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Franklin D. Roosevelt, Silver, and China

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  • Friedman, Milton

Abstract

The silver purchase program, initiated by Franklin Roosevelt in late 1933 in response to the economically small but politically potent silver bloc, gave a large short-run subsidy to silver producers at the cost of destroying any long-run monetary role for silver. More important, it imposed severe deflation on China, the only major country still on a silver standard, and forced it off the silver standard and on to a fiat standard, which brought forward in time and increased in severity the subsequent wartime inflation and postwar hyperinflation. The silver purchase program thereby contributed, though perhaps only modestly, to the ultimate triumph of the Communists. Copyright 1992 by University of Chicago Press.

Suggested Citation

  • Friedman, Milton, 1992. "Franklin D. Roosevelt, Silver, and China," Journal of Political Economy, University of Chicago Press, vol. 100(1), pages 62-83, February.
    • Handle: RePEc:ucp:jpolec:v:100:y:1992:i:1:p:62-83
    DOI: 10.1086/261807
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    Cited by:

    1. Jacks, David S. & Yan, Se & Zhao, Liuyan, 2017. "Silver points, silver flows, and the measure of Chinese financial integration," Journal of International Economics, Elsevier, vol. 108(C), pages 377-386.
    2. Boyer, Russell S., 2009. "Reflections on Milton Friedman's contributions to open economy money/macro," Journal of International Money and Finance, Elsevier, vol. 28(7), pages 1097-1116, November.
    3. Burdekin, Richard C.K., 2008. "US pressure on China: Silver flows, deflation, and the 1934 Shanghai credit crunch," China Economic Review, Elsevier, vol. 19(2), pages 170-182, June.
    4. Alan de Bromhead & Alan Fernihough & Markus Lampe & Kevin Hjortshøj O'Rourke, 2021. "Four great Asian trade collapses," Australian Economic History Review, Economic History Society of Australia and New Zealand, vol. 61(2), pages 159-185, July.
    5. Yum K. Kwan & Francis T. Lui, 2004. "Les régimes de caisse d’émission sont-ils performants ? Le cas de Hong-Kong," Revue d'Économie Financière, Programme National Persée, vol. 75(2), pages 153-178.
    6. Bojanic, Antonio N., 2011. "Final Years of the Silver Standard in Mexico: Evidence of Purchasing Power Parity with The United States," MPRA Paper 45535, University Library of Munich, Germany, revised 27 Jul 2011.
    7. Jiwei Qian & Tuan‐Hwee Sng, 2021. "The state in Chinese economic history," Australian Economic History Review, Economic History Society of Australia and New Zealand, vol. 61(3), pages 359-395, November.
    8. Braggion, Fabio & Manconi, Alberto & Zhu, Haikun, 2020. "Credit and social unrest: Evidence from 1930s China," Journal of Financial Economics, Elsevier, vol. 138(2), pages 295-315.
    9. Ho, Tai-kuang & Lai, Cheng-chung, 2013. "Silver fetters? The rise and fall of the Chinese price level 1928–34," Explorations in Economic History, Elsevier, vol. 50(3), pages 446-462.

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