A Monetary History of the United States

A Monetary History of the United States, 1867–1960

Dust jacket of 1st Edition, 3rd printing
Author	Milton Friedman, Anna Schwartz
Country	USA
Language	English
Subject	Economic history
Genre	History
Published	1963 Princeton University Press
Media type	Print (hardcover)
Pages	860 pp (first edition)
Dewey Decimal	332.4973

A Monetary History of the United States, 1867–1960 is a book written in 1963 by Nobel Prize–winning economist Milton Friedman and Anna J. Schwartz. It uses historical time series and economic analysis to argue the then novel proposition that changes in the money supply profoundly influenced the US economy, especially the behavior of economic fluctuations. The implication is that monetary policy should control the money supply. Economic historians see it as one of the most influential economics books of the century.

Milton Friedman and Anna Schwartz were working at the National Bureau of Economic Research (NBER) when the future chairman of the Federal Reserve, Arthur Burns, suggested that they collaborate on a project to analyze the effect of the money supply on the business cycle. Schwartz was already gathering much of the relevant historical data at that point, while Friedman was already a professor at the University of Chicago and also at the NBER. They began work in the late 1940s and eventually published A Monetary History through Princeton University Press in 1963. The Depression-related chapter, "The Great Contraction," was republished as a separate section in 1965.

The book discusses the role of the monetary policy in the U.S. economy from the Civil War Reconstruction Era to the middle of the 20th century. It presents what was then a contrarian view of the role of monetary policy in the Great Depression. The prevalent view in the early 1960s was that monetary forces played a passive role in the economic contraction of the 1930s. The Monetary History argues that the bank failures and the massive withdrawals of currency from the financial system that followed significantly shrank the money supply (the total amount of currency and outstanding bank deposits), which greatly exacerbated the economic contraction. The book criticizes the Federal Reserve Bank for not keeping the supply of money steady and not acting as lender of last resort, instead allowing commercial banks to fail and allowing the economic depression to deepen.