War and Inflation in the United States from the Revolution to the Persian Gulf War

Hugh Rockoff

A chapter in Economic History of Warfare and State Formation, 2016, pp 159-195 from Springer

Abstract: Abstract The institutional arrangements governing the creation of new money in the United States have changed dramatically since the Revolution. Yet beneath the surface the story of wartime money creation has remained much the same. During wars against minor powers, the government was able to fund the war by borrowing and levying taxes. During wars against major powers, however, the story was very different. In major wars there came a point when further increases in taxes could not be undertaken for administrative or political reasons, and further increases in borrowing could not be undertaken except at higher interest rates, rates that exceeded what was considered fair based on prewar norms. At those moments governments turned to the printing press. The result was substantial inflation.

Keywords: Interest; Inflation; Borrowing; Adam Smith; John Stuart Mill; Robert Barro; John Maynard Keynes; [American] Revolution; War of 1812; (American) Civil War; National Banking Act; U.S. Treasury; Federal Reserve; Benjamin Franklin; First Gulf War; Farley Grubb; Continental dollar; Virginia dollar; Continental Congress; Nathaniel Greene; Charles Lee; Daniel Morgan; French and Indian War; Congress; Debt; Milton Friedman; Anna Schwartz; Mexican War; Greenback; Supreme Court; John Sherman; Thaddeus Stevens; Jay Cooke; Homestead Act; Spanish-American War; Philippine-American War; World War I; World War II; Bonds; Korean War; Korean War Accord; Vietnam War; William McChesney Martin; Lyndon B Johson (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (5)

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DOI: 10.1007/978-981-10-1605-9_7

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