"We Must Deflate": The Crime of 1920 Revisited. (26th May 2016)

• Record Type: Journal Article
• Authors: SHAW, CHRISTOPHER W.
• Is Part Of: Enterprise & society. Volume 17:Number 3(2016:Sep.)
• Page Start: 618
• Page End: 650
• Publication Date: 2016-05-26
• Subjects: Business -- History -- Periodicals; 338.09
• DOI: 10.1017/eso.2015.90
• Languages: English
• ISSNs: 1467-2227

Abstract

Abstract : Post-World War I Federal Reserve System policy focused on reducing price levels. Faith in liquidationist ideas led Federal Reserve officials to maintain tight-money policies during the depression of 1920–1921. Farmers suffering through this economic crisis objected to contemporary monetary policy. Organized labor and leading Progressive reformer Robert M. La Follette Sr. seconded their criticism. Postwar challenges to the nation's financial leadership and its priorities bore tangible results by producing a number of notable reforms, including modifications of Federal Reserve policy and the Agricultural Credits Act of 1923. In the absence of similar political pressure during the Great Depression, the Federal Reserve System adhered to liquidationist ideas and did not pursue monetary expansion.