. 22).

(1933,

p. 342),

causal thereby

p. 356).

that the behavior

. . . grow out of the business

to the interrelationship

currency

The

is suggested

for loans. In fact, on several occasions,

banks. But in order to maintain

must have the confidence contraction

pp. 5-7).

movements

in

He was

arising from an

for currency

theory can in places be read as indicating

exactly that: “Almost all checking

discussion

1945,

demands

forays;

he concentrated

thereof

in Circulation

of deposit and currency

is the result of the demand

commercial

p. 37;”

of its

as was customary work (1911).‘e

contraction

deposits to increased

in which Money

the conformity

in his empirical

of money, though

the multiple

for currency

by virtue

1932c, p. 125).’

pp.lSO-181),

in his empirical

of the quantity

including

relating declining

(1932,

pursued

the price level is not

is justified

did not discuss the money supply as an aggregate

he separated

increase

(U.S. Congress

to which Fisher returns time and again. Increasing

it is reflation,

counteracting

why this depression

he says

loans made by

accounts,

business

men

See also, the above quoted of distress

as well as (1932,

selling

and

pp. 127-128;

the

1945,

pp. 7-9) .I9 In fact, however, Fisher’s raising

the price

Reserve

open

detailed

market

purchases,

raising the price of gold (1932, 376-380). “remedies”

(1932,

pp. 127-133).

on how to raise the price level, and

his basic concern, though

concentrated

he was not averse to other

pp. 216-222;

His most extensive discussion

open market purchases Bank,

comments

level-reflation-was

1933a, p. 347; U.S. Congress

of open market purchases

Here he noted

initially

indebtedness

such as

1932a, pp.

was in his proposed

that reserves

may well be used to repay a bank’s indebtedness

“but after its (i.e., the bank’s)

on Federal

means,

generated

by

to the Reserve

is paid off, any further

excess in its

YALE AND THE GREAT DEPRESSION balance 129).

is pretty sure to be used as reserve for further

Further,

“by operating

policy, the 12 Reserve deposit

Banks

currency-for

in (1933a,

not only the rediscount can powerfully

loans to the public”

regulate

1933b, pp. 158-159;

(1932,

p.

rate but also the open market the volume

of the country’s

good or evil” (1932, p. 130). Similar expressions

pp. 346-347;

311

1934, pp. 12&129;

can be found

U.S. Congress

1932c,

p. 125). His principal Swedish

empirical

experience

15&159).

evidence

came in the form of repeated

in the early thirties

He argued

that “it is claimed

is impossible

by any means, monetary

by monetary

economists

(1932,

p. 158;

[by some]

or otherwise.

a stable price level of over one hundred Rooth,

Swedish

Gustav Cassel and his predecessor,

of genuine

of the Riksbank

Reserve

the importance almost

supporting

actions increasing

of Benjamin

died in October

Strong,

1928 the Federal

altogether”

of Sweden,

stable money in Sweden”

One last piece of evidence had Federal

1933b,

(1933a,

of Sweden,

weeks in succession

to whom,

together

Rnut Wicksell,

. ..

with the

we owe the

(1934, pp. 130, 150).

the view that Fisher’s monetary

Reserve

p. 347).

pp.

of the price level

the money supply is his repeated

Governor

to the

That has been not only disbelieved

[due to] Governor economist

p. 346;

that stabilization

for years, but recently disproved by the experience

which has maintained

introduction

1933a,

references

mechanism reference

to

of the NewYork Bank. Had Strong not “would have prevented

See also (1934,

the depression

p. 151; U.S. Congress

1932c,

p.

131). Fisher’s evaluation policies,

of the effect of Strong’s death and its portent

for inappropriate

by which Fisher meant those affecting the price level, strengthened

In a post World War II letter to Clark Warburton reserve proposal,

soliciting

over time.

support for his 100 percent

Fisher wrote:

I have always believed that had Governor Strong lived, we would not have had the tragic depression following the stock market crash in 1929 or so big a crash to start with. I think the realization ofwhat was going to happen shortened his life. He had because of illness resigned in 1927 [sic, Strong never resigned (Chandler 1958, p. 473)] and died in 1928. I was told that he paced the floor in distress realizing that his policies were being abandoned (1946, p. 3). A conflict, and Strong

mostly laid to jealousy,

between

members

of the Board in Washington

in New York was at the heart of the failure to pursue appropriate

As Fisher recounts,

Eugene

as late as the summer

what they were called unimaginable

Meyer the chairman

of 1931 of the behavior until

Fisher

and Schwartz

him

deposits,

(Fisher

ignorant

not even knowing

1946,

p. 4).

Such

was

with Strong.”

This view of the importance was monetary

informed

of the Board was completely of demand

policy.

