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A Hands-off Central Banker? Marriner S. Eccles and the Federal Reserve Policy, 1934-1951


  • Matias Vernengo


Marriner Eccles is often seen as an early defender of Keynesian ideas. In that respect, it is generally accepted that he considered monetary policy of secondary importance, and that as a result he allowed the Federal Reserve to be submitted to the interests of the Treasury. In this view, the Federal Reserve after 1935 acquired new instruments to command monetary policy, but it did not change its behavior significantly. Further, his defense of the Federal Reserve-Treasury accord in 1951 is sometimes seen as a reversal of his previous policy stances. This paper claims that proper understanding of Eccles’ views is necessary to appreciate the changes in monetary policy during the Great Depression and World War II. Rather than a hands-off central banker, that submitted the Fed to the Treasury, a more proper depiction of Eccles tenure at the Fed would be as a Main Street chairman.

Suggested Citation

  • Matias Vernengo, 2006. "A Hands-off Central Banker? Marriner S. Eccles and the Federal Reserve Policy, 1934-1951," Working Paper Series, Department of Economics, University of Utah 2006_04, University of Utah, Department of Economics.
  • Handle: RePEc:uta:papers:2006_04

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    References listed on IDEAS

    1. Charles Calomiris & David Wheelock, 1998. "Was the Great Depression a Watershed for American Monetary Policy?," NBER Chapters,in: The Defining Moment: The Great Depression and the American Economy in the Twentieth Century, pages 23-66 National Bureau of Economic Research, Inc.
    2. Peter Temin, 1991. "Lessons from the Great Depression," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262700441, July.
    3. Robert Leeson, 1997. "The Eclipse of the Goal of Zero Inflation," History of Political Economy, Duke University Press, vol. 29(3), pages 445-496, Fall.
    4. Richard H. Timberlake, 1999. "The tale of another chairman," The Region, Federal Reserve Bank of Minneapolis, issue Jun, pages 32-35,64,67.
    5. Orphanides, Athanasios, 2003. "Historical monetary policy analysis and the Taylor rule," Journal of Monetary Economics, Elsevier, vol. 50(5), pages 983-1022, July.
    6. Alan S. Blinder, 1999. "Central Banking in Theory and Practice," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262522608, July.
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    Cited by:

    1. Luca Fiorito & Matías Vernengo, 2009. "The Other J.M.: John Maurice Clark and the Keynesian Revolution," Journal of Economic Issues, Taylor & Francis Journals, vol. 43(4), pages 899-916.

    More about this item


    History of Thought; Keynesians; Federal Reserve History;

    JEL classification:

    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • B31 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals - - - Individuals
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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