O.M.W. Sprague (the Man Who “Wrote the Book” on Financial Crises) meets the Great Depression

Hugh Rockoff

No 29416, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: When the Great Depression struck the United States, Oliver M.W. Sprague was America’s foremost expert on financial crises. His History of Crises under the National Banking System is a frequently cited classic. Had he diagnosed a banking panic and called for an aggressive response by the Federal Reserve, it might have made a difference; but he did not. Sprague’s misdiagnosis had, I argue, two causes. First, the crisis lacked the symptoms of a panic, such as high short-term interest rates in the New York money market, which Sprague had identified from his studies of previous crises. Second, Sprague’s macro-economic ideas led him to conclude that an expansionary monetary policy would be of little help once a depression was underway. Sprague’s main concern was that abandoning the gold standard would intensify the crisis, a concern that led him to resign his position as advisor to the U.S. Treasury to protest Roosevelt’s gold policy.

JEL-codes: B2 N12 N2 (search for similar items in EconPapers)
Date: 2021-10
New Economics Papers: this item is included in nep-ban, nep-cba, nep-his, nep-hpe, nep-mac and nep-pke
Note: DAE
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Published as Hugh Rockoff, 2022. "O.M.W. Sprague (the Man Who “Wrote the Book” on Financial Crises) meets the Great Depression," Jahrbuch für Wirtschaftsgeschichte / Economic History Yearbook, vol 63(2), pages 527-557.

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