(1963, pp. 411414) policy

of Strong

the hypothesis

adopted when they addressed

so inept?“14 The

Schwartz accept regarding

is precisely

hypothesis

that both

that Friedman

the question Fisher

of “Why

and Friedman-

Strong’s death as the reason for policy ineptness

is however

QUARTERLY

312 just

that:

REVIEW OF ECONOMICS

an hypothesis.

policies-that

Whether

or not Strong

is, was there a change

others, Epstein the Fisher

and Ferguson

would

in regime?-is

have pursued

an open question,

change-of-regime

in the gold standard,

hypothesis.

alternative

one on which

and Wheelock (1991) for instance,

(1984)

and FriedmanSchwartz

after all firmly believed

AND FINANCE

disagree with

Governor

Strong

and it was over issues of gold that many

policy actions were initiated. Fisher’s

principal

concern

sion. Understandably nature.

He argued

believe

probable-that

then,

was not an analysis of monetary his discussion

that had it been

united

this depression

was due to the mismanagement

factors in the depres-

of System policy tended under

Strong,

to be general

“it is possible-in

of the Federal

Reserve System. Such mismanagement

1934, p. ‘74). The fact that the price level declined of perverse

Reserve

Credit

economy. sufficient

evidence

respects

interpretation

developments

level was the problem

then, Irving Fisher

associated

thirty years later, though different

facie

ofFederal in the

and its decline

was

to have articulated

the

of flawed policy.

In many important monetary

the behavior

try to tie policy to the unfolding

For him, the fall in the price

(U.S. Congress

was taken by Fisher to be *ima

policy (1932, p. 151). He did not examine

and thereby

fact I

would have been a mild one. Its seriousness

could not be avoided as long as it was a house divided against itself’ evidence

in

with Friedman

it must be emphasized

appears

and Schwartz’s central

message

of

again that his major interest was quite

from theirs.

Fisher was not as convinced narily difftcult Federal

Reserve

sufficiency

of the effectiveness

times. He harbored to increase

of increases

he was concerned

no serious

the money

in it, though

of monetary

reservations

supply. Rather,

policy in extraordi-

about

the ability of the

he had doubts

those doubts seem to be incidental.

about hoarding-“in

the case of a depression

about

the

Specifically

and a falling price

level, a mere new supply of money . . . might fail to raise the price level by failing to get into circulation

. . . . [Thus,]

in M might

increase exercised

directly

(1932,

To the extent of monetary advocated reduce

of people

to accelerate to increase

by some

V-that

a mere influence

is, to convert

the

velocity would however be

(p. 142). And it was precisely such an emergency

to advocate

his Silvio Gesell-type

Stamp &r$

(1933c),

that Fisher

respects.

(p. 8). differs from Friedman

First and most important,

policy in the contraction; unabashedly

policies

particular

System actions

and Schwartz

his central

concern

then,

it is in two

was not an analysis

rather it was the policy advisor role in which he

to increase

the real value of debtors’

identifying

supplemented

being that like money it can be spent, but “it is unlike money, because

IT GAN NOT BE HOARDED” important

unless

p. 140). Policies

only in emergencies”

that led him shortly thereafter its advantage

boost of the price level, therefore,

insufficient,

on the moods

public from hoarding” “badly needed

for a prompt

prove

burdens.

the price Accordingly,

and policies

during

level, policies

which

would

he was not interested the contraction;

in

variations

YALE AND THE GREAT DEPRE!WON

313

in Federal Reserve Credit were not items of interest. Next, he allowed his demand for money function to have a liquidity trap dimension, whereas theirs had no such feature. Fisher’s preoccupation with raising the price level is a clear instance supporting Patinkin’s conjecture “that even when there are points of similarity [between the work of different investigators], there are significant differences in the extent to which these points were incorporated into the respective central messages of the researchers in question” (1982, p. 92). James Harvey Rogers

In his comments before the American Academy, Fisher singled out Rogers as one of the “ablest monetary economists in the world” (1934, p. 127). In particular he mentioned Rogers’s influential America Wkghs Her Gold (1931), which Fisher also promoted in his congressional testimony on the Coldsborough bill (U.S. Congress 1932a, p. 403). As the depression began, Rogers published his study of inflationary processes in France (1929). That study examined the behavior of prices through the eyes of the equation of exchange, with particular emphasis on the role of deposits and banks. Thus, he was familiar with the monetary data, particularly deposits, though they were not a major concern of his. Questions of gold, the balance of payments and the behavior of prices dominated his short, well regarded book (1931). The role of the Federal Reserve was discussed only in terms of loosening the link between gold flows, and credit and price movements. Specific Federal Reserve actions of changes in its government securities portfolio or its rediscount rate in relation to member bank reserves were never considered. The concern was with gold movements and their effects on prices. He argued that the traditional link between the two via the gold standard was in fact broken: “Under our highly elastic banking system, inflowing gold, within very wide limits, may or may not induce prices to rise” (1931, p. 128). The Federal Reserve was thus seen as sterilizing gold inflows and “obliterating” outflows. Interestingly, Rogers never identified reasons when and why it pursued “sterlizing and obliterating” actions; his concern was primarily establishing that it did so. The closest he came to assigning a rationale was in his penultimate section: Unconsciously, perhaps, on the part of many of their officials, and under the pressure of what to them appeared much more significant and more important considerations [which he did not mention], the Federal Reserve Banks, in the past two years, have played the part of gigantic sponges continually soaking up the ever inflowing golden flood ( 1931, p. 207). After pointing out that the Federal Reserve was passive in permitting gold inflows to be used by banks to pay off their indebtedness, he then delivered his verdict: “For the failure to create such a basis for much-needed credit and price expansion, the

