J. Laurence Laughlin versus Irving Fisher on the quantity theory of money, 1894 to 1913

In the controversy leading to the Federal Reserve Act of 1913, J. Laurence Laughlin of the University of Chicago and Irving Fisher of Yale were the leading opponent and proponent, respectively, of the quantity theory of money as the theoretical basis for reorganizing the US monetary system. Laughlin identified the quantity theory with bimetallist claims that monetizing silver would have lasting real benefits. Laughlin offered a cost of production theory of the value of gold as an alternative to the quantity theory, while his students published empirical critiques of the quantity theory. Fisher upheld the quantity theory as explaining price movements while distancing the theory from assertions of long-run non-neutrality of money. Laughlin and Fisher vigorously debated monetary theory and monetary reform, notably at American Economic Association meetings. Their confrontations illuminate the monetary controversies preceding the Federal Reserve Act, which reflected the views of Laughlin and Willis (adviser to Congressman Carter Glass) while rejecting the mandate to stabilize the price level proposed by Senator Owen and his adviser Fisher.