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

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  • Rockoff Hugh

    (Department of Economics, Rutgers University, 75 Hamilton Street, New Brunswick NJ 08901, New Jersey, USA)

Abstract

When the Great Depression struck the United States, O.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 neither. Sprague’s misdiagnosis had, I argue, two causes. First, the crisis lacked the symptoms of a panic, such as high 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 increasing the stock of money 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.

Suggested Citation

  • Rockoff Hugh, 2022. "O.M.W. Sprague (the Man Who “Wrote the Book” on Financial Crises) meets the Great Depression," Jahrbuch für Wirtschaftsgeschichte / Economic History Yearbook, De Gruyter, vol. 63(2), pages 527-557, November.
    • Handle: RePEc:bpj:jbwige:v:63:y:2022:i:2:p:527-557:n:7
    DOI: 10.1515/jbwg-2022-0018
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    Keywords

    O.M.W. Sprague; Great Depression; banking panic; financial crises; Federal Reserve; Weltwirtschaftskrise; Bankenpanik; Finanzkrisen; Geldpolitik;
    All these keywords.

    JEL classification:

    • B - Schools of Economic Thought and Methodology
    • G - Financial Economics
    • E - Macroeconomics and Monetary Economics
    • E - Macroeconomics and Monetary Economics

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