Friday, November 27, 2015

An Economic History of How the Sausage is Made: Lowenstein's "America's Bank"



I had recently read “The Summit,” a book who’s subtitle explains that it is a book about how the Bretton Wood agreement came about to be, and enjoyed it. I read a lot of economics, but not that much economic history of how the sausage is made.

Therefore, when I saw that Lowenstein was putting out a book about the founding of the Federal Reserve, I jumped at the chance to read it. It is right up my alley – heck, it should be up everyone’s alley, popular nonfiction about monetary policy being important.

The book itself is a story well told. The first part basically is setting up the history of banking for the first part of the republic, with federalists sparing against Jacksonian anti-federalist and chomping at the same urban / rural divide that is still with us. This first part is the more compelling part. The second part is about the drafting of the bills that would become the Federal Reserve act and the personalities behind the drafting. For me, this is where it broke down. I wanted more of the details about the policy, and less about Carter Glass being a bit of a hick (though he did have a big hand in both the Federal Reserve and later New Deal Legislation).

For me, one of the strengths was that the book didn’t give too much credence to the various conspiracies surrounding the Fed. The first part of the book is in itself strong enough to support the need for a central bank, even if 100 years ago our ancestors weren’t ready for a kind of European central bank like the bank of England, having centralized deposits was important for the country’s development as a global capitalist power. It does address these various cranks – on one page – and then moves on. I thought that was a brilliant rhetorical move by Lowenstein. I’m still not entirely sure why Missouri has two branches of the Fed, but the book is rich in detail and an interesting read for everyone who hasn’t bought into various anti-centralization conspiracies.