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The Money Makers: How Roosevelt and Keynes Ended the Depression, Defeated Fascism, and Secured a Prosperous Peace
Shortly after arriving in the White House in early 1933, Franklin Roosevelt took the United States off the gold standard. His opponents thought his decision unwise at best, and ruinous at worst. But they could not have been more wrong. With The Money Makers, Eric Rauchway tells the absorbing story of how FDR and his advisors pulled the levers of monetary policy to save the domestic economy and propel the United States to unprecedented prosperity and superpower status. Drawing on the ideas of the brilliant British economist John Maynard Keynes, among others, Roosevelt created the conditions for recovery from the Great Depression, deploying economic policy to fight the biggest threat then facing the deflation. Throughout the 1930s, he also had one eye on the increasingly dire situation in Europe. In order to defeat Hitler, Roosevelt turned again to monetary policy, sending dollars abroad to prop up the faltering economies of Britain and, beginning in 1941, the Soviet Union. FDR's fight against economic depression and his fight against fascism were indistinguishable. As Rauchway writes, "Roosevelt wanted to ensure more than business recovery; he wanted to restore American economic and moral strength so the US could defend civilization itself." The economic and military alliance he created proved unbeatable-and also provided the foundation for decades of postwar prosperity. Indeed, Rauchway argues that Roosevelt's greatest legacy was his monetary policy. Even today, the "Roosevelt dollar" remains both the symbol and the catalyst of America's vast economic power.The Money Makers restores the Roosevelt dollar to its central place in our understanding of FDR, the New Deal, and the economic history of twentieth-century America. We forget this history at our own peril. In revealing the roots of our postwar prosperity, Rauchway shows how we can recapture the abundance of that period in our own.
338 pages, Kindle Edition
First published October 13, 2015
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About the author
Eric Rauchway
13 books44 followersEric Rauchway is an American historian and professor at the University of California, Davis. Rauchway's scholarship focuses on modern US political, social and economic history, particularly the Progressive Era and the New Deal.
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July 22, 2025
I have always admired FDR’s presidency. The empathy that he and Eleanor demonstrated during their presidency amid the Great Depression and WWII towards the masses in spite of both coming from well to do families, is an inspiration to me. But I have never had a chance to study how FDR oversaw the development of the Keynsian Economic principles as they were implemented in the United States starting in 1933. It was an unprecedented and brash economic revolution that many then old school economic thinkers went berserk over, even to the point where several early administration advisors resigned in protest. The status quo was an adherence to the Gold Standard which did not allow for deficit expenditures to the extent that was used in the early years of the Great Depression.
Here is where the British economist John Maynard Keynes and his then evolving Keynesian Theories. FDR was prescient enough and had enough confidence in his judgment to set aside many of the then norms. It was literally for the first year or so a swim upstream against strong economic expectations. That FDR had the fortitude to stick to his policies long enough for them to prove their fruition is commentary on FDR’s strength of will.
The book also demonstrates how these economic theories helped keep the US from entering a path to fascism and communism when there were many advocating these theories.
What is sad is how far out of favor Keynesian Economic theories have fallen, especially since the “Reagan Revolution” that started in 1981. How so much economic and societal equilibrium progress has been nulled by modern day economic practices.
Here is where the British economist John Maynard Keynes and his then evolving Keynesian Theories. FDR was prescient enough and had enough confidence in his judgment to set aside many of the then norms. It was literally for the first year or so a swim upstream against strong economic expectations. That FDR had the fortitude to stick to his policies long enough for them to prove their fruition is commentary on FDR’s strength of will.
The book also demonstrates how these economic theories helped keep the US from entering a path to fascism and communism when there were many advocating these theories.
What is sad is how far out of favor Keynesian Economic theories have fallen, especially since the “Reagan Revolution” that started in 1981. How so much economic and societal equilibrium progress has been nulled by modern day economic practices.
April 6, 2017
Call it selective memory: we tend to forget that the survival of our democratic system was by no means assured on March 4, 1933, when Franklin Delano Roosevelt was sworn in as president. With the country paralyzed by twenty-five percent unemployment, shuttered factories, insolvent banks, and rapidly falling prices for farm commodities and consumer goods alike, both Communism on the Left and fascism on the Right were rapidly gaining adherents. It was far from clear that a catastrophic clash of the extremes could be prevented. Contemporary events in Europe suggested that even the best-educated and most sophisticated societies could all too easily turn dangerously radical: barely more than a month earlier, Hitler had been named Chancellor of Germany. In The Money Makers, historian Eric Rauchway reviews the economic policies that FDR deployed to rescue the nation from a similar fate, steering the country on a moderate course through the years of the Depression and the world war that followed.
