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Birth of a Market: The U.S. Treasury Securities Market from the Great War to the Great Depression

Author

Listed:
  • Garbade, Kenneth D.

    (Federal Reserve Bank of New York)

Abstract

The market for U.S. Treasury securities is a marvel of modern finance. In 2009 the Treasury auctioned $8.2 trillion of new securities, ranging from 4-day bills to 30-year bonds, in 283 offerings on 171 different days. By contrast, in the decade before World War I, there was only about $1 billion of interest-bearing Treasury debt outstanding, spread out over just six issues. New offerings were rare, and the debt was narrowly held, most of it owned by national banks. In Birth of a Market, Kenneth Garbade traces the development of the Treasury market from a financial backwater in the years before World War I to a multibillion dollar market on the eve of World War II. Garbade focuses on Treasury debt management policies, describing the origins of several pillars of modern Treasury practice, including "regular and predictable" auction offerings and the integration of debt and cash management. He recounts the actions of Secretaries of the Treasury, from William McAdoo in the Wilson administration to Henry Morgenthau in the Roosevelt administration, and their responses to economic conditions. Garbade's account covers the Treasury market in the two decades before World War I, how the Treasury financed the Great War, how it managed the postwar refinancing and paydowns, and how it financed the chronic deficits of the Great Depression. He concludes with an examination of aspects of modern Treasury debt management that grew out of developments from 1917 to 1939.

Suggested Citation

  • Garbade, Kenneth D., 2012. "Birth of a Market: The U.S. Treasury Securities Market from the Great War to the Great Depression," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262016370, March.
  • Handle: RePEc:mtp:titles:0262016370
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    Citations

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    Cited by:

    1. George J. Hall & Thomas J. Sargent, 2015. "A History of U.S. Debt Limits," NBER Working Papers 21799, National Bureau of Economic Research, Inc.
    2. George J. Hall & Thomas J. Sargent, 2015. "A History of U.S. Debt Limits," NBER Working Papers 21799, National Bureau of Economic Research, Inc.
    3. Butkiewicz, James, 2015. "Eugene Meyer And The German Influence On The Origin Of Us Federal Financial Rescues," Journal of the History of Economic Thought, Cambridge University Press, vol. 37(01), pages 57-77, March.
    4. Michael Bordo & Arunima Sinha, 2016. "A Lesson from the Great Depression that the Fed Might have Learned: A Comparison of the 1932 Open Market Purchases with Quantitative Easing," NBER Working Papers 22581, National Bureau of Economic Research, Inc.
    5. Gary B. Gorton, 2016. "The History and Economics of Safe Assets," NBER Working Papers 22210, National Bureau of Economic Research, Inc.
    6. Jane Knodell, 2013. "The nation-building purposes of early US central banks," Review of Keynesian Economics, Edward Elgar Publishing, vol. 1(3), pages 288-299, January.
    7. Garbade, Kenneth D., 2014. "Direct purchases of U.S. Treasury securities by Federal Reserve banks," Staff Reports 684, Federal Reserve Bank of New York.

    More about this item

    Keywords

    securities; national debt; debt management; history;

    JEL classification:

    • N4 - Economic History - - Government, War, Law, International Relations, and Regulation
    • N2 - Economic History - - Financial Markets and Institutions
    • G1 - Financial Economics - - General Financial Markets
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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