TY - JOUR AU - Bordo,Michael D. AU - Humpage,Owen AU - Schwartz,Anna J. TI - The Historical Origins of U.S. Exchange Market Intervention Policy JF - National Bureau of Economic Research Working Paper Series VL - No. 12662 PY - 2006 Y2 - November 2006 UR - http://www.nber.org/papers/w12662 L1 - http://www.nber.org/papers/w12662.pdf N1 - Author contact info: Michael D. Bordo Department of Economics Rutgers University New Jersey Hall 75 Hamilton Street New Brunswick, NJ 08901 Tel: 732/822-7152 Fax: 732/932-7416 E-Mail: bordo@econ.rutgers.edu Owen Humpage Federal Reserve Bank of Cleveland P.O. Box 6387 Cleveland, OH 44101-1387 Tel: 216 579 2019 Fax: 216 579 3050 E-Mail: owen.f.humpage@clev.frb.org Anna J. Schwartz NBER 365 Fifth Ave, 5th Floor New York, NY 10016 Tel: 212/817-7957 Fax: 212/817-1597 E-Mail: aschwartz@gc.cuny.edu AB - The present set of arrangements for U.S. exchange market intervention policy was largely developed after 1961 during the Bretton Woods era. However, that set had important historical precedents. In this paper we examine precedents to current arrangements, focusing on three historical eras: pre-1934 operations; the Exchange Stabilization Fund operations beginning in 1934; and the Bretton Woods era. We describe operations by the Second Bank of the United States in the pre-Civil War period and then operations by the U.S. Treasury in the post-Civil War period. After establishment of the Federal Reserve in 1914, the New York Fed engaged in isolated exchange market policies in the 1920s and 1930s, first under the direction of the Governor Benjamin Strong until his death in 1928, thereafter, under the direction of his successor, George Harrison. We then examine operations of the Exchange Stabilization Fund that the Gold Reserve Act of 1934 created as a Treasury Department agency. We exploit unique unpublished sources to analyze its dealings with the Banque de France and the Bank of England before and after the Tripartite Agreement. Finally, based on a unique data set of all U.S. Treasury and Federal Reserve foreign-exchange transactions, we discuss U.S. efforts from 1961 through 1972 to defend the dollar's parity under the Bretton Woods system. ER -