Allyn Young on Money, Banking and Business Cycles

In this chapter Young’s monetary views are discussed. He stated that modern business was in the hands of men who had come to think in terms of money and the price-making process was largely in their hands. A change in the money supply causes distortion in relative prices which, in turn, caused business cycles. Young took the best points from Fisher, Laughlin and Hawtrey while rejecting their weak points in his monetary views. While agreeing with Laughlin on the gold standard, he rejected his laissez-faire and passive accommodation policies. While agreeing with Fisher’s activist monetary policy, he rejected his rules-based approach. He disagreed with Hawtrey on the discount rate as an instrument of control particularly in the American context.