Business Cycles

Authored by: Christopher Hanes

Routledge Handbook of Modern Economic History

Print publication date:  December  2012
Online publication date:  January  2013

Print ISBN: 9780415677042
eBook ISBN: 9780203075616
Adobe ISBN: 9781135121211


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This chapter examines characteristics and causes of American business cycles in the era before the First World War – the “prewar” era – especially the years from 1879 on, which represent a distinct monetary regime. In January 1879, the U.S. Treasury began to redeem legal-tender currency in gold at a fixed rate, placing the U.S. within the international gold-standard system that had developed in the 1870s (Meissner 2005). Unlike most large gold-standard countries, the U.S. had no central bank. In 1914, the American monetary regime changed in two ways: the international gold standard broke down as other countries suspended gold convertibility, and the U.S. gained a central bank in the Federal Reserve system.

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