314

QUARTERLY REVIEW OF ECONOMICS AND FINANCE

Federal

Reserve

responsible” These

System is by many capable

(1931,

conclusions

They are suggestive were reported

were not however though

less than

satisfactory

meetings

in December

for the decline

to identify policy actions, Rogers

examined,

dollars

The

principal

factors

resulted

in the much

smaller

million),

which presumably

crease, and (b) repayment

reserves

by member

reserves

This

optimism Reserve

through substantial

began

“accumulation

Others

rather

government’s crowded

than

unbalanced

cash. budget

then, were for all practical purposes infinitely

After an excursion at the prospect

is some prospect Again, (1131

that the

he examined

percent)

(or idle funds)”

to understanding

January

(1933b,

the distributors

p. 122))

rapid to bring of credit and its

is that banks because

losses” (1933b,

of

p. 124); therefore

for the most part have already been accom-

cash, i.e., excess reserves,

ofwhy banks would not acquire

assets.

U.S. government owing

was regarded

because

in aliquidity

as a cause for alarm (1933b,

p. 124). Banks,

trap; their demand

to the they

for Rogers

for excess reserves

to their reserves would be impounded.

several reasons

that was increasingly

the gap.

to riskier earning

In fact the flow of such securities

elastic. Additions through

his money supply mechanism. notion

to borrow from banks, hence

out “other issues of much less security”

was essentially

on a level to keep

to such levels as to lend only to the most creditworthy

the question hold

that the

If the . . . Federal

so far has not proved sufftciently

these borrowers

would be unable

Rogers never addressed

the fact that excess

purchases

year (1933b).

“dare not run the risk offurther

Banks in other words preferred securities

in-

to the System ($333

gives some faint hope

a $400 million

it is clear that Rogers’s

they raise their credit standards modated.

($371

the reserve

(p. 123).

defined,

Furthermore

purchases

(a) gold outflows

to “obliterate”

there

of excess reserves

a “gap” is central

their poor condition borrowers.

mounting,

relief . . . . In other words, the gap between

not formally

market

were

pp. 248-249).

that “the credit expansion

The notionpof

open

“Nevertheless,

their open-market

to fade the following

users is still largely unbridged” Though

optimism:

gradually

a bit

of governments

with the Federal Reserve being a “gigantic

data, this time highlighting

October

concluding

(1932,

million

that during

increased

may finally have made its appearance.

will again maintain

bank excess

data and found

were

system are still considerable

turn in liquidation

however was

recovery.

banks of their indebtedness

expressed

nonetheless

policy may yet succeed” Federal

in reserves

Rogers

of our banking

member

increases

evidence.

he was attempting

bank reserves

why such large

were passively permitted in connection

Banks

Reserve

over $900

explaining

a factor he discussed

long-desired Reserve

though

concern

to promote

in the first half of 1932 member

bought.

sponge.”

1931.16His

activity. Instead

if any, already undertaken

billion

by any empirical

analysis, the first results of which

in economic

as Fisher did not, Federal

period

a quarter

million),

of its policy being held directly

substantiated

of a more

at professional

not with the reasons

a three-month

students

p. 208).15

exacerbating

the gap, Rogers

to occupy him, the specter

of the failure

arrived of the

YALXAND THE GREAT DEPRESSION

capitalistic

system. Though

prefer to call it”“’ -with

willing to credit monetary actions-“‘reflation’

arresting the contraction,

“ultimate success in bringing constructed

315

some

he expressed doubt about its

relief.” To underscore

this in dramatic fashion, he

two examples: the first being a distribution of money to people in the

amounts they lost through bank failures and the second a devaluation of gold. The point of each exercise was to demonstrate