Saving capitalism
Today, it’s widely accepted among everybody except those on the extreme Right that Roosevelt succeeded in “saving capitalism.” Most historians give the credit to New Deal policies such as the Works Progress Administration, Social Security, and the Agricultural Adjustment Act — more generally, what economists call fiscal policy, which entails spending government funds to achieve social ends. Indeed, Roosevelt did use deficit spending through these and many other programs, and huge numbers of Americans gained desperately needed jobs or income subsidies. However, it’s recognized now (as Roosevelt himself did at the time) that the funds devoted to these programs were far from enough to turn the economy around. Rauchway asserts that it was not fiscal policy but monetary policy that played the larger role.
At the outset of the famous first “100 days” of the New Deal, Roosevelt took two bold steps: declaring a bank holiday to put a lid on bank failures — and taking the United States off the gold standard. Rauchway makes a strong case that the latter was the decisive action, not just because it stemmed deflation, allowing prices to rise for the benefit of business and consumers alike, but also because it allowed the United States to exert leadership in restoring world trade.
The only major weakness in Rauchway’s argument is that he gives equal credit for this policy shift to John Maynard Keynes; other economists, perhaps influenced by Keynes but important in their own right, helped persuade Roosevelt to take the dollar off the gold standard. In any case, Roosevelt didn’t need much, if any, persuading, as Rauchway makes clear.
Keynes’ direct role in steering American economic policy didn’t become critical until midway through World War II, when he faced off with New Deal economist Harry Dexter White as head of Britain’s economic negotiating team. The two men were central, even decisive, in shaping the agreement that emerged from the Bretton Woods Conference, which gave birth to the International Monetary Fund and the World Bank. Though these two new institutions may not have been immediately significant to the extent that Rauchway contends — other historians indicate that their true importance didn’t emerge until years later — there is little doubt that the IMF and the World Bank played large roles in extending the prosperity that came on the heels of World War II.
Taking Keynes’ later role into account, which helped pave the way for these developments, it might be appropriate to include him in the book’s subtitle along with FDR. However, it could be argued that two other men — Henry Morgenthau, Jr., and Harry Dexter White — also merit inclusion. Rauchway’s account assigns that prominence to them, the subtitle notwithstanding. The resulting run-on sentence might have been more than a little awkward, though.
The gold standard, deflation, and class war
From the earliest days of American history, the conflict between debtors and creditors has dominated our economic life. In the modern world, creditors, for the most part, have been bondholders; despite the media focus on the stock market, the bond market is nearly twice as large. Bonds are predominantly held by rich people and banks. Debtors are all the rest of us. Though we don’t directly pay the interest that accrues to bondholders, our taxes and the prices we pay for goods and services do make them possible.
Naturally, bondholders would like very much to receive their interest payment in dollars that are worth more than when they bought the bonds. That happens under deflation, which lowers prices and thus increases the value of the dollar because it buys more. Bondholders grow richer; consumers grow poorer in a vicious cycle, losing their jobs because businesses fold since they can no longer make a profit with prices so much lower. As prices fall further, people have even less money to spend because more businesses have folded. And so forth.
When FDR took office, deflation was rampant and threatened to spiral out of control. In Europe, where that had taken place, deflation played a major role in enabling the rise of Nazism and fascism. There, and increasingly in the United States, movements on the political extremes quickly grew as the pain of deflation increased. Despite the obvious threat that this instability implied, Wall Street bankers and the Republican Party cried out nearly in unison that the country should be put back on the gold standard lest runaway inflation take hold. (The most extreme of them have never ceased making the same demand.)
Like John Maynard Keynes but only a handful of other economists at the time, Roosevelt understood that the gold standard was the key to sustaining deflation. Since every dollar had to be backed by gold, the amount of money in circulation was limited because gold was so scarce and the government’s hoard of the yellow metal was no longer increasing. (That had taken place during the major gold discoveries of the nineteenth century; in the twentieth, only European payments for World War I debts brought gold to the United States, but those payments had long since halted as the Depression got underway.) It was abundantly clear that only if enough money circulated through the economy could prosperity be restored. To increase the money supply and defeat deflation, FDR would have to take the dollar off the gold standard. It was that action which enabled the Roosevelt Administration to engage in the limited deficit spending that the political environment allowed. Even more important, delinking the dollar from gold permitted prices to rise domestically — and world trade to increase as Roosevelt and Keynes maneuvered major European countries into parallel policies.
About the author
Eric Rauchway teaches history at the University of California, Davis. He specializes in the Progressive Era and the New Deal. An earlier book, published in 2008, The Great Depression and the New Deal, covered some of the same territory. Rauchway holds a Ph.D. from Stanford. The Money Makers is his fifth book.
Saving capitalism
Today, it’s widely accepted among everybody except those on the extreme Right that Roosevelt succeeded in “saving capitalism.” Most historians give the credit to New Deal policies such as the Works Progress Administration, Social Security, and the Agricultural Adjustment Act — more generally, what economists call fiscal policy, which entails spending government funds to achieve social ends. Indeed, Roosevelt did use deficit spending through these and many other programs, and huge numbers of Americans gained desperately needed jobs or income subsidies. However, it’s recognized now (as Roosevelt himself did at the time) that the funds devoted to these programs were far from enough to turn the economy around. Rauchway asserts that it was not fiscal policy but monetary policy that played the larger role.
