Monetary Trends in the United States and the United Kingdom

Editor’s Introduction Originally published in Volume 16, Number 1, Spring 1972, pages 4-17 . At the 1971 annual conference of the American Economic Association, Milton Friedman (1912-2006) delivered this paper as the fourth John R. Commons Lecture. It is a summary of research he was conducting with Anna Schwartz intended as a follow-up to their seminal work published nearly a decade earlier, A Monetary History of the United States, 1867-1960 . Over his lengthy career, Professor Friedman became his generation’s leading proponent of the Chicago School of economic thought and the founder of modern monetarism. In 1976 he received the Nobel Prize in Economic Sciences, “for his achievements in the fields of consumption analysis, monetary history and theory and for his demonstration of the complexity of stabilization policy.†Professor Friedman was one of those rare economists whose work was as widely known by the general public as it was respected by his academic peers. In this paper, Friedman identifies, examines, and compares a variety of trends in the monetary bases of the United States and the United Kingdom using nearly a century of data. His observations on the impact of technology, such as “automatic computers†on the velocity of money and the early movements toward a “checkless society†are prescient given that they were written more than forty years before today’s age of digital commerce. The paper concludes with a transcription of Professor Friedman’s responses to questions from the lecture’s audience.