that even extreme monetary measures

depend on the same banking actions “now defeating the expansionary

influences

already in operation” (1933b, p. 126), by which he meant the “gap.” Accordingly, government programs were instituted “to bridge the gap left open by the ‘temporary’ failure of the capitalist machinery” (1933b, pp. 126-127), and those government programs would become “each day more involved as a creditor to American business” (1933b, p. 127). Though not fully ready to accept the idea that banks would be unable ever to fill the gap, Rogers believed “that at least temporarily our economic equilibrium is broken” (p. 127). Rogers’s last published comments on monetary influences in the depression came in the Irving Fisher 70th birthday Festsch+ monetary

developments

understanding

(Rogers

1937) where he discussed

in the Roosevelt years. His comments

add little to our

of the issues of interest in this paper. For instance, it is difficult to see

whether he seconded or criticized the doubling of reserve requirements in 1936-1937, though the logic of his “gap” analysis would have him indifferent to the increase. The theme he played in his remarks was the linking of currency devaluation to economic nationalism. Here again he registered his concern for the capitalistic system, a concern spelled out at greater length in Capitalism in Crisis (1938). My evaluation

of Rogers accordingly

finds him increasingly

doubtful

about

whether Federal Reserve policies would be able to generate an increase in the money stock. Rogers was pessimistic about the transmission of reserves supplied by the Federal Reserve into deposit growth, this being his concern about a “gap.” His gap however was not the result of a “shortage” of borrowers, as was argued by many economists, perhaps the majority of them. For instance, E. W. Remmerer of Princeton, did not see banks as such a linchpin; rather it was the borrowers: “The banks had more money to lend, but these conservative people, the only ones the banks cared to trust with these new funds, did not want to borrow them. They could not see anything that they could do with them safely and profitably” (1933, p. 134). Rogers’s position contrasts sharply with a principal element Schwartz’s analytical core. They had no reservations aboutwhether

of Friedman

and

reserves generated

by sufficiently large open-market purchases would increase the stock of money. Rogers on the other hand had banks impounding

those reserves, thereby preventing any

increase in the money supply. It should be emphasized that Rogers, though, was close to other elements of their analytical core in that he was familiar with the evolution of some of the monetary aggregates, as well as being particularly critical of Federal Reserve actions, especially those relating to the influence of gold on bank reserves.

316

QUARTERLY REVIEW OF ECONOMICS AND FINANCE

Harry G. Brown To appreciate

Brown’s view of the depression,

the late twenties the University was the chairman,

of Missouri’s

economics

was one of the top departments

four monetary

economists-Earl

though

left for Yale shortly thereafter,

where

Rogers

Bopp,

he did his undergraduate

specifically

about Federal

Brown’s burden

discussion

Reserve

Brown, James

longing

the depression.

singled

and Elmer

just as Wood was returning

concentrated

Wood,

to Missouri

did not publish

not surprisingly

(1933, pp. 9S-99),

of Irving Fisher. As to the factor(s)

any reservation

of which Brown

and had on its faculty

H. Rogers

however

that in

anything

policy and the depression.tg

of the depression

without

department,

in the nation,

work.18 Wood

of the fall in prices on debtors

the emphasis

it is useful to be reminded

out the Federal

on the real

which of course was precisely

responsible Reserve,

for the deflation,

both for causing

he

and pro-

A major cause of the depression- in my opinion the outstanding cause so far as the United States is concerned-is an inept policy of those in charge of our Federal Reserve system. .. . [T] he policy followed was definitely and unnecessarily deflationary and tended to produce depression. Those in charge of the system give no evidence of understanding the tremendous control they can exercise over our business prosperity. Apparently they are quite capable of doing, innocently and uncomprehendingly, the very things that conduce to the pitiful disasters of depression (1933, p. 99). In Brown’s writings, there is only one indication with the behavior

that he might have been familiar

of the money supply, and that is an incidental

were back in the period of prosperity

of 1924-1929.

Suppose

remark:

“Suppose

we

then that some mysteri-

ous force spirited away a third of every person’s monqr and bank deposit account” (1933, p. 99, my italics). currency

Note here

from deposits.

every person’s empirical

money”

Rogers

Was his phrase rhetorical

analysis? Nowhere

which it was relevant.

that Brown

follows Fisher’s

concerning

bait, an informed

is there any indication

Nowhere

in his published

does he ever mention

it again, though

an ideal place. Ryan’s (1989)

reading

convention

the spiriting

of separating

away of “a third of

guess or an estimate

based

as to its basis nor the period

work nor in his correspondence his textbook

(1936)

on over with

would seem to be

of Brown’s analysis of the depression

similarly

does not suggest any familiarity by Brown with the actual behavior

of the money supply.