At the outset of the famous first “100 days” of the New Deal, Roosevelt took two bold steps: declaring a bank holiday to put a lid on bank failures — and taking the United States off the gold standard. Rauchway makes a strong case that the latter was the decisive action, not just because it stemmed deflation, allowing prices to rise for the benefit of business and consumers alike, but also because it allowed the United States to exert leadership in restoring world trade.
The only major weakness in Rauchway’s argument is that he gives equal credit for this policy shift to John Maynard Keynes; other economists, perhaps influenced by Keynes but important in their own right, helped persuade Roosevelt to take the dollar off the gold standard. In any case, Roosevelt didn’t need much, if any, persuading, as Rauchway makes clear.
Keynes’ direct role in steering American economic policy didn’t become critical until midway through World War II, when he faced off with New Deal economist Harry Dexter White as head of Britain’s economic negotiating team. The two men were central, even decisive, in shaping the agreement that emerged from the Bretton Woods Conference, which gave birth to the International Monetary Fund and the World Bank. Though these two new institutions may not have been immediately significant to the extent that Rauchway contends — other historians indicate that their true importance didn’t emerge until years later — there is little doubt that the IMF and the World Bank played large roles in extending the prosperity that came on the heels of World War II.
Taking Keynes’ later role into account, which helped pave the way for these developments, it might be appropriate to include him in the book’s subtitle along with FDR. However, it could be argued that two other men — Henry Morgenthau, Jr., and Harry Dexter White — also merit inclusion. Rauchway’s account assigns that prominence to them, the subtitle notwithstanding. The resulting run-on sentence might have been more than a little awkward, though.
The gold standard, deflation, and class war
From the earliest days of American history, the conflict between debtors and creditors has dominated our economic life. In the modern world, creditors, for the most part, have been bondholders; despite the media focus on the stock market, the bond market is nearly twice as large. Bonds are predominantly held by rich people and banks. Debtors are all the rest of us. Though we don’t directly pay the interest that accrues to bondholders, our taxes and the prices we pay for goods and services do make them possible.
Naturally, bondholders would like very much to receive their interest payment in dollars that are worth more than when they bought the bonds. That happens under deflation, which lowers prices and thus increases the value of the dollar because it buys more. Bondholders grow richer; consumers grow poorer in a vicious cycle, losing their jobs because businesses fold since they can no longer make a profit with prices so much lower. As prices fall further, people have even less money to spend because more businesses have folded. And so forth.
When FDR took office, deflation was rampant and threatened to spiral out of control. In Europe, where that had taken place, deflation played a major role in enabling the rise of Nazism and fascism. There, and increasingly in the United States, movements on the political extremes quickly grew as the pain of deflation increased. Despite the obvious threat that this instability implied, Wall Street bankers and the Republican Party cried out nearly in unison that the country should be put back on the gold standard lest runaway inflation take hold. (The most extreme of them have never ceased making the same demand.)
Like John Maynard Keynes but only a handful of other economists at the time, Roosevelt understood that the gold standard was the key to sustaining deflation. Since every dollar had to be backed by gold, the amount of money in circulation was limited because gold was so scarce and the government’s hoard of the yellow metal was no longer increasing. (That had taken place during the major gold discoveries of the nineteenth century; in the twentieth, only European payments for World War I debts brought gold to the United States, but those payments had long since halted as the Depression got underway.) It was abundantly clear that only if enough money circulated through the economy could prosperity be restored. To increase the money supply and defeat deflation, FDR would have to take the dollar off the gold standard. It was that action which enabled the Roosevelt Administration to engage in the limited deficit spending that the political environment allowed. Even more important, delinking the dollar from gold permitted prices to rise domestically — and world trade to increase as Roosevelt and Keynes maneuvered major European countries into parallel policies.
About the author
Eric Rauchway teaches history at the University of California, Davis. He specializes in the Progressive Era and the New Deal. An earlier book, published in 2008, The Great Depression and the New Deal, covered some of the same territory. Rauchway holds a Ph.D. from Stanford. The Money Makers is his fifth book.
December 10, 2015
There is a near universal consensus among contemporary economists, both left and right, that the monetary policies of Franklin Roosevelt were the real reason for the United States' recovery from the Great Depression. Yet this argument, until recently, had not penetrated the history of the New Deal. This brisk, well-written book puts monetary policy back at the center of the story.
