The Origins of the Federal Reserve

by Murray N. Rothbard

Where did this thing called the Fed come from? Murray Rothbard has the answer here -- in phenomenal detail that will make your head spin. In one extended essay, one that reads like a detective story, he has put together the most comprehensive and fascinating account based on a century's accumulation of scholarship.The conclusion is that the Fed did not originate as a policy response to national need. It wasn't erected for any of its stated purposes. It was founded by two groups of government officials and large financial and banking interests. Rothbard adds a third critical economists hired to give the scheme a scientific patina.This excerpted chapter from Rothbard's History of Money and Banking is as scholarly as it is hair raising. This is one economic historian who fears not naming names and assigning blame.

Genres: Economics, History, Politics, Nonfiction, Philosophy, American History, Money

120 pages

First published January 1, 2009

About the author

Murray Newton Rothbard was an influential American historian, natural law theorist and economist of the Austrian School who helped define modern libertarianism. Rothbard took the Austrian School's emphasis on spontaneous order and condemnation of central planning to an individualist anarchist conclusion, which he termed "anarcho-capitalism".

In the 1970s, he assisted Charles Koch and Ed Crane to found the Cato Institute as libertarian think tank.

Reviews

[Mark Geise · Rating 5 out of 5]

“The Origins of the Federal Reserve” by Murray Rothbard is a nice concise summary of the environment that produced the Federal Reserve. Rothbard does a good job to chronicle the agitation throughout the United States banking community that there needed to be a lender of last resort and a cartelization of sorts among the big banks. The banks and politicians knew that an outright central bank would be extremely difficult to justify to the American public, so they gradually built their way up to the “independent” Federal Reserve System. Once you read this book, any Fed supporter will have a much harder time believing that the Fed was created to actually serve the American public.

Rothbard describes the American public’s historical aversion to central banking and the political climate into which the Federal Reserve System was instituted. The Morgan and Rockefeller interests shadily promoted a central bank, using “non-partisan” academics and experts to promote the virtues of cartelized banking. They held monetary conferences in the Midwest to falsely insinuate that the push for a cartelized banking and monetary system was a grassroots effort by small business owners in the heartland, when in fact the attendees of these conferences were among the most influential in the Morgan and Rockefeller circles of influence. The 1907 panic precipitated more calls for banking and monetary reform, resulting in the creation of the National Monetary Commission to study banking systems in Europe. Not coincidentally, the commission was headed by Nelson Aldrich, the father-in-law of John D. Rockefeller. The large banks wanted a system in which they could coordinate inflation of the money supply and provide the “elasticity” that the banks needed in times of panic. Eventually, the idea of the Federal Reserve System, a decentralized system with the Federal Reserve Board at the center and twelve regional Federal Reserve banks, was born at a secretive meeting on Jekyll Island in Georgia and proposed to Congress by Aldrich. The rest is history.

Murray Rothbard always does a great job of synthesizing lots of details into an easy-to-digest account of events. Though this book is only a bit over 100 pages, he packs a lot of information into that space. The Federal Reserve System was not created for the benefit of the average American; it was created for the benefit of the big banks that were able to exert the most influence over the regional Federal Reserve banks and have an avenue for coordinated inflation of the money supply. The calls for a lender of last resort and an avenue to conduct coordinated inflation were a long cry from the American tradition of sound money and relatively free banking, principles from which we have so far departed that it seems unfathomable that we will ever embrace them once again. The Federal Reserve System has worked to the benefit of big banks, just as they believed it would, and it has harmed the average American. It will come as absolutely no surprise to you that this has happened if you read Rothbard’s account.

[Daniel Yi · Rating 5 out of 5]

Not your typical history book. Great read.

“To achieve a regime of big government and government control, power elites cannot achieve their goal of privilege through statism without the vital legitimizing support of the supposedly disinterested experts and the professoriat. To achieve the Leviathan state, interests seeking special privilege, and intellectuals offering scholarship and ideology, must work hand in hand.”

Excerpt From
The Origins of the Federal Reserve
Murray Rothbard
This material may be protected by copyright.

[Jeff Russo · Rating 3 out of 5]

a perfectly reasonable little pamphlet that I can really only recommend if you want a quick and dirty history of the topic at hand.

For a more detailed and entertaining treatment, head right over to The Creature from Jekyll Island: A Second Look at the Federal Reserve

[Jack Gardner · Rating 5 out of 5]

Origins of America's Big Government

History of the period when the founding fathers' vision for America was subverted as outdated and the progressive movement emerged. Basically, 1890 -- 1920. Economic confusions of academics, financial machinations of Morgan and Rockefeller interests, political favoritism and power grabs come together over three decades.

[Cristian · Rating 4 out of 5]

A concise book revealing the push from both private and governmental powers to create what is now the biggest central bank. Rothbard as always names names and writes in a way that's a pleasure to read in spite of the awful, liberty-restricting topic at hand.

[Mantas Jaskys · Rating 5 out of 5]

Detailed steps in establishing the federal reserve definitely worth reading

[Simon · Rating 5 out of 5]

Great.

[Bookworm · Rating 4 out of 5]

The book description is pretty accurate, with only one exception. This does not read like a detective story. It is very technical and sometimes very boring.

[Zinger · Rating 4 out of 5]

If you want a short and concise book on the details, persons, and manipulations done by the incestuous banking families that pushed for a centralized bank which eventually led to the creation of the Federal Reserve, this is the book.

Rothbard has done a lot of work and has several books available about the scam called the Federal Reserve. More people need to be aware of what the Federal Reserve is...a government approved cartel granted a monopoly on the counterfeiting of money.

[Nick Rudin · Rating 4 out of 5]

Pretty boring tbh BUT that does not mean it’s bad. Rothbard achieves exactly what he set out to convey. Good information.

[Zach Boyle · Rating 4 out of 5]

Interesting history of the imperialist-central bank model in comparison to truly free markets.