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Paul van Zeeland and the first decade of the US Federal Reserve System : The analysis from a European central banker who was a student of Kemmerer

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  • Ivo Maes

    () (National Bank of Belgium and Robert Triffin Chair, Université catholique de Louvain and ICHEC Brussels Management School, Boulevard de Berlaimont 14, 1000 Brussels, Belgium)

  • Rebeca Gomez Betancourt

    () (University of Lyon 2. Triangle-ISH)

Abstract

The establishment of a central bank occurred at very different moments in the process of economic integration in the United States and the European Union. In this paper, we go into the first years of the Federal Reserve System through the lens of Paul van Zeeland’s PhD dissertation. Paul van Zeeland (1893-1973) became the first Head of the Economics Service of the National Bank of Belgium in 1921, after his studies in Princeton with Edwin Walter Kemmerer. There are clear similarities in their analyses of the Federal Reserve System, for instance in their adherence to the gold standard and the real bills doctrine as well as in their emphasis on the elasticity of the money supply. Moreover, they shared a view - with hindsight a rather naïve view - that with the Fed in place, financial crises would be a distant memory. However, there were also important differences. So, van Zeeland, like several other economists as Warburg, accorded greater significance to the discount market (a key factor for the international role of the dollar) and to a stronger centralization of the Fed (which would be taken up in the 1935 Banking Act). Moreover, very specific for van Zeeland is the importance given to the Fed's independence from the State (an element related to his continental European background and Belgium's experience of monetary financing during the war).

Suggested Citation

  • Ivo Maes & Rebeca Gomez Betancourt, 2018. "Paul van Zeeland and the first decade of the US Federal Reserve System : The analysis from a European central banker who was a student of Kemmerer," Working Paper Research 339, National Bank of Belgium.
  • Handle: RePEc:nbb:reswpp:201803-339
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    File URL: https://www.nbb.be/doc/oc/repec/reswpp/wp339en.pdf
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    References listed on IDEAS

    as
    1. Ivo Maes, 2002. "Economic Thought and the Making of European Monetary Union," Books, Edward Elgar Publishing, number 2515.
    2. Perry Mehrling, 2002. "Retrospectives: Economists and the Fed: Beginnings," Journal of Economic Perspectives, American Economic Association, vol. 16(4), pages 207-218, Fall.
    3. Eichengreen, Barry, 2012. "Exorbitant Privilege: The Rise and Fall of the Dollar," OUP Catalogue, Oxford University Press, number 9780199642472.
    4. António Almodovar & Pedro Teixeira, 2008. "The Ascent and Decline of Catholic Economic Thought, 1830–1950s," History of Political Economy, Duke University Press, vol. 40(5), pages 62-87, Supplemen.
    5. Ivo Maes, 2010. "A century of macroeconomic and monetary thought at the National Bank of Belgium," Working Paper Research 188, National Bank of Belgium.
    6. Rebeca Gomez Betancourt, 2010. "Edwin Walter Kemmerer and the origins of the Federal Reserve System," Post-Print halshs-00559631, HAL.
    7. Gomez Betancourt, Rebeca, 2010. "Edwin Walter Kemmerer And The Origins Of The Fed," Journal of the History of Economic Thought, Cambridge University Press, vol. 32(04), pages 445-470, December.
    8. Ivo Maes & Erik Buyst, 2005. "Migration and Americanization: The special case of Belgian economics," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 12(1), pages 73-88.
    9. P. Butzen & S. Cheliout & H. Geeroms, 2014. "Lessons from the US for the institutional design of EMU," Economic Review, National Bank of Belgium, issue ii, pages 82-101, September.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    van Zeeland; Kemmerer; Federal Reserve System; financial crisis; banking reform;

    JEL classification:

    • A11 - General Economics and Teaching - - General Economics - - - Role of Economics; Role of Economists
    • B1 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F02 - International Economics - - General - - - International Economic Order and Integration
    • N23 - Economic History - - Financial Markets and Institutions - - - Europe: Pre-1913

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