The opening sections, on Roosevelt's 1933 decision to take the United States off gold, show how conscious and planned this decision was, and how it aimed at moving the US back to its old price level, after four years of disastrous deflation, despite the pleas of Roosevelt's advisors like James Warburg and William Woodin. While other historians hesitate around these esoteric subjects, Rauchway deftly dives into both the political and economic significance of the decision. He shows how Roosevelt outmaneuvered goldbugs by helping drum up "demands" by rural radicals for inflation, so that his own policy could be seen as a mere compromise with more drastic measures.
The latter parts of the book, however, can be frustrating. Rauchway often seems to feel that his job is to write a brief for a managed dollar and the international Bretton Woods system. Instead of using economic arguments, however, he uses the historian's tool of guilt by association. In this story, opponents of the plans are just fascist goldbugs allied with craven banks, who only want to further grind the faces of the poor. Fascism, at home and abroad, is lingering behind almost all reaction. In a sense, this portrayal is the mirror image of Benn Steil's "The Battle of Bretton Woods," to which Rauchway is responding. In that, communists, and specifically Soviet spy and Roosevelt economic advisor Harry Dexter White, are the impetus behind the international managed currency experiment, and international institutions like the IMF and World Bank are forever tarnished by that connection.
Instead of merely admitting or investigating White's influence and moving on, Rauchway spends pages and pages tying himself in knots, trying to minimize every indication of White's espionage. Rauchway argues that White only joined the communists during a "nearly respectable time for communism and the Soviet Union," an astounding statement about an ideology and country that Americans hated and feared more than any other (even if that hatred was not as peaked as it would be later). Rauchway notes that White's espionage is "puzzling" and that "he surely knew he was doing something he should not," again an amazing understatement. Every example of White's espionage seems to be provided only to dismiss its importance. Rauchway notes that by 1942 White saw his handler "less frequently" for fear of his career, that White caused endless "frustration" to the KGB, that most of the information he passed on only came from a secretary he hired at request of the KGB. Yet if one came at this story with fresh eyes, the "lede" here is surely that White was spying, not how vigorously he did it.
This is frustrating not because one should take Steil's extreme view that White's espionage defined world politics in this period, but that somehow being a bad spy for Stalin's dictatorship proves something counter to Steil's arguments. In fact, besides being argumentative, this constant minimizing seems to prove nothing at all. The same partisan tone, tarring the plans' opponents as fascists while bending over backwards to excuse communists, is evident again when Rauchway discusses the "one politician willing to act against the spread of domestic fascism," New York congressman Samuel Dickstein, while failing to mention that Dickstein is now widely regarded to be a communist agent. The issue is not that one side or the other was worse in this period, but that Rauchway is laboring to be one-sided.
On the whole, however, the book stands on its deep research and solid writing. The descriptions are rich and thick, and the political legerdemain skillfully played out. If one can ignore the same argumentative tone that also colored Steil's book, one can learn a lot about a real triumph of economic policy, which would be no less a triumph if some of the actors were even less savory than they appear here.
The opening sections, on Roosevelt's 1933 decision to take the United States off gold, show how conscious and planned this decision was, and how it aimed at moving the US back to its old price level, after four years of disastrous deflation, despite the pleas of Roosevelt's advisors like James Warburg and William Woodin. While other historians hesitate around these esoteric subjects, Rauchway deftly dives into both the political and economic significance of the decision. He shows how Roosevelt outmaneuvered goldbugs by helping drum up "demands" by rural radicals for inflation, so that his own policy could be seen as a mere compromise with more drastic measures.
The latter parts of the book, however, can be frustrating. Rauchway often seems to feel that his job is to write a brief for a managed dollar and the international Bretton Woods system. Instead of using economic arguments, however, he uses the historian's tool of guilt by association. In this story, opponents of the plans are just fascist goldbugs allied with craven banks, who only want to further grind the faces of the poor. Fascism, at home and abroad, is lingering behind almost all reaction. In a sense, this portrayal is the mirror image of Benn Steil's "The Battle of Bretton Woods," to which Rauchway is responding. In that, communists, and specifically Soviet spy and Roosevelt economic advisor Harry Dexter White, are the impetus behind the international managed currency experiment, and international institutions like the IMF and World Bank are forever tarnished by that connection.
Instead of merely admitting or investigating White's influence and moving on, Rauchway spends pages and pages tying himself in knots, trying to minimize every indication of White's espionage. Rauchway argues that White only joined the communists during a "nearly respectable time for communism and the Soviet Union," an astounding statement about an ideology and country that Americans hated and feared more than any other (even if that hatred was not as peaked as it would be later). Rauchway notes that White's espionage is "puzzling" and that "he surely knew he was doing something he should not," again an amazing understatement. Every example of White's espionage seems to be provided only to dismiss its importance. Rauchway notes that by 1942 White saw his handler "less frequently" for fear of his career, that White caused endless "frustration" to the KGB, that most of the information he passed on only came from a secretary he hired at request of the KGB. Yet if one came at this story with fresh eyes, the "lede" here is surely that White was spying, not how vigorously he did it.