Among

of any of them ever

his colleagues

commenting

then at Missouri,

on the actual behavior

to be one incidental

remark,

there also is no record

of the money supply. Beyond

the evidence

what appears

then

is that Brown was in fact not familiar

with

the money supply’s behavior. His quantity theory framework and the consequences facie evidence

thereof,

coupled with his concentration

suggests

that he took the decline

that the money supply had contracted.

on the fall in prices in prices

as pima

YALE AND THE GREAT DEPRESSION

317

Federal Reserve discount rate and portfolio actions, such as open-market sales in 1929 leading to “an undue and too persistent curtailment

of credit” are cursorily

discussed (1936, p. 106). And finally in 1932, “at long last, the Federal Reserve System did follow .. . a policy of heavy buying of United States government securities. [But this had little effect because] the accumulating forces of depression were too great to be overcome except by a stronger policy .. . [because] money was being hoarded by banks” (1933, p. 102)-the

position at which Rogers arrived.

Banks however “would feel safe in purchasing bonds and notes of the United States” (1933, p. 103) and to that end he advocated deficit-financed public works. Bank purchases of governments would increase the Treasury’s money balances which then would be spent, thereby increasing “the volume of purchasing . .. and recovery would be very greatly enhanced” (p. 103). There are three points to note about Brown’s proposal. First, the emphasis on a deficit financed in this manner is not the Keynesian one of increasing aggregate demand; rather it is that the deficit is monetized, a point stressed by Patinkin (1979). Next, rising interest rates resulting from government borrowing play no role in inducing banks to buy governments and thereby reduce their excess reserves. Finally, Brown does not recognize that bank purchases of extant governments would similarly reduce excess reserves. Only if the groups from whom the governments were bought would use the proceeds to repay their bank loans would bank purchases of currently outstanding governments leave excess reserves unchanged. Brown thus has banks behaving in the peculiar manner of not willing to make loans, notwilling to buy outstanding government securities, but only willing to acquire newly issued ones. This is a most peculiar money supply mechanism, though perhaps the same one as Rogers’s had he considered bank purchases of governments. Brown’s scathing comments on monetary policy were directed, not surprisingly, toward the fact that prices had fallen. To raise the price level, the gold standard-“the sacred cow of American monetary policy”-should be jettisoned: “as a long-run policy, it would be better to stabilize the general price level by open market purchases and sales of eligible securities and of gold and not to be dependent upon any necessity of interfering

with the importation and exportation of gold” (1933, p. 106). For Brown,

the virulently contractive policies in which the System “entered upon with not the slightest premonition of its likely political consequences as well as with no apparent comprehension of its purely economic significance” (p. 106) may have had as an unforeseen consequence “the rise of Hitlerism in Germany, and perhaps other events of more or less ominous import” (p. 106). A common theme of Brown and his colleagues was the confusion rampant among Federal Reserve officials in their pursuit of policy. Bopp, for instance, argued that “the statements and the actions of Reserve officials, then, indicate that Reserve policy was not a relentless quest for commodity price stabilization” (1932, p. 383). After documenting numerous flips and flops, he sardonically observed, ” [s] ince those at the helm are without rudder and compass, it is small wonder at the rest of us are waiting for #

318

QUARTERLY REVIEW OF ECONOMICS AND FINANCE

ships that never come in” (p. 385)) ajudgement he sought “to determinejustwho

he reached in his dissertation in which

and what the Federal Reserve system is and has been”

(1935, p. 80). He concluded that it is “evident that general credit policy and its effect upon economic

conditions have at times been made secondary to a rivalry between

two or more elements of the administrative machinery. The important matter is that rivalry, jealousy, etc., may be more important in conditioning of ‘high principle”’

policy than are matters

(1935, p. 80), a theme that Friedman and Schwartz very much

adopted as a solution to their conundrum regarding the ineptness of monetary policy. More than a decade later, Bopp (1948) reviewed System policy in the Great Depression, characterizing it as one of “easy money,” using as his indicator the large amount of securities bought (p. 13). Nowhere does he mention the behavior of the money stock, though those data were available when he was writing. The policy confusions about which he earlier had so strongly written are absent; in fact the impression is that the Board had a single minded view of what its role was. The doubling of reserve requirements was not regarded as a restrictive action (p. 16). Both Brown (1933, pp. 100-101)

and Bopp had as their b&e noireAdolph C. Miller,

the only professional economist on the Board. Bopp for instance in a closing passage approvingly quoted by Friedman and Schwartz (1963, p. 410, n. 166) wrote, “Mr. A. C. Miller, who seems to be the dominant figure in the Board, has stated that he is opposed to open-market operations-the only effective method of stimulating revival from a severe depression-except as a ‘surgical operation.’ Even through 1931 he was not of the opinion that such a ‘surgical procedure’ was necessary” (1932, p. 390). Brown and his colleagues at Missouri thus contributed important elements toward the Friedman and Schwartz interpretation of policy ineptness, particularly their emphasis on the disarray in policy making as the reason for the failure of the Federal Reserve to take appropriate actions. They did not however anticipate their analytical core’s theme regarding the actual behavior of the money supply.

