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A Brief Review of HW Brands "The Money Men"

I recently finished reading The Money Men by H.W. Brands. I purchased it a while back with a hope of gaining a better understanding of monetary policy.

I'm only slightly more knowledgeable about the subject now, but it was still an interesting read. The titular money men are Alexander Hamilton, Nicholas Biddle, Jay Cooke, Jay Gould, and J.P. Morgan, all of whom had some effect on shaping America's monetary policy. The book takes us from the founding of the country to the founding of the Federal Reserve, which is what determines monetary policy today. It is framed in terms of the tension between capitalism (the interests of those with capital) and democracy (the interests of everybody in general...I myself would have used the word "populism" but who am I to argue with H.W. Brands?).

Alexander Hamilton is probably the most famous of the five. He was our first Treasury Secretary and also helped establish the First National Bank of the United States. I have not been one of his biggest fans (he is a bit too centralist for my tastes), but after reading this book I've decided he deserves his place on the 10 dollar bill. He did a lot to get the United States back on its feet financially after the war, and helped establish a sound currency (which was desperately needed after all the fiat money that was issued to finance the Revolutionary War.)

Nicholas Biddle locked horns with Andrew Jackson over the re-establishment of the National Bank. Jay Cooke sold bonds to help finance the War Between The States, and pioneered the idea of selling treasuries to individuals instead of just financial institution. Jay Gould tried to corner the gold market. He was finally thwarted when Ulysses Grant dumped a huge quantity of government gold onto the market (after much dilly-dallying and unintentional assistance to Gould...Grant probably doesn't deserve to have his face on money.) JP Morgan helped bail out the banks after the Panic Of 1907. Shortly after this, in 1913, the Federal Reserve was formed to deal with such instability in banks.
Really, the purpose was to have something permanent to do the same thing JP Morgan did, but the author doesn't put it quite like that.

Overall, this book didn't enlighten me about monetary policy as much as I'd hoped it would. On the other hand, it was  more fun to read  than I expected. Of course, any historical book where Aaron Burr (in the section on Alexander Hamilton) and Andrew Jackson (in the section on Nicholas Biddle) show up is bound to be a lively read.

I did learn a few things. For one, advocates of small government and capitalists have not always been on the same side. For instance, most of the opposition to Hamilton's bank was based on a belief in a decentralized government, and the principle that the government is forbidden from doing what is not explicitly allowed by the Constitution (a principle held by many conservatives today.)

I also learned quite a bit about the Free Silver movement (this was included in the chapter on Jay Gould.) It included much of the text of William Jennings Bryan's "Cross Of Gold" speech, or at least more of it than I have ever read. I was familiar with Bryan's famous quote "you shall not crucify mankind upon a cross of gold" and had been mystified as to how something as boring as currency policy could inspire such florid rhetoric. This book did a lot to help me understand the stakes in the fight between a pure gold standard and bimetallism.

As I mentioned, the book winds down with the establishment of The Federal Reserve, which avoided a lot of the problems that were described throughout the book. He credits the Fed with bringing about a ceasefire between the capitalists and democrats, at least over monetary issues. He closes the book with a description of what monetary policy has been like since the creation of the fed: "money policy was far more successful...but it was also far less entertaining."

It's good that he used the past tense. The fed hasn't had a very good track record during the 21st century. Given some of the calamities described in this book, it's fair to say that money policy has been more successful than it has in the past, but time will tell if it remains so.