Saturday, May 8, 2010

Dear Withywindle:

Paul Krugman wrote the following, which relates to your question:
why did 19th-century America, with a small central government, also work as a currency area? One answer, which David Beckworth points out, is that it didn’t necessarily work all that well. When William Jennings Bryan declared that “you shall not crucify this country on a cross of gold,” he was in effect saying that the monetary policy dictated by the Bundesbank gold standard wasn’t appropriate for the farm states.

1 comment:

The Ancient said...

I seem to recall crashes and periods of depression in the 1830s, 1840s, and 1850s. I seem to remember stock exchange crises precipitated by "little things" like the sinking of a single ship bearing gold back to New York from California. (The irregular supply of additional gold was a big problem in the credit markets of the 1840s and 1850s.) I also seem to remember a pretty bad post-Civil War economy (in contrast to booms after WW1 and WW2).

But then I'm older than Paul, and I actually know something about American history.

P.S. FLG -- Granted, Bray Hammond's book is daunting. As a temporary substitute, look at "The First Tycoon" -- the new biography of Cornelius Vanderbilt. It has its defects -- it leaves out an important part of the early railroad grid (New Jersey, which linked NY to the coal fields of Pennsylvania, for instance), and it get NY society wrong in several ways, but it is really very good on the development of the modern corporation and the problems Vanderbilt and others faced in financing the growth of industry before and after the Civil War. You'll learn a lot.

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