Table of Contents

Preface Introduction The Federal Reserve's Legacy A Shock to the System: 1919-1921 Collapse and Revival: 1929-1935 Stagflation and the Monetary Experiment of 1979-1982 The Federal Reserve's Ascent Final Remarks Notes Bibliography Index

Promotional Information

"Bernard Shull provides unique insights about how the Federal Reserve evolved from 'small and almost impoverished institution' to become a 'bullet proof...colossus.' The key to their success was adaptation to the economic conditions and political realities of the times." -- Benton E. Gup, Ph.D., Chair of Banking, the University of Alabama "Professor Shull's very interesting analysis of how the Federal Reserve rose to power far beyond the intentions of its founders explains an intriguing paradox: that it did so in spite of making huge inflationary and deflationary blunders. This is definitely a good read for anybody interested in the evolution of the American financial system, and a must read for those wishing to understand how useful having a central bank has been and is for the government." -- Alex J. Pollock, Resident Fellow, American Enterprise Institute "The Fourth Branch is a remarkable achievement. Shull has provided an authoritative and clearly written history of the origins of the Fed and of its ability to deal with the three major crises in its 92-year history: the roller coaster of inflation and deflation in the post-World War I years of 1919-1921; the financial and economic implosion of 1929-1933; and the stagflation and subsequent high interest rates of 1973-1982. In each episode, the System made serious errors and received widespread criticism; yet the System emerged each time stronger rather than weaker. Shull attributes this continued strengthening to the adaptability of the System, as well as to its widely recognized value in times of crises (such as wars) and to its unique and flexible structure. This book will be accessible to specialists and generalists alike and is likely to be used as a reference for many decades to come." -- Lawrence J. White, author E. Imperatore Professor of Economics, Stern School of Business, New York University

About the Author

Bernard Shull is Professor Emeritus in the Department of Economics, Hunter College, and a special consultant for National Economic Research Associates (NERA). He has held various positions in the Federal Reserve System, including Associate Advisor to the Board of Governors. He was also Senior Economist in the Office of the Comptroller of the Currency. He has published widely in professional and academic journals on issues of monetary, banking, and financial policy, and is the co-author of two books, Interest Rate Volatility and Bank Mergers in a Deregulated Environment (Quorum, 2001).

Reviews

Shull provides a good overview of the history of the Federal Reserve, emphasizing its role in three economic crises: the inflation and sudden deflation of 1919-21, the Great Depression, and the stagflation period of 1973-82. In each of these events, the Federal Reserve played an undistinguished role, and was often fingered as a major cause of the problem. Despite its failures, in the wake of each crisis the Federal Reserve emerged with enhanced powers. The author credits the success of the Federal Reserve in expanding its power to its willingness to change course when conditions require it. One could just as well conclude from the evidence presented in this work that the Federal Reserve has been rewarded because it has proven itself willing and able to serve the financial community. Shull, whose career includes working for the board of governors of the Federal Reserve and the Office of the Comptroller of the Currency as well as teaching, brings both archival material and the established literature into play. His book is well written and for the most part avoids technical analysis, making it accessible to undergraduate students. Recommended. Public and academic library collections, lower-division undergraduate and up.
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Dr. Shull examines how, despite convincing evidence that misguided Federal Reserve policy exacerbated a number of major economic crises, the institution has consistently emerged from each crisis more powerful and influential than before. By focusing on three critical periods of economic stress (the inflation and deflation following World War I, the stock market crash of 1929 and subsequent Depression, and the volatility of the 1970s and 1980s), Dr. Shull argues that the key to the Federal Reserve's unexpected success has been awareness of its immense value in national emergencies and its capacity to adapt to the changing economic conditions and political realities of the past century.
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