This is frustrating not because one should take Steil's extreme view that White's espionage defined world politics in this period, but that somehow being a bad spy for Stalin's dictatorship proves something counter to Steil's arguments. In fact, besides being argumentative, this constant minimizing seems to prove nothing at all. The same partisan tone, tarring the plans' opponents as fascists while bending over backwards to excuse communists, is evident again when Rauchway discusses the "one politician willing to act against the spread of domestic fascism," New York congressman Samuel Dickstein, while failing to mention that Dickstein is now widely regarded to be a communist agent. The issue is not that one side or the other was worse in this period, but that Rauchway is laboring to be one-sided.
On the whole, however, the book stands on its deep research and solid writing. The descriptions are rich and thick, and the political legerdemain skillfully played out. If one can ignore the same argumentative tone that also colored Steil's book, one can learn a lot about a real triumph of economic policy, which would be no less a triumph if some of the actors were even less savory than they appear here.
March 22, 2016
I really think that I am slowly shifting to at least a weird middle position on Keynesian economics. This author is gung-ho that Keynes and Roosevelt were geniuses. He is an economics professor. I need to read a few economic books in a row rather than occasionally to really come to good conclusions.
I loved the book. It is probably too esoteric for most of my Goodreads friends--the minute details about Roosevelt's rationale for leaving the gold standard, currency valuation, central banking, the genesis of the IMF (International Monetary Fund) and World Bank, and the different national and international arguments for or against these policies.
We are still living these economic debates today--the parallels between the 20's and Great Depression and the 2007 recession are very obvious, and the author makes those connections in the epilogue. Even with some fawning descriptions of individuals at times, the author makes a convincing case that strictly reducing spending in times of economic stress hurts the majority of regular citizens while benefiting the bankers and Wall Street types whose risk taking generally causes the downturn. The philosophical underpinning is to value jobs and spending power for the common man over currency stability and fighting inflation.
I am shifting toward more of this view and reevaluating "stimulus." I need to read more.
I loved the book. It is probably too esoteric for most of my Goodreads friends--the minute details about Roosevelt's rationale for leaving the gold standard, currency valuation, central banking, the genesis of the IMF (International Monetary Fund) and World Bank, and the different national and international arguments for or against these policies.
We are still living these economic debates today--the parallels between the 20's and Great Depression and the 2007 recession are very obvious, and the author makes those connections in the epilogue. Even with some fawning descriptions of individuals at times, the author makes a convincing case that strictly reducing spending in times of economic stress hurts the majority of regular citizens while benefiting the bankers and Wall Street types whose risk taking generally causes the downturn. The philosophical underpinning is to value jobs and spending power for the common man over currency stability and fighting inflation.
I am shifting toward more of this view and reevaluating "stimulus." I need to read more.
December 18, 2020
What a great book, and what a great History about these two amazing men. Both people are hero's of the western Liberal international order and setting the peace for the past 75 years. Mr. Rauchway does a great job of combining economic theory with history to make the ideas and solutions come to life in an easy and understandable way. This book makes me long for brave and courageous leaders like Keynes and Roosevelt. Maybe one day, we will get men or women like these two again. People who know what's right, can build a coalition to support these policies, and care about the people of the country and not the people of Wall Street.
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December 27, 2015Nice monetary history of the US before great depression through Bretton Woods. Historically informative but still a fun read.
Historically interesting, informative, yet reads like a story. Enjoyable. Great way to keep educated monetary history that shaped the world economy, yet it won't put you to sleep.
Historically interesting, informative, yet reads like a story. Enjoyable. Great way to keep educated monetary history that shaped the world economy, yet it won't put you to sleep.
October 22, 2018
The author manages to make economic policy change gripping. He definitely has an opinion, which I agree with, so it didn't bother me. Parallels and juxtapositions to the present are striking.
September 11, 2016
The Money Makers runs into a major problem from the title onwards, Roosevelt and Keynes never worked closely together and their histories are largely separate. There is already a glut of books out there about Roosevelt and his actions when it came to financial policy. There are also other established books about Keynes that better flesh out his economic policy, including going into detail about why the things he were fighting against were so terrible.
There's nothing severely wrong with The Money Makers as a book. It has a solid premise (albeit not as detailed as hoped) which I agree with, but it suffers from the feel of being a book written in the shadow of the Great Depression. Except it was published in 2015 and books like Keynes: The Return of the Master by Robert Skidelsky has already beaten the author to the punch.
If you're looking for new information about what Roosevelt or Keynes did in order to fight The Great Depression or Fascism, this probably isn't the book for you. However, if you're looking for something that's more introductory without being 800+ pages then this would be considered a decent place to start.
There's nothing severely wrong with The Money Makers as a book. It has a solid premise (albeit not as detailed as hoped) which I agree with, but it suffers from the feel of being a book written in the shadow of the Great Depression. Except it was published in 2015 and books like Keynes: The Return of the Master by Robert Skidelsky has already beaten the author to the punch.
