Review of Allan Meltzer’s A History of the Federal Reserve, Volume 2

Tuesday, November 30, 2010

Working Group on Economic Policy: WP10110

When Allan Meltzer published Volume 1 of the history of the Federal Reserve in 2003, it was received with wide acclaim. Michael Bordo (2006), reviewing it in the Journal of Monetary Economics, praised it as a “monumental accomplishment” researched with “painstaking detail.” David Laidler (2003), writing in the Journal of Economic Literature, called it “an exceptionally clear story.” Both emphasized that the history complemented Friedman and Schwartz’s (1963) monetary history since Meltzer provides a penetrating biography of an institution rather than a broader history of monetary trends.

Volume 2, published six years later, is all this and much more. It picks up the story in 1951 where Volume 1 left off. Reflecting the increased volume of relevant source material, it is substantially longer than Volume 1—up from 800 pages to 1312 pages, which required that it be split up into two books. The year 1951 is a logical break point because it coincides with the start of William McChesney Martin’s long term as Chairman and also with the year of the famous Accord which gave the Federal Reserve freedom to set interest rates in a way that would “minimize monetization of the public debt” rather than simply peg the Treasury borrowing rate.

Allan H. Meltzer’s A History of the Federal Reserve, Volume 2