CONCLUDING

COMMENTS

The monetary analyses of the Yale school-Fisher, Rogers and Brown-are of course fascinating in and of themselves. One is struck by the perceptiveness of its insights, particularly as several of them came to be articulated later. Fisher, for example, deals repeatedly with the death of Benjamin Strong as the important factor explaining the perversity of subsequent Federal Reserve policies. Brown and his colleagues’ discussion of Board confusion is similarly insightful, as is Rogers’s investigation into the endogeneity of components of the monetary base. Three conclusions stand out in this study of their analyses. The first is that they were single-minded in their emphasis on monetary dimensions in their interpretation of the decline. Second, their interpretations were however only a part of the Friedman and Schwartz analytical core. In fact, each of the school’s members failed to emphasize

YALE AND THE GREAT DEPRESSION

319

one of the three points in their core. Interestingly, each omitted a different one: Brown, familiarity with the actual behavior of the money supply; Fisher, the analysis of actual Federal Reserve actions and the consequences of such on the money stock; and Rogers,

the money mechanism,

trap, thus denying

that the Federal

supply. The final conclusion eries. As the foregoing Yale school

elements

however an important, prevailing

monetary

Reserve

could

relates to Patinkin’s discussion

then have increased

hypothesis

concerning

makes clear, though

had an interpretation

tant respects

as he came to believe that banks were in a liquidity

multiple

discov-

each of the members

of the

of the Great Depression

of the Friedman significant

and Schwartz

ingredient

interpretation

the money

that overlapped

interpretation,

of their thesis, tbe one that has been the

for the last three decades.

This stands out most clearly in the case of Fisher. His single-minded raising

the price

important

element,

level,

of which

certainly

his concern

underscores

about

The case of the Yale school

of Mints’s and Currie’s monetary accumulating

evidence

the Federal

the importance

The analyses of Rogers and Brown similarly are further of that hypothesis.

in impor-

each omitted

of Patinkin’s

pieces of evidence

coupled

of Patinkin’s

for

was an

hypothesis. in support

with that of previous

analyses of the Great Depression,

against the rejection

crusade

Reserve

adds further

studies to the

hypothesis.

NOTES *An earlier version was presented in our Departmental Macroeconomics Workshop and as the Hauptvortrag at the 1991 Irving Fisher Gesellschaft meeting at the University of Wfirzburg. It also was presented at seminars at Brown University, the Federal Reserve Bank of Richmond, as well as at the March 1992 meeting of the Midwest Economics Association and the May 1992 History of Economics Society meeting. I wish to thank the participants at those presentations, especially Larkin Warner and Maria Marcuzzo, for their helpful comments. 1. Typical of opinion, and this as early as the mid-30s, was the view that the “Federal Reserve system attempted at an early stage in the depression to counter-act deflationary influences [but] the operations of the system proved ineffectual. In 1932, the system again attempted to stimulate revival, both by lowering the rediscount rates and by extensive purchases of government bonds. .. . The result .. . was not to expand credit but chiefly to increase non-member bank balances held by member banks” (Gayer 1935, pp. 277-278). In this respect, see also Warburton’s extended commentary on professional economists ignoring monetary considerations (1966, pp. 81-83, n. 10). 2.

The correspondence

between Fisher and Rogers is unenlightening

on the matters with

which this paper is concerned. Much of the correspondence deals with the founding of the Econometric Society and Rogers’s appearance on programs at its annual meetings--including the severalvariations on the paper that finally became “The Absorption ofBank Credit” (Rogers 1933a). One intriguing piece is a hand-written note on a copy of a letter (July 2, 1935) Fisher sent to FDR in which Fisher deferentially inquired whether Rogers wanted to be on Fisher’s list of nominees to the reconstituted Federal Reserve Board (James Harvey Rogers Papers, Box 17,

QUARTERLY

320

REVIEW OF ECONOMICS

AND FINANCE

Folder 205). In a subsequent hand-written note (February 21,1936),

Fisher passed on his regrets

that Rogers was not named to the Board (James Harvey Rogers Papers, Box 18 Folder 226). 3. Rogers in fact was on a first name basis with FDR, see for example FDR’s note expressing regret at missing him when he was in Washington, addressing Rogers as “My dear Jim:” (James Harvey Rogers Papers, Bx. 20, Folder 256, letter of 10 December 1936). 4.

The idea of identifying a scholar’s “central message” resulted from Patinkin’s inquiry

into whether the Swedish School and/or Michael Kalecki anticipated Keynes whose “central message” was identified as the theory of effective demand (1982, pp. 8-l 1; 1983). 5. Anna Schwartz (1981, p. 6) points out that previous estimates, by for example Currie (1934) “had measured the extent of the decline in the quantity of money over the contraction, so we did not discover the fact of sharp decline.” 6.