If you're looking for new information about what Roosevelt or Keynes did in order to fight The Great Depression or Fascism, this probably isn't the book for you. However, if you're looking for something that's more introductory without being 800+ pages then this would be considered a decent place to start.
January 6, 2021
I have mixed feelings about this book, which was entertaining, well researched, and not quite the book I thought I was going to read. As a work of political and diplomatic history, covering Roosevelt and Keynes and the discussions around currency policy during the Roosevelt administration, from abandoning the gold peg up through the negotiations over the Bretton Woods institutions, this is a valuable peek into how policy got made, drawing on extensive archival work on the major players and their writings and conversations. As a work of economic history, it is a bit less tightly structured. While making a case that the arc from the 1933 devaluation and break from gold to the establishment of the Bretton Woods institutions at the end of WWII represented a culmination of a coherent and successful intellectual and political program by Roosevelt to institute Keynesian monetary ideas in the US and worldwide, the actual discussion of these ideas and their interaction with the economic situation faced during the 1930s and 1940s feels a bit superficial. The coverage of the impetus for break from the gold standard is coherent, though the economics are pretty much drawn from Eichengreen, who I would read first if looking for coverage of this (or Liaquat Ahmad, who also rehashes Eichengreen but much more entertainingly than the original). The Bretton Woods coverage, in contrast, is hindered by cutting off the passage of the bill (soon after Roosevelt's death, which clearly drove the coverage decision), with only a brief epilogue on the outcome, and more generally by a lack of clarity on the economic issues at stake and theories behind the implementation, which might have illuminated the importance of implementation of an institution to coordinate exchange rate adjustments and the fights over the details, like the well known argument between the Keynes plan based on a global reserve currency and the White plan for a dollar-based Fund.
That being said, if you are already familiar with the broad outlines of policy in this era, this book does have quite a bit of new information on the motivations of the key actors. While it has been remarked (often critically) that Roosevelt drew largely on agricultural economists like George Warren for the ideas behind the 1933 devaluation rather than Keynes per se, Rauchway makes clear that Keynesian ideas were well known to the president and his advisors at the time, but also vividly illustrates the degree to which the decision was driven by political pressure from agricultural interests in response to commodity price falls to get commodity prices back up. The coverage of the economics somewhat elides the distinctions, but rather than the (new) Keynesian intertemporal substitution channel of expected inflation lowering real ex ante interest rates emphasized by Eichengreen and Eggertsson, among others, the descriptions suggest a motivation based more on redistribution motives via ex post interest changes, either via Fisherian real revaluation of nominal debt contracts, or a (less explored) increase in real relative prices of commodities. Of these latter two, the quotes make it hard to distinguish, because the extensive quotes about raising commodity prices which establish it as the main justification in both private and public communications do not distinguish between real and nominal quantities. In terms of the opposition to the policy, Rauchway has a splendid knack for finding pithy and damning quotes from assorted bankers expressing their opposition in terms of material interest in preserving asset values. All of this seems to suggest that distributional conflict, rather than ideas about macroeconomic management per se, were forefront at least in the discussions at the time.
Where Rauchway excels is in digging up entertaining anecdotes and bon mots from the archives of key players; I get the impression this ostentatious display of command over primary sources plays a similar role in terms of disciplinary prestige for historians as florid overuse of mathematics does for economists. The value provided is real, but it can lead to distorted focus. In the coverage of post-war monetary plans, the stolid Harry Dexter White is largely portrayed as a boring nerd with few strong convictions (which, to be fair, is exactly what you should behave like if you are a Soviet spy at the highest level of US government), while the charming, witty, and prolific Keynes is lionized, with less discussion of the economic merits and demerits of their plans per se. This is admittedly a complicated issue and whether Keynes plan would have succeeded in avoiding the issues leading to the demise of the dollar based adjustable peg system in the 70s or whether it was inevitable due to asymmetric adjustment incentives is (to my knowledge) not fully settled, but neither is it here discussed. Nor is the issue of the adequacy of the adjustable peg system as a remedy to the forces that lead to the Great Depression and associated international adjustments. The book does, however, review the children's book produced to sell the treaty to Americans (I would love to find a copy) and describe who won at the volleyball games between the delegates (the Soviets, twice).
Overall, this is a nice source if your interest is in the politics behind the monetary policy decisions of the Roosevelt administration, worth picking up if you are already a Great Depression buff.
