When Washington Shut Down Wall Street: The Great Financial Crisis of 1914 and the Origins of America's Monetary Supremacy Paperback - 2008

From the rear cover

"This book addresses an important issue that deserves wide readership. It is lucid and clear and deals with some very important episodes in American history."--Milton Friedman, Nobel Prize-winning economist

"William Silber has performed two sterling services with this fascinating and original book. He has illuminated the hitherto neglected financial crisis of 1914, an event that deserves to be mentioned in the same breath as the Crash of 1929 in the history of Wall Street. But he has also come up with some bold and compelling answers to two burning questions that are of more than purely historical interest: How should monetary policymakers cope with a really big and unexpected political shock? And how does one international reserve currency come to be overtaken by another? I cannot praise this book too highly. It is rare that one author so skillfully unites the disciplines of finance and history."--Niall Ferguson, Harvard University, author of Colossus

"A fascinating story that mixes first-rate economic theory with telling observations about U.S. financial and monetary policy decisions taken in the midst of an international finance crisis that were permanently to reshape the international financial landscape. The book is full of insights about the ideas and the personalities of the founders of the Federal Reserve System and other anchors of our financial system today."--Thomas Sargent, Hoover Institution, coauthor of The Big Problem of Small Change

"Silber tells a compelling tale proving the power of the law of unintended consequences. The financial crisis of 1914 was a major turning point in American economic history, an outcome nobody could have predicted as massive amounts of gold sailed to Europe, banks shook at their foundations, and the nascent Federal Reserve System was only just going into operation. What a story!"--Peter L. Bernstein, author of The Power of Gold

"Silber's book weaves a fascinating historical story about the shaping of U.S. financial policy during the chaotic years surrounding World War I. The story centers on William McAdoo, who as Senator, Treasury Secretary, and first Chairman of the Federal Reserve System, displayed courage and principles which paved the way for the success of financial institutions that we take for granted today. The story of McAdoo's role in securing the dominance of the U.S. in the world's financial markets will inform a new generation of students of financial markets."--Robert Shiller, Yale University, author of Irrational Exuberance

"When Washington Shut Down Wall Street iis political and financial history at its best. William Silber reminds us that the U.S., and indeed the world, might easily have suffered a financial meltdown when World War I began. Instead, largely because of U.S. Treasury Secretary William McAdoo's leadership skills in staring down incipient financial crisis, the summer of 1914 became the panic that didn't happen. By year end, the dollar had become the world's strongest currency, paving the way for U.S. international leadership from then to now. Anyone interested in what leadership is, and how it is gained and retained, will want to read Silber's fascinating account of 1914."--Richard Sylla, New York University, President of the Business History Conference

"Silber's financial history of 1914 provides us with a series of modern lessons. It helps us to understand the political economy of central bank design and how difficult it can be to establish and maintain independence. It teaches us that Wall Street was closed in order to ensure that foreigners did not sell shares, redeem the proceeds for gold, and then take the gold out of the country. This would have put America's ability to remain on the gold standard at risk. And, finally, Silber teaches us about subsidized insurance during World War I, a case that can be used to help design government interventions into the terrorism insurance market. We learn all of this (and more) through a series of stories that are often told in the words of the participants themselves. Bill Silber is an incredibly skilled writer who has woven a tale here that is extremely readable. I started the manuscript one morning and did nothing else (aside from reading the sports page and watching some baseball) before I finished."--Stephen G. Cecchetti, Brandeis University

Media reviews

Citations

• Time, 01/04/2010, Page 69