A contemporary

analogue of the problem of deciding the posture of monetary policy

occurred in the six months, FebruaryAugust

1992 when the Ml money stock and the monetary

base grew at 9.3 percent and 8.3 percent annual rates respectively. The M2 money stock however fell at a 0.5 percent annual rate. Was monetary policy accommodative, restrictive, easy? 7.

For instance, an appendix sketches “An Outline of Complete Stabilization Program

which, zyadopted,wouldfmwid~ stabilization expedients sufficient to meet aU cimmstances

which could

reasonably be expected to arise” (p. 212).

8.

The complementarity

between Fisher’s personal and professional

concerns

is also

acknowledged by Tobin; for example, “he saw clearly and unapologetically that in lobbying for what was good for the country he was also hoping to rescue the Fisher family finances” (1987, p. 376). 9. The distinction between reflation and inflation appears several times in Fisher’s work, notably in his congressional

testimony, his book Reflation (1936) and his comments to the

American Academy (1934). 10.

For writers at this time, “money” was defined as currency, and deposits were claims

on money, hence the Fisherian M and M’components M’VE

in the equation of exchange-MV+

ET Accordingly, the typical approach was to examine components

of the money supply

rather than the aggregate. Currie (1934) was the first to present a money series covering the depression years in which demand deposits were included in the aggregate, the money supply. 11.

In his analysis of the effects of a “physical dollar withdrawn,” Fisher cites Rogers, whose

much cited article appeared the following year (1933a), for working out mathematically the details of the process. 12. With regard to his money supply mechanism, he suggests, incorrectly of course, that the Federal Reserve can control the quantity of currency, as when “from February to December, 1931, [it] increased its issues of Federal Reserve notes by 80 per cent” (1932, p. 103). 13.

In an eight page letter (March 19, 1933) responding to the 100 percent money

proposal by economists at the University of Chicago, Fisher’s increasing disenchantment

with

the Federal Reserve is apparent. First of all, he has the System lamentably failing at preventing inflation and deflation. Second, he believes “it is destined to fail in the future ifreliance is placed upon it for that function” (Irving Fisher Papers, Box 8, Folder 116,34),

and the principal reason

is the dominance on the Board of bankers, no one of whom could measure up to Strong. 14. Another point of overlap between them is Fisher’s identification of the importance of the failure of the Bank of the United States, “a relatively small bank on the outskirts of New York City” (1932, p. 101) in accelerating the banking system’s downward spiral. For Fisher, as

YALE AND THE GREAT DEPRESION

321

well as for Friedman and Schwartz (1963, pp. 309-31 l), the failure was important because that bank was perceived to be an official public institution. 15.

Friedman and Schwartz (1963, p. 410 n. 166) use this quote and the subsequent

sentence as evidence that Rogers was one of the few academicians who understood that monetary actions were a contributing cause of the contraction. Harold Reed of Cornell, Fisher, James Angel1 of Columbia and Karl Bopp of Miisouri are also mentioned. 16. Rogers’s seminal paper on bank credit (1933a) is another example. The paper was written as the result of trying to understand the observed contraction of bank credit, hence the puzzling title, “The Absorption of Bank Credit” rather than what seems more natural, “The Expansion of Bank Credit.” Interestingly, one of the conclusions he drew concerned the ineffectiveness of rediscount rate policy: “Under present distressing conditions, easy monqris of little importance. Plentiful money would probably bring effective relief’ (1933a, p. 70). 17.

Rogers was opposed to using inflation as a cure for the depression, hence the snideness

of what in this quote is essentially an aside and the quotation marks around the word reflation. On his opposition to “currency inflation as a possible relief measure,” see his letter of February 6,1933

to Senator Elmer Thomas of Oklahoma (James Harvey Rogers Papers, Box 11, Folder

134). 18. In addition, Myron W. Watkins of industrial organization fame was there into the late 1920s until he left for New York University. Wood had just moved from North Carolina State where he had gone after his Harvard graduate work. His David Wells Prize book based on his dissertation, English Theories of Central Banking Control 181%1858,

was published in 1938.

Wood’s strong influence is mentioned by Brown (1936, p. ix) and Bopp (1935, p. 5) whose dissertation Wood supervised, parts of which appeared in (Bopp 1932). Bopp received his doctorate at Missouri in 1931 and remained on the faculty until he went to the Federal Reserve Bank of Philadelphia as Director of Research in 1941. He later became president of the bank. 19.

This is not entirely correct. In his Monetary Control, published at the time of his

retirement

in the early 196Os, Wood at one point mentioned the confusion that reined regarding the operation of the discount rate: “During the worst of the crisis the Federal Reserve authorities can hardly be said to have followed any principle: they were extemporizing, trying to keep going from day to day” (1963, p. 174). His discussions of open market operations and reserve requirement policies in the 1930s are devoid of any such judgments. In fact, in his chapter on Reserve Requirements, he moves from their enactment in the Banking Act of 1935 to the post-World War II increase without mentioning the 19361937

[I] [2] [31 [41

doubling (p. 152).

