On the Origins of "A Monetary History"
This paper explores some of the scholarship that influenced Milton Friedman and Anna J. Schwartz's "A Monetary History". It shows that the ideas of several Chicago economists -- Henry Schultz, Henry Simons, Lloyd Mints, and Jacob Viner -- left clear marks. It argues, however, that the most important influence may have been Wesley Clair Mitchell and his classic book "Business Cycles" (1913). Mitchell, and the NBER, provided the methodology for "A Monetary History", in particular the emphasis on compiling long time series of monthly data and analyzing the effects of specific variables on the business cycle. A common methodology and the stability of monetary relationships produced similar conclusions about money. Friedman and Schwartz deemphasized Mitchell's "bank-centric" view of the monetary transmission process, but they reinforced Mitchell's conclusion that money had an independent, predictable, and important influence on the business cycle.
I am grateful to Michael Bordo, Ross Emmett, Daniel Hammond, David Laidler, Malcolm Rutherford, Anna J. Schwartz, and the participants in a seminar at Rutgers University in October 2006 for detailed comments on previous drafts. I am also grateful to Claudia Goldin for making available tapes of interviews that she conducted with Anna J. Schwartz and that she and Larry Katz conducted with Milton Friedman for the NBER and to Daniel Hammond for alerting me to and making available documents from the Milton Friedman papers. I am responsible for any of the errors and mistaken judgments that remain. The final version of this paper will be published in The Elgar Companion to the Chicago School of Economics, edited by Ross B. Emmett (Edward Elgar). The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research.