That being said, if you are already familiar with the broad outlines of policy in this era, this book does have quite a bit of new information on the motivations of the key actors. While it has been remarked (often critically) that Roosevelt drew largely on agricultural economists like George Warren for the ideas behind the 1933 devaluation rather than Keynes per se, Rauchway makes clear that Keynesian ideas were well known to the president and his advisors at the time, but also vividly illustrates the degree to which the decision was driven by political pressure from agricultural interests in response to commodity price falls to get commodity prices back up. The coverage of the economics somewhat elides the distinctions, but rather than the (new) Keynesian intertemporal substitution channel of expected inflation lowering real ex ante interest rates emphasized by Eichengreen and Eggertsson, among others, the descriptions suggest a motivation based more on redistribution motives via ex post interest changes, either via Fisherian real revaluation of nominal debt contracts, or a (less explored) increase in real relative prices of commodities. Of these latter two, the quotes make it hard to distinguish, because the extensive quotes about raising commodity prices which establish it as the main justification in both private and public communications do not distinguish between real and nominal quantities. In terms of the opposition to the policy, Rauchway has a splendid knack for finding pithy and damning quotes from assorted bankers expressing their opposition in terms of material interest in preserving asset values. All of this seems to suggest that distributional conflict, rather than ideas about macroeconomic management per se, were forefront at least in the discussions at the time.
Where Rauchway excels is in digging up entertaining anecdotes and bon mots from the archives of key players; I get the impression this ostentatious display of command over primary sources plays a similar role in terms of disciplinary prestige for historians as florid overuse of mathematics does for economists. The value provided is real, but it can lead to distorted focus. In the coverage of post-war monetary plans, the stolid Harry Dexter White is largely portrayed as a boring nerd with few strong convictions (which, to be fair, is exactly what you should behave like if you are a Soviet spy at the highest level of US government), while the charming, witty, and prolific Keynes is lionized, with less discussion of the economic merits and demerits of their plans per se. This is admittedly a complicated issue and whether Keynes plan would have succeeded in avoiding the issues leading to the demise of the dollar based adjustable peg system in the 70s or whether it was inevitable due to asymmetric adjustment incentives is (to my knowledge) not fully settled, but neither is it here discussed. Nor is the issue of the adequacy of the adjustable peg system as a remedy to the forces that lead to the Great Depression and associated international adjustments. The book does, however, review the children's book produced to sell the treaty to Americans (I would love to find a copy) and describe who won at the volleyball games between the delegates (the Soviets, twice).
Overall, this is a nice source if your interest is in the politics behind the monetary policy decisions of the Roosevelt administration, worth picking up if you are already a Great Depression buff.
February 21, 2018
If I had to describe it in two words: vanilla and superfluous.
November 3, 2024
A book that is much more topical than I'd have expected, given the current environment of zero-sum-game isolationist populism.
Very readable, given the financial / political subject matter could have produced something much drier. Well researched, with plenty of absorbing detail, especially around the main actors.
My criticism would be that it is actually a little on the light side - certain elements were unnecessarily glossed over, and in particular the mechanics could have been laid out in greater detail.
As a lay person, mindful of current nostalgia in some places for what a Gold Standard is believed to achieve, I would have really appreciated a deeper analysis of how it worked, why it was needed/established in the first place, and how the system works without one.
Not all those who agitate against free exchange or anti-deflation are bankers and creditors with institutional exposure to inflation. Today, it is not enough to appeal to farmers looking for a bump in crop prices...
Very readable, given the financial / political subject matter could have produced something much drier. Well researched, with plenty of absorbing detail, especially around the main actors.
My criticism would be that it is actually a little on the light side - certain elements were unnecessarily glossed over, and in particular the mechanics could have been laid out in greater detail.
As a lay person, mindful of current nostalgia in some places for what a Gold Standard is believed to achieve, I would have really appreciated a deeper analysis of how it worked, why it was needed/established in the first place, and how the system works without one.
Not all those who agitate against free exchange or anti-deflation are bankers and creditors with institutional exposure to inflation. Today, it is not enough to appeal to farmers looking for a bump in crop prices...
April 28, 2019
An excellent book combining the history of the period with lessons in Keynesian economics for the non-economist. It basically boils down to governments spending money on doing good things is, in fact a good thing.
August 2, 2025
Interesting. Often a bit too fiscally technical for lay readers. However, I very much admire FDR and the New Deal / monetary system he created.
Much of our current national fiscal insecurity has occurred since we went away from the financial systems created by FDR.
Much of our current national fiscal insecurity has occurred since we went away from the financial systems created by FDR.
November 29, 2020
This is the first book I've read on this subject, so I can't claim to have good reasons to agree or disagree with his points. It's engaging enough to wish to learn more, which is what I need.
March 8, 2021
Great info but super dry. Idk if the authors could have done more given the subject matter. Glad I read it
September 10, 2016
Oh, so disappointing. As we live in an age where some politicians call for balanced budgets and even a return to the gold standard, a book that goes over the successful fiscal interventions led by the Roosevelt Administration should be a gold mine (pun intended) of information for creating an informed opinion as to why the gold standard is a really, really bad idea.