Allen, William R 1977. “Irving Fisher, ED.R, and the Great Depression.” History of Political Economy (Winter): 56&587. Bopp, Rarl R 1932. “Two Notes on the Federal Reserve System.” Journal of PoZiticaZ Economy (June): 379-391. -. 1935. TheAgencies ofFederal Reserve Policy. The University of Missouri Studies No. 104, October, l-83. -. 1948. “Three Decades of Federal Reserve Policy.” In Federal Reserve Policy, Board of Governors of the Federal Reserve System, Washington, D.C., Postwar Economic Studies No. 8.

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Brown, Harry G. 1933. “Nonsense and Sense in Dealing with the Depression.” Beta Gamma Sigmu Exchange (Spring): 97-107. 1936. Economic Science and the Common Welfare, 6th ed. Columbia, MO: Lucas WI -. Brothers. [71 Chandler, Lester V. 1958. Benjamin Strong, Central Banker. Washington, DC: The Brookings Institution. Currie, Lauchlin. 1934. The Supply and Control of Monqr in the United States. Cambridge, PI MA: Harvard University. Epstein, Gerald and Thomas Ferguson. 1984. “Monetary Policy, Loan Liquidation, and PI Industrial Conflict: The Federal Reserve and the Open Market Operations of 1932.” Journal of Economic History (December): 957-983. Fisher, Irving. 1911/1971. The Purchasing Power of Monqr. New York, NY: Augustus M. WI Kelley. -. 1932. Booms and Dqtnzssions. New York, NY: Adelphi. [Ill 1933a. “The Debt-Deflation Theory of Great Depressions.” Econometrica 1 (Oc[I21 -. tober) : 337-357. -. 1933b. “The Relation of Employment to the Price Level.” Pp. 152-159 in Stabilization ofEmployment, edited by CF. Roos. Bloomington, IN: Principia Press. -. 1933c. Stump Scrip New York, MI: Adelphi. -. 1934. “Reflation and Stabilization.” Annals of theAmerican Academy ofPolitical and SocialScience (January): 127-131 and 150-151. -. 1936. After Reflation, What? New York, NY: Adelphi. WI 1945. ZOO% Monqr, 3rd ed. New Haven, CT: City Printing. [I71 -. -. 1946. Private correspondence, letter to Clark Warburton, July 23. WI Papers. Manuscripts and Archives, Yale University Library. [191 -. Fisher, Irving N. 1956. My Father IrvingFisher. New York, NY: Comet Press. WI Friedman, Milton and Anna J. Schwartz. 1963. A Monetary History the United States: WI 1867-1960. Princeton, NJ: Princeton University. [221 Gayer, Arthur D. 1935. Public Works in Prosperity and Depression. New York, NY: National Bureau of Economic Research. Humphrey, Thomas M. 1971. “Role on Non-Chicago Economists in the Evolution of the ~31 Quantity Theory in America.” Southern Economic Journal (July): 12-18. 1973. “On the Monetary Economics of Chicagoans and Non-Chicagoans: Reply.” [241 -. Southzrn Economic Journal Uanuary): 460-463. 1939. “James Harvey Rogers, 1886-1939.” Atican ~251 J[ones], R[alph] C[oughenour]. Economic Zteviezo (December): 913-914. Kemmerer, E. W. 1933. “Discussion.” Anmican Economic Review Supplement (March): Ml 130-134. ~271 Miller, John Perry. 1967. “Irving Fisher ofYale.” In Ten Economic Studies in the Tradition of ZruingFisher. New York, NY:John Wiley & Sons. Monissen, Hans G. 1989. “Irving Fisher.” In Kla.ssiker des ~konomisc&n Denkens, edited by P81 Joachim Starbatty. Munich, FRG: Beck. Patinkin, Don. 1979. “Keynes and Chicago.” Journal of Law and Economics (October): KBI 213-232. 1982. Anticipations of the General Thxxq? Chicago, IL: University of Chicago. [301 -. 1983. “Multiple Discoveries and the Central Message.” American Journal of [311 -. Sociology (September): 306-323. [321 Rogers, James Harvey. 1929. The Process of Inflation in France, 1914-l 927. New York, NY: Columbia University. 1931. America Weighs Her Gold. New Haven, CT: Yale University. [331 -. 1932. “Gold, International Credits and Depression.” Journal of the Am&can [341 -. Statistical Association (September): 239-250. 1933a. “The Absorption of Bank Credit.” Economettica (January): 63-70. [351 -. -. 1933b. “Federal Reserve Policy in World Monetary Chaos.” A&can Economic WI Review Supplement (March): 119-129. [51

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