A New Version of My Paper (With Ron Batchelder) on Hawtrey and Cassel Is Available on SSRN

It’s now over twenty years since my old UCLA buddy (and student of Earl Thompson) Ron Batchelder and I started writing our paper on Ralph Hawtrey and Gustav Cassel entitled “Pre-Keynesian Monetary Theories of the Great Depression:  Whatever Happened to Hawtrey and Cassel?”  I presented it many years ago at the annual meeting of the History of Economics Society and Ron has presented it over the years at a number of academic workshops.  Almost everyone who has commented on it has really liked it.  Scott Sumner plugged it on his blog two years ago.  Scott’s own very important work on the Great Depression has been a great inspiration for me to continue working on the paper.  Doug Irwin has also written an outstanding paper on Gustav Cassel and his early anticipation of the deflationary threat that eventually turned into the Great Depression.

Unfortunately, Ron and I have still not done that last revision to make it the almost-perfect paper that we want it to be.  But I have finally made another set of revisions, and I am turning the paper back to Ron for his revisions before we submit it to a journal for publication.  In  the meantime, I thought that we should make an up-to-date version of the paper available on SSRN as the current version (UCLA working paper #626) on the web dates back to (yikes!) 1991.

Here’s the abstract.

A strictly monetary theory of the Great Depression is generally thought to have originated with Milton Friedman.  Designed to counter the Keynesian notion that the Great Depression resulted from instabilities inherent in modern capitalist economies, Friedman’s explanation identified the culprit as an inept Federal Reserve Board.  More recent work on the Great Depression suggests that the causes of the Great Depression, rooted in the attempt to restore an international gold standard that had been suspended after World War I started, were more international in scope than Friedman believed.  We document that current views about the causes of the Great Depression were anticipated in the 1920s by Ralph Hawtrey and Gustav Cassel who warned that restoring the gold standard risked causing a disastrous deflation unless an increasing international demand for gold could be kept within strict limits.  Although their early warnings of potential disaster were validated, and their policy advice after the Depression started was consistently correct, their contributions were later ignored and forgotten.  We offer some possible reasons for the remarkable disregard by later economists of the Hawtrey-Cassel monetary explanation of the Great Depression.

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7 Responses to “A New Version of My Paper (With Ron Batchelder) on Hawtrey and Cassel Is Available on SSRN”


  1. 1 Tas von Gleichen March 30, 2012 at 8:58 am

    Worth reading this blog every time :)

  2. 2 amv March 30, 2012 at 11:58 am

    I skipped through and I love it already. Cassel and Hawtrey were in my blind spot, and you changed that. Thanks!

  3. 3 Rob Read March 30, 2012 at 12:56 pm

    I really enjoyed the paper. As well as describing the monetary views of these two unfairly neglected economists it also shows how the more commonly known Austrian, Keynesian and Monetarists explanations for the Great Depression and missing a vital and obvious factor.

    On thing that is touched upon in the paper is the relevance of the 19th century debates between the British Banking and Currency schools to later monetary theory. This interested me – but googling this theme threw up few relevant results. Can you suggest any papers or other material that covers that topic in more detail.

  4. 4 amv March 30, 2012 at 2:44 pm

    @ Rob Read

    You may like “The Development of Monetary Economics – A Modern Perspective on Monetary Controversies”, chapter III, by D.P. O’Brien, as well as “The Golden Age of the Quantity Theory”, chapter 2, by D. Laidler.

  5. 6 David Glasner April 3, 2012 at 9:20 am

    Tas, Glad to hear that comment. Thanks.

    amv, You made my day.

    Rob, Please pardon the self-promotion, but you should read my papers on classical monetary theory listed in the references of the Hawtrey and Cassel paper, also the paper on the Law of Reflux. Or for a summary of the main points you could read the relevant chapters of my book Free Banking and Monetary Reform.

    amv, O’Brien is a fine economist and scholar of classical economics. But we disagree pretty sharply on the correct interpretation of classical economics and the position of the quantity theory in classical monetary economics.


  1. 1 Lets concentrate on the policy framework « The Market Monetarist Trackback on April 2, 2012 at 3:00 pm

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About Me

David Glasner
Washington, DC

I am an economist at the Federal Trade Commission. Nothing that you read on this blog necessarily reflects the views of the FTC or the individual commissioners. Although I work at the FTC as an antitrust economist, most of my research and writing has been on monetary economics and policy and the history of monetary theory. In my book Free Banking and Monetary Reform, I argued for a non-Monetarist non-Keynesian approach to monetary policy, based on a theory of a competitive supply of money. Over the years, I have become increasingly impressed by the similarities between my approach and that of R. G. Hawtrey and hope to bring Hawtrey's unduly neglected contributions to the attention of a wider audience.

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