A History of Macroeconomic Policy in the United States Keynes asked whether his ‘visionary’ ideas would overcome the interests opposed to change. However, an examination of the histories of monetary and fiscal policies suggests that this is a false distinction. The interests and ideas associated with government policies are seldom opposed. The suspicion that the latter more often follows than confronts the former is supported by the experi- ences documented in this book. Professor Wood’s new title examines the controlling influences that drive macroeconomic policies in the United States. The book addresses the history of the interests, ideas, and practices of monetary and fiscal policies in the United States, although it also examines macro-policies in other countries, particularly the United Kingdom. Professor Wood argues that economic policies in the United States have been relatively predictable and stable historically, through a detailed examination of conflicts over taxes and monetary policy such as the whiskey rebellion, Magna Carta, the Stamp Act, the Banks of the United States, and the Federal Reserve. Issues covered also include property, economists’ theo- ries of stabilization, taxes, deficits, and monetary policy. This book will be of interest to monetary and fiscal economists, both in the United States and the United Kingdom. It is also relevant to postgraduate and advanced undergraduate economics students. John H. Wood is the Reynolds Professor of Economics at Wake Forest Univer- sity in North Carolina, USA. 1 Routledge explorations in economic history 2 Edited by Lars Magnusson 3 Uppsala University, Sweden 4 5 6 7 8 9 1 1 1 1 Economic Ideas and 7 Production Efficiency in 1 Government Policy Domesday England, 1086 1 Contributions to contemporary John McDonald 1 economic history 1 Sir Alec Cairncross 8 Free Trade and its Reception 1 1815–1960 1 2 The Organization of Labour Freedom and trade: volume I 1 Markets Edited by Andrew Marrison 2 Modernity, culture and 2 governance in Germany, Sweden, 9 Conceiving Companies 2 Britain and Japan Joint-stock politics in Victorian 2 Bo Stråth England 2 Timothy L. 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Wood 2 Economic Regulation 2 Edited by Peter Bernholz and 2 Roland Vaubel 2 2 3 3 3 3 3 3 3 3 3 3 4 4 4 4 4 4 1 2 A History of Macroeconomic 3 4 Policy in the United States 5 6 7 8 9 0 1 2 3 John H. Wood 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 1 2 3 4 5 6 7 8 First published 2009 9 by Routledge 1 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN 1 Simultaneously published in the USA and Canada 1 by Routledge 1 270 Madison Ave, New York, NY 10016 1 Routledge is an imprint of the Taylor & Francis Group, an informa business 1 1 This edition published in the Taylor & Francis e-Library, 2008. 1 “To purchase your own copy of this or any of Taylor & Francis or Routledge’s 1 collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk.” 1 2 © 2009 John H. Wood 2 All rights reserved. No part of this book may be reprinted or reproduced or 2 utilized in any form or by any electronic, mechanical, or other means, now 2 known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing 2 from the publishers. 2 British Library Cataloguing in Publication Data 2 A catalogue record for this book is available from the British Library 2 Library of Congress Cataloging-in-Publication Data 2 A catalog record for this book has been requested 2 ISBN 0-203-88356-X Master e-book ISBN 3 3 3 ISBN10: 0-415-77718-6 (hbk) 3 ISBN10: 0-203-88356-X (ebk) 3 ISBN13: 978-0-415-77718-6 (hbk) 3 ISBN13: 978-0-203-88356-3 (ebk) 3 3 3 3 4 4 4 4 4 4 1 2 3 4 5 6 7 8 9 0 1 2 3 But though thus largely directed by practical needs, economics avoids as far 4 as possible the discussion of those exigencies of party organization, and those 5 diplomacies of home and foreign politics of which the statesman is bound to take 6 account in deciding what measures that he can propose will bring him nearest to 7 the end that he desires to secure for his country. It aims indeed at helping him to 8 determine not only what that end should be, but also what are the best methods of a broad policy devoted to that end. But it shuns many political issues, which the 9 practical man cannot ignore: and it is therefore a science, pure and applied, rather 0 than a science and an art. And it is better described by the broad term ‘Economics’ 1 than by the narrower term ‘Political Economy’. 2 (Marshall 1920: 36) 3 4 It is universally acknowledged that there is a great uniformity among the actions of 5 men in all nations and ages, and that human nature remains still the same in its 6 principles and operations. The same motives always produce the same actions; the 7 same events follow from the same causes.... Would you know the sentiments, 8 inclinations, and course of life of the Greeks and Romans? Study well the temper 9 and actions of the French and English: you cannot be much mistaken in transferring to the former most of the observations which you have made with regard to the 0 latter. Mankind are so much the same in all times and places that history informs 1 us of nothing new or strange in this particular.... Nor are the earth, water, and other 2 elements examined by Aristotle and Hippocrates more like to those which at 3 present lie under our observation than the men described by Polybius and Tacitus 4 are to those who now govern the world.