But no. Like so many economic histories, the author opts to tell a narrative that is character-driven (Keynes, Harry White, Warburg, Roosevelt, etc.) with throwaway lines of the ilk: "By adhering to the gold standard, the economy was constrained." How useless is this? While a plot-driven, character-based narrative helps move the book along, a few sidebars on exactly why sticking to the gold standard during the Hoover administration caused the Depression to deepen would have been useful. As the war reached its conclusion, the major & minor powers agreed to a new system for conducting trade, namely, the Bretton Woods agreement. But the author eschewed any sidebar that explained with examples why this was a better system. Instead, it was simply asserted it was better because the participants are quoted as saying it was better.
Put another way, I want, after reading a book like this to refute arguments made in the political arena on the desirability of returning to a hard money policy. The book gave me no tools to do this.
On the plus side, there were some interesting tidbits of narrative that I did not know, including extensive Soviet penetration of the highest levels of the US Treasury Department and the near insurrection of farmers at the start of the Depression due to low commodity prices. Balanced budget types in the 1930s claimed that we just had to suffer through enough business liquidations to drive prices sufficiently low that, in the long run, investment would return and restart growth. Keynes famously retorted that "in the long run, we're all dead". Perhaps not dead, but living under a communistic government as the landless and moneyless revolted.
So, read this book (which is much better than "Keynes versus Hayek" but not as good as "Lords of Finance") to get a decent economic history of the time but don't expect to become better qualified for the Sunday talk shows than the current cop of bloviators.
But no. Like so many economic histories, the author opts to tell a narrative that is character-driven (Keynes, Harry White, Warburg, Roosevelt, etc.) with throwaway lines of the ilk: "By adhering to the gold standard, the economy was constrained." How useless is this? While a plot-driven, character-based narrative helps move the book along, a few sidebars on exactly why sticking to the gold standard during the Hoover administration caused the Depression to deepen would have been useful. As the war reached its conclusion, the major & minor powers agreed to a new system for conducting trade, namely, the Bretton Woods agreement. But the author eschewed any sidebar that explained with examples why this was a better system. Instead, it was simply asserted it was better because the participants are quoted as saying it was better.
Put another way, I want, after reading a book like this to refute arguments made in the political arena on the desirability of returning to a hard money policy. The book gave me no tools to do this.
On the plus side, there were some interesting tidbits of narrative that I did not know, including extensive Soviet penetration of the highest levels of the US Treasury Department and the near insurrection of farmers at the start of the Depression due to low commodity prices. Balanced budget types in the 1930s claimed that we just had to suffer through enough business liquidations to drive prices sufficiently low that, in the long run, investment would return and restart growth. Keynes famously retorted that "in the long run, we're all dead". Perhaps not dead, but living under a communistic government as the landless and moneyless revolted.
So, read this book (which is much better than "Keynes versus Hayek" but not as good as "Lords of Finance") to get a decent economic history of the time but don't expect to become better qualified for the Sunday talk shows than the current cop of bloviators.
December 18, 2016
It is said that history repeats itself. That's not quite true, but it does often rhyme. When FDR took office in in 1933, the United States was in much worse shape than it is today. The Great Depression had destroyed businesses and jobs. Discontent was raging, and there was a real threat of populist movements that saw democratic capitalism as a failure and were willing to consider fascism, communism, or some kind of totalitarian system to replace it as long as it provided a promise of security and a sense of hope for the future. People today are feeling much the same, but for reasons far less dire. Still, with wages stagnant and with the promise of upward mobility lost, there is again this urge to find an alternative. Roosevelt understood where the real problem lie, and he drew on the insights of British economist John Maynard Keynes to help him to not only restore the economy but to make America greater than it had ever been. The history related in this book is especially important for our time. "So we face a choice. We can return to the lately prevailing orthodoxy that discounted Roosevelt and Keynes, and which led to our current discontents: or we can heed the lessons of their success." (pg. 245)
December 31, 2024
For economics history nerds. FDR's decision to break from the gold standard was a politically and economically momentous choice that set the stage for recovery from the Great Depression. But popular accounts of the New Deal, like David Kennedy's Pulitzer winning Freedom From Fear, oddly tend to play it down, or are outright critical. Rauchway corrects the record, showing how moving off of gold was central to the Roosevelt's economic program and, later, the U.S.'s effort to create a durable post WWII peace. The book also explores Keynes' direct and indirect influence on the president's thinking, and shows how the Bretton Woods agreement finally buried the old gold standard and helped usher in a more modern era of economic policy making, where countries could manage their currencies to ensure prosperity, instead of being forced to sacrifice prosperity to manage the value of their currency.
Want to read
November 21, 201511/21/15 wsj
January 27, 2016
Entertaining economic history from the great depression to Bretton Woods.
March 18, 2016
Interesting and well-written story of the transformation of the United States and later the world from the "Gold Standard." Lots of information and analysis.
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