A Monetary History of the United States, 1867-1960 by Milton Friedman

Author:Milton Friedman [Friedman, Milton; Schwartz, Anna Jacobson]
Language: eng
Format: epub, pdf
ISBN: 978-1-4008-2933-0
Publisher: Princeton University Press
Published: 1963-10-28T16:00:00+00:00

1 For an interesting comparison of the two contractions, see George Macesich, “Monetary Disturbances in the United States, 1834-45,” unpublished Ph.D. dissertation, University of Chicago, June 1958.

2 This view has been argued most cogently by Clark Warburton in a series of important papers, including: “Monetary Expansion and the Inflationary Gap,” American Economic Review, June 1944, pp. 320, 325-326; “Monetary Theory, Full Production, and the Great Depression,” Econometrica, Apr. 1945, pp. 124—128; “The Volume of Money and the Price Level Between the World Wars,” Journal of Political Economy, June 1945, pp. 155-163; “Quantity and Frequency of Use of Money in the United States, 1919-45,” Journal of Political Economy, Oct. 1946, pp. 442-450.

3 See Milton Friedman, The Demand for Money: Some Theoretical and Empirical Results, New York, National Bureau of Economic Research, Occasional Paper 68, 1959, p. 16.

4 As in pre-Federal Reserve times, J. P. Morgan and Company assumed leadership of an effort to restore an orderly market by organizing a pool of funds for lending on the call market and for purchase of securities. But the bankers’ pool did not stem the tide of selling. By the second week after the crash the phase of organized support of the market was over.

5 During the two weeks before the panic on Oct. 23, loans to brokers for the account of others by reporting member banks in New York City declined by $120 million, largely as a result of withdrawals of funds by foreigners. From then to the end of the year, those loans declined by $2,300 million, or by no less than 60 pre cent. Loans on account of out-of-town banks fell an additional $1 billion. More comprehensive figures show a decline of roughly $4.5 billion in brokers’ loans by out-of-town banks and others from Oct. 4 to Dec. 31, and a more than halving of total brokers’ loans.

For the data on New York City weekly reporting member bank loans to brokers and dealers in securities, see Banking and Monetary Statistics, Board of Governors of the Federal Reserve System, 1943, Table 141, p. 499, and, for quarterly estimates of the total of such loans by all lenders, see ibid., Table 139, p. 494. Although both tables show similar captions for the principal groups of lenders—most of whose funds were placed for them by the New York banks—except for loans by New York City banks for their own accounts, the breakdowns are not comparable. In the weekly series, “out-of-town domestic banks” include member and nonmember banks outside New York City and, to an unknown amount, customers of those banks, whereas in the comprehensive series that category is restricted to member banks outside New York City. Similarly, “others” in the weekly series cover mainly corporations and foreign banking agencies, but in the comprehensive series include also other brokers, individuals, and nonmember banks.

For loans except to brokers and dealers by New York City weekly reporting member banks, which also increased in the week after the crash, see ibid., p. 174. Also see the discussion of that episode in sect.

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