Economics at your fingertips  

The Rise and Fall of the Quantity Theory in Nineteenth Century Britain: Implications for Early Fed Thinking

Robert L. Hetzel
Additional contact information
Robert L. Hetzel: Federal Reserve Bank of Richmond

Economic Quarterly, 2016, issue Q4, 281-320

Abstract: British monetary experience in the nineteenth century was extremely rich both in terms of the development of the quantity theory and in terms of the evolution of views of the role of the Bank of England in the international gold standard. One can ask, should or could the early Federal Reserve have learned from this experience? Especially during the Depression, why didn't the Federal Reserve understand its responsibility for the monetary contraction, deflation, and economic collapse it produced? Why didn't knowledge of the quantity theory, which developed in early nineteenth century Britain, prevent such a catastrophic mistake? A short answer is that the quantity theory, which flourished in the first part of the nineteenth century, disappeared as the gold standard became orthodoxy and the counterfactual of a paper money standard became heresy. There was then very little to guide the early Fed when it created a monetary standard that in reality was a paper money standard.

Keywords: quantity theory; gold standard; monetary standard (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link) ... y/2016/q4/hetzel.pdf Full text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from

Access Statistics for this article

More articles in Economic Quarterly from Federal Reserve Bank of Richmond Contact information at EDIRC.
Bibliographic data for series maintained by Christian Pascasio ().

Page updated 2019-07-18
Handle: RePEc:fip:fedreq:00051