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1 Financial and Monetary History of the United States 1700 to 1933 Financial and Monetary History of the United States 1700 to 1933 Economics 344:01 (Fall 2012) Monday/Thursday 11:30-12:50 Murray 211 Professor Michael D. Bordo Department of Economics New Jersey Hall, Room 304 Rutgers University (732) 932-7363 [email protected] http://econweb.rutgers.edu/bordo Office hours: Mondays 11-12 and Thursday 11-12 or by appointment Prerequisites Econ 320 (Intermediate Microeconomic Analysis) and Econ 321 (Intermediate Macroeconomic Analysis). Money and Banking Econ 301 is recommended. This is an upper level elective course where you are expected to apply the knowledge and expertise that you have gained in the prerequisites. Course Objective The focus of the course is on American Monetary and Financial history. The methodology of the course is to apply modern tools of monetary and macroeconomic theory to important historical issues. The introduction of theoretical tools and historical data can shed new light on controversies of the past and yield new insights for today’s economic problems. Attendance Policy and Academic Integrity Students are expected to attend every class. Attendance is highly correlated with performance in the course. As this is an upper level class I will not take attendance. It is the student’s responsibility to master the course work including the lectures and the readings. As always at Rutgers, you are expected to follow the University’s precepts of academic integrity. ( See http://academicintegrity.rutgers.edu/integrity.shtml). Course Requirements There will be a short research paper of maximum 12 pages, double-spaced including references, tables and figures worth 40% of the grade. It is due on Monday December 3. There will also be a midterm exam worth 20% of the grade on October 29. The final exam is worth 40% of the grade. Term Paper The term paper should be a short concise essay. The paper should be no longer than 12 pages, double- spaced (including footnotes, references, tables and figures). 1 The paper should accomplish the following tasks: Define the subject/problem to be covered Briefly summarize the literature or if a debate—present the various positions Briefly summarize and critically evaluate the evidence, data and methods used Suggest any unanswered questions and scope for further research Consider the policy lessons Possible Topics for the Term paper: You may choose these or any other one as long as it concerns U.S. financial and monetary history. The Crash of 1929 The Dual Banking system The Great Depression and the Great Recession The Suffolk banking system Monetary Policy before the Federal Reserve System Financing the Civil War in the North/or the South The National Monetary Commission State Deposit Insurance Schemes before FDIC The Crisis of 1837, or 1857, or 1873, or 1893, or 1907 Formation of the U.S. Monetary Union The Bank Holiday of 1933 and the Run on the Dollar Benjamin Strong: central banker William Jennings Bryan and Free Silver Andrew Mellon and the Great Depression Wildcat banking The “rules of the game” in the classical gold standard J.P. Morgan, early central banker 2 Financial and Monetary History of the United States 1700 to 193 Economics 344:01 (Fall 2012) Prof Michael D. Bordo Reading List Textbooks can be found at the college bookstore. Articles will be available on the course Sakai site. Milton Friedman and Anna J. Schwartz, A Monetary History of the United States 1867 to 1960. Princeton University Press, 1970. Milton Friedman, Money Mischief: Episodes in Monetary History. Harcourt Brace 1992 Peter Temin, The Jacksonian Economy. W.W. Norton, 1969 Gary M. Walton and Hugh Rockoff, History of the American Economy: Eleventh Edition. Harcourt, Brace 2010 Topics 1. Colonial Monetary Regimes Walton and Rockoff, chapter 4 Bruce D. Smith (1984), “Money and Inflation in Colonial Massachusetts,” Federal Reserve Bank of Minneapolis Quarterly Review ( Winter ) pp 1-14 Bruce Smith (1985) “ Some Colonial Evidence on Two Theories of Money: Maryland and the Carolinas” Journal of Political Economy, 93, pp 1178-1211 Ronald Michener, (1987) “Colonial Money and the Quantity Theory “Carnegie Rochester Conference Series in Public Policy. November Bennett McCallum (1992) “Money and Prices in Colonial America: A New test of Competing Theories.” Journal of Political Economy. February Farley Grubb, “ Benjamin Franklin and the Birth of a Paper Money Economy” Federal of Philadelphia Reserve Bank, 2006 2. Early Beginnings of the Republic; Hyperinflation; Price Controls; Monetary Unification; the Monetary Standard. 3 Walton and Rockoff chapter 7 Hugh Rockoff (1984) Drastic Measures: A History of Wage and Price Controls in the United States. Cambridge University Press. Chapter 2. Richard Timberlake Jr., (1978). The Origins of Central Banking in the United States. Harvard University Press. Chapters 1 and 2. Richard Sylla, Robert E. Wright and David Cowen (2009) “Alexander Hamilton, Central Banker” Business History Review 83 (spring) pp 61-86. A.Rolnick, B. Smith and W. Weber. (1994).“The Origins of the Monetary Union in the United States” in Pierre Siklos (ed) Varieties of Monetary Reform. Kluwer pp 323-349. Thomas Sargent (2012)” Nobel Lecture: United States Then, Europe Now.” Journal of Political Economy. February pp 1-40. Arthur Fraas (1974) “The Second Bank of the United States: An Instrument for an Interregional Monetary Union.” Journal of Economic History, 34, pp 447-463 3. The Bank War, the Depression of 1837-1843 and the Debt Defaults by the States Walton and Rockoff chapter 12 Peter Temin (1969) The Jacksonian Economy Peter Rousseau (2002) “ Jacksonian Monetary Policy, Specie Flows and the Panic of 1837” Journal of Economic History June pp 467-488 John Wallis, (2012) The Depression of 1839 to 1843: States, Debts and Banks” University of Maryland ( mimeo) John Wallis, Richard Sylla and Arthur Grinath (2012) “Sovereign Default and Repudiation: The Emerging Market Debt Crisis in the U.S. 1837-1843” University of Maryland (mimeo). John Wallis, Ricahard Sylla and John Legler, (1987) “ Banks and State Public Finance in the New Republic; The U.S. 1790-1860” Journal of Economic History June 4. Free Banking Walton and Rockoff, chapter 12. Hugh Rockoff (1972) “Money, Prices and Banks in the Jacksonian Era.” In R. Fogel and S. Engerman. The Reinterpretation of American Economic History. Arthur Rolnick and Warren Weber (1983) “ New Evidence on the Free Banking Era” American Economic Review, 73, 1080-1091 Hugh Rockoff (1985) “New Evidence on Free Banking in the United States” American Economic Review, 75, 886-889. 5. The Civil War, the Greenbacks: Inflation and Resumption Walton and Rockoff, chapter 19. Milton Friedman and Anna Schwartz, A Monetary History of the United States. Chapters 3 and 4. Michael Bordo (1989) “ The Contribution of “ A Monetary History of the United States 1867 to 1960 to Monetary History” in Michael D. Bordo ( ed) Money, History and Finance: Essays in Honor of Anna J. Schwartz. University of Chicago press pp 49-52. 6. The Gold Standard 4 Michael Bordo (1981) “ The Classical Gold Standard: Some Lessons for Today” Federal Reserve Bank of St. Louis Review, 63 Milton Friedman and Anna Schwartz, A Monetary History of the United States. Chapters 3 and 4. 7. The Agitation over Silver Milton Friedman and Anna Schwartz, A Monetary History of the United States. Chapter 3 Milton Friedman, Money Mischief, chapters 3, 4, and 5. 8. The National Banking Era and Financial Crises Walton and Rockoff, chapter 19. Philip Cagan (1963) “The First Fifty Years of the National Banking System—An Historical Appraisal” in Deane Carson (ed) Banking and Monetary Studies Richard D. Irwin. Milton Friedman and Anna Schwartz, A Monetary History of the United States. Chapter 4. Anna Schwartz (1986) “Real and Pseudo Financial Crises,” in F. Capie and G. Wood (eds) Financial Crises and the World Banking System. London, MacMillan Eugene White (1982) The Political Economy of Banking Regulations, 1864-1933” Journal of Economic History XLII, 33-42 Michael Bordo (1990) “ The Lender of Last Resort: Alternative Views and Historical Experiences,” Federal Reserve Bank of Richmond, Economic Review , March Jon Moen and Ellis Tallman (1992) “The Bank Panic of 1907: The Role of the Trust Companies “. Journal of Economic History 52:2 (June) pp 611-630. 9. The Establishment of the Federal Reserve System Milton Friedman and Anna Schwartz, A Monetary History, chapter 5. R.C. West (1976) “Real Bills, The Gold Standard, and Central Bank Policy” Business History Review. Winter, pp 503-513. Michael Bordo and David Wheelock (2011) “ The Promise and Performance of The Federal Reserve as Lender of Last Resort 1914-1933” NBER Working Paper 16763 Michael Bordo (2012) “Could the United States Have Had a Better Central Bank? : An Historical Counterfactual Speculation.” Journal of Macroeconomics. 10. The 1920s: Was it the High Tide of Fed Policy? Walton and Rockoff, chapters 21 and 22. M. Friedman and Anna Schwartz, A Monetary History, chapter 6. Michael Bordo (1989) “The Contribution of a Monetary History of the United States 1867 to 1960 to Monetary History” pp 38-42. 11. The Great Contraction 1929-1933 Walton and Rockoff chapter 23 Milton Friedman and Anna Schwartz (1970) A Monetary History of the United States. Chapter 7. David Wheelock (1992) “Monetary Policy in the Great Depression: What the Fed Did, and Why” Federal Reserve Bank of St. Louis Review. March/April 5 Eugene White (1990). “The Stock Market Boom and Crash of 1929 Revisited “Journal of Economic Perspectives. Spring, pp 76-83. Christina Romer (1993) “The Nation in Depression “Journal of Economic Perspectives. 7:2 (spring) pp 19-39. Michael Bordo and John Landon Lane, (2011) “The Banking Panics in the United States: Some Lessons for Today” Oxford Review of Economic Policy, volume 26 pp 481-509. 6 .
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