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Politics on the road to the U.S. monetary union

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  • Peter L. Rousseau

    ()
    (Vanderbilt University)

Abstract

Is political unity a necessary condition for a successful monetary union? The early United States seems a leading example of this principle. But the view is misleadingly simple. I review the historical record and uncover signs that the United States did not achieve a stable monetary union, at least if measured by a uniform currency and adequate safeguards against systemic risk, until well after the Civil War and probably not until the founding of the Federal Reserve. Political change and shifting policy positions end up as key factors in shaping the monetary union that did ultimately emerge.

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Bibliographic Info

Paper provided by Vanderbilt University Department of Economics in its series Vanderbilt University Department of Economics Working Papers with number 13-00006.

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Date of creation: 25 Mar 2013
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Handle: RePEc:van:wpaper:vuecon-sub-13-00006

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Web page: http://www.vanderbilt.edu/econ/wparchive/index.html

Related research

Keywords: colonial currency; Bank of the United States; Jacksonian monetary policy; free banking; National Banking System; Federal Reserve System;

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References

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  1. Rousseau, Peter L., 2006. "A common currency: early US monetary policy and the transition to the dollar," Financial History Review, Cambridge University Press, vol. 13(01), pages 97-122, April.
  2. Farley Grubb, 2007. "The Continental Dollar: How Much Was Really Issued?," NBER Working Papers 13047, National Bureau of Economic Research, Inc.
  3. Matthew Jaremski & Peter L. Rousseau, 2012. "Banks, Free Banks, and U.S. Economic Growth," NBER Working Papers 18021, National Bureau of Economic Research, Inc.
  4. Peter L. Rousseau, 2000. "Jacksonian Monetary Policy, Specie Flows, and the Panic of 1837," Vanderbilt University Department of Economics Working Papers 0004, Vanderbilt University Department of Economics, revised Jun 2001.
  5. Cowen, David J., 2000. "The First Bank of the United States and the Securities Market Crash of 1792," The Journal of Economic History, Cambridge University Press, vol. 60(04), pages 1041-1060, December.
  6. Van Fenstermaker, J., 1965. "The Statistics of American Commercial Banking, 1782–1818," The Journal of Economic History, Cambridge University Press, vol. 25(03), pages 400-413, September.
  7. Farley Grubb, 2011. "State Redemption of the Continental Dollar, 1779-1790," Working Papers 11-08, University of Delaware, Department of Economics.
  8. Wettereau, James O., 1942. "The Branches of the First Bank of the United States," The Journal of Economic History, Cambridge University Press, vol. 2(S1), pages 66-100, December.
  9. Rolnick, Arthur J & Weber, Warren E, 1983. "New Evidence on the Free Banking Era," American Economic Review, American Economic Association, vol. 73(5), pages 1080-91, December.
  10. Thomas J. Sargent, 2012. "Nobel Lecture: United States Then, Europe Now," Journal of Political Economy, University of Chicago Press, vol. 120(1), pages 1 - 40.
  11. Peter L. Rousseau & Richard Sylla, 2000. "Emerging Financial Markets and Early U.S. Growth," Econometric Society World Congress 2000 Contributed Papers 1254, Econometric Society.
  12. Gorton, Gary, 1996. "Reputation Formation in Early Bank Note Markets," Journal of Political Economy, University of Chicago Press, vol. 104(2), pages 346-97, April.
  13. Matthew Jaremski, 2010. "Free Bank Failures: Risky Bonds versus Undiversified Portfolios," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 42(8), pages 1565-1587, December.
  14. Weber, Warren E., 2006. "Early State Banks in the United States: How Many Were There and When Did They Exist?," The Journal of Economic History, Cambridge University Press, vol. 66(02), pages 433-455, June.
  15. Cowen, David J., 2000. "The First Bank of the United States and the Securities Market Crash of 1792," The Journal of Economic History, Cambridge University Press, vol. 60(04), pages 1041-1060, December.
  16. Sylla, Richard, 2002. "Financial Systems And Economic Modernization," The Journal of Economic History, Cambridge University Press, vol. 62(02), pages 277-292, June.
  17. Calomiris, Charles W., 1988. "Institutional Failure, Monetary Scarcity, and the Depreciation of the Continental," The Journal of Economic History, Cambridge University Press, vol. 48(01), pages 47-68, March.
  18. Bordo, Michael D., 2012. "Could the United States have had a better central bank? An historical counterfactual speculation," Journal of Macroeconomics, Elsevier, vol. 34(3), pages 597-607.
  19. Sylla, Richard, 1969. "Federal Policy, Banking Market Structure, and Capital Mobilization in the United States, 1863–1913," The Journal of Economic History, Cambridge University Press, vol. 29(04), pages 657-686, December.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. “A fluid, ever-evolving, and organic process of improvement, misstep and improvement”: The Long Road to Monetary Union in the USA
    by Manuel Bautista in NEP-HIS blog on 2013-08-07 23:19:48

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