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When Washington Shut Down Wall Street

The Great Financial Crisis of 1914 and the Origins of America`s Monetary Supremacy

William L. Silber

Princeton UP, 2006

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In Kazuo Ishiguro's novel The Remains of the Day, a blue-blood guest unmercifully grills James Stevens, the head butler at an English estate. The pompous guest is trying to demonstrate that uneducated people should not have the vote. "My good man," he asks, "do you suppose the debt situation regarding America is a significant factor in the present low levels of trade? Or...is the abandonment of the gold standard...at the root of the matter?" Stevens, aware that the question is meant only to baffle him, replies that he has no idea. Poor Stevens! Anyone without a degree in international finance would have an equally difficult time answering such an abstruse question. That's why this intriguing business history book by William L. Silber is so worthwhile: He brings global finance to life by spotlighting America's 1914 money crisis and by explaining how then-U.S. Treasury Secretary William McAdoo used this portentous episode to establish the nation's financial supremacy. getAbstract suggests you read this illuminating work of economic history to understand the seminal events that established U.S. monetary policy.

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At the Financial Brink

In July 1914, a skittish Europe was poised for all-out war. The so-called "Great War," World War I, would have far-reaching implications beyond bloody battles won and lost. It could threaten the financial integrity – and economic stability – of the United States. At the time, U.S. railroad stocks represented the largest industrial category on the New York Stock Exchange (NYSE), America's financial barometer. Investors from other countries owned more than a fifth of these shares. As European tensions mounted, foreign investors quickly began to sell their railroad stock and their other American securities. They demanded payment in gold bullion, shipped to Europe immediately so it could be used to fund the intense preparations for war.

Would America, a debtor nation that had suffered major financial crises in 1873, 1884, 1893 and during the Panic of 1907, be able to survive financially if it had to export its gold reserves? Most astute observers did not believe that it could. This uncertainty quickly translated to a severe decline in the dollar's value in world financial markets. By mid-1914, the U.S. faced a potentially severe financial crisis – ...

About the Author

William L. Silber is a finance and economics professor at New York University, and a member of the New York Mercantile Exchange. He was a senior economist on the President's Council of Economic Advisors.

When Washington