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Politics on the road to the U.S. monetary union

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  • Peter L. Rousseau

    (Vanderbilt University)

Abstract

Is political unity a necessary condition for a successful monetary union? The early United States seems a leading example of this principle. But the view is misleadingly simple. I review the historical record and uncover signs that the United States did not achieve a stable monetary union, at least if measured by a uniform currency and adequate safeguards against systemic risk, until well after the Civil War and probably not until the founding of the Federal Reserve. Political change and shifting policy positions end up as key factors in shaping the monetary union that did ultimately emerge.

Suggested Citation

  • Peter L. Rousseau, 2013. "Politics on the road to the U.S. monetary union," Vanderbilt University Department of Economics Working Papers 13-00006, Vanderbilt University Department of Economics.
    • Handle: RePEc:van:wpaper:vuecon-sub-13-00006
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    References listed on IDEAS

    as
    1. Peter L. Rousseau & Richard Sylla, 2003. "Financial Systems, Economic Growth, and Globalization," NBER Chapters, in: Globalization in Historical Perspective, pages 373-416, National Bureau of Economic Research, Inc.
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    4. Farley Grubb, 2011. "State Redemption of the Continental Dollar, 1779-1790," NBER Working Papers 17209, National Bureau of Economic Research, Inc.
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    6. Bordo, Michael D., 2012. "Could the United States have had a better central bank? An historical counterfactual speculation," Journal of Macroeconomics, Elsevier, vol. 34(3), pages 597-607.
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    8. Cowen, David J., 2000. "The First Bank of the United States and the Securities Market Crash of 1792," The Journal of Economic History, Cambridge University Press, vol. 60(4), pages 1041-1060, December.
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    13. Bodenhorn,Howard, 2000. "A History of Banking in Antebellum America," Cambridge Books, Cambridge University Press, number 9780521662857, January.
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    18. Rousseau, Peter L., 2006. "A common currency: early US monetary policy and the transition to the dollar," Financial History Review, Cambridge University Press, vol. 13(01), pages 97-122, April.
    19. Warren E. Weber, 2006. "Early state banks in the United States: how many were there and where did they exist?," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 30(Sep), pages 28-40.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. “A fluid, ever-evolving, and organic process of improvement, misstep and improvement”: The Long Road to Monetary Union in the USA
      by Manuel Bautista in NEP-HIS blog on 2013-08-08 04:19:48

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    Cited by:

    1. Régis Breton & Mariana Rojas Breu & Vincent Bignon, 2013. "Monetary Union, Banks and Financial Integration," Post-Print hal-01685888, HAL.

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    More about this item

    Keywords

    colonial currency; Bank of the United States; Jacksonian monetary policy; free banking; National Banking System; Federal Reserve System;
    All these keywords.

    JEL classification:

    • N1 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations
    • N2 - Economic History - - Financial Markets and Institutions

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