Gold, the Real Bills Doctrine, and the Fed: Sources of Monetary Disorder 1922–1938. By Thomas M. Humphrey, and Richard H. Timberlake,. Washington, DC: Cato Institute, 2019. Pp. xix, 201. $21.21, hardcover.

Gold, the Real Bills Doctrine, and the Fed: Sources of Monetary Disorder 1922–1938. By Thomas M. Humphrey and Richard H. Timberlake. Washington, DC: Cato Institute, 2019. Pp. xix, 201. $21.21, hardcover.

A key thesis in Thomas M. Humphrey and Richard H. Timberlake’s Gold, the Real Bills Doctrine, and the Fed begins with Milton Friedman and Anna Schwartz’s Monetary History of the United States 1867–1960 (Princeton: Princeton University Press, 1963). In attributing the Great Depression to monetary forces, Friedman and Schwartz placed blame squarely on the Federal Reserve (Fed) for allowing the money supply and banking system to collapse. Friedman and Schwartz argued that the Fed had a markedly superior monetary policy in the 1920s when New York Fed governor Benjamin Strong effectively ran policy, but that the officials who took charge following Strong’s death in 1928 lacked his experience or understanding. Humphrey and Timberlake agree that Strong had led a highly successful monetary policy from 1922 to 1928 and that the flawed policies of his successors “so constricted bank credit that the banking industry was in shambles, and the economy was in the most disastrous depression imaginable” (p. 115). Humphrey and Timberlake then depart from Friedman and Schwartz by attributing the Fed’s failures of 1929–1933 to policymakers’ acceptance of the Real Bills Doctrine and strong antipathy toward financial speculation, as well as to the...