The National Bureau of Economic Research has published a new paper by Michael D. Bordo, Hugh Rockoff, Not Just the Great Contraction: Friedman and Schwartz’s A Monetary History of the United States 1867 to 1960. They write (My highlight)
A Monetary History of the United States 1867 to 1960 published in 1963 was written as part of an extensive NBER research project on Money and Business Cycles started in the 1950s. The project resulted in three more books and many important articles. A Monetary History was designed to provide historical evidence for the modern quantity theory of money. The principal lessons of the modern quantity theory of the long-run neutrality of money, the transitory effects of monetary policy on real economic activity, and the importance of stable money and of monetary rules have all been absorbed in modern macro models. A Monetary History , unlike the other books, has endured the test of time and has become a classic whose reputation has grown with age. It succeeded because it was based on narrative and not an explicit model. The narrative methodology pioneered by Friedman and Schwartz and the beautifully written story still captures the imaginations of new generations of economists.
What’s fascinating about this commentary is that the most highlighted observation in the Friedman-Schwartz text has been their view on the Great Depression. Ivan Pongracic, Jr writes:
As a result of examining more closely the key years between 1929 and 1933, Friedman and Schwartz first concluded that the Great Depression was not the necessary and direct result of the stock-market crash of October 1929, which they attribute to a speculative investment bubble.[...] In fact, they believed that the economy could have recovered rather rapidly if only the Fed—the central bank of the United States —had not engaged in a series of disastrous policies in the aftermath of the crash.
In contrast, the economist Murray Rothbard tied together the stock-market crash and Great Depression, in his book, America’s Great Depression, to Federal Reserve money printing of the 1920s. The end to this printing, in Rothbard’s view, caused the crash and the Great Depression. The GD itself being prolonged by government interference, which prevented markets (especially with regard to wages) from clearing.
Thus, while it is interesting to observe the mainstream propaganda machine hailing the Friedman-Schwartz book as having “endured the test of time.” It may prove instructive to look as the numbers to determine endurance.
According to Amazon, the paperback edition of A Monetary History of the United States, 1867-1960 is ranked #40,235 in Books.
The paperback edition of Murray Rothbard’s America’s Great Depression is #37,511 in Books
Even drilling down to the much narrower category, Books > Business & Investing > Economics > Money & Monetary Policy
Rothbard out ranks Friedman-Schwartz. Rothbard is ranked # 18 and Friedman-Scwartz is ranked #19.
This is quite remarkable given that the Mises Institute sells Rothbard’s book, which is a perennial best seller for them and likely draws away a significant number of sales that would otherwise go to Amazon and boos Rothbard’s sales rank even higher. There is no comparable institute selling the Friedman-Schwartz book.
I look forward to Bordo and Rockoff discussing why Rothbard out ranks Friedman-Schwartz, when it comes to Money & Monetary Policy, and Rothbard’s enduring legacy.
Source: Economic Policy Journal. Written by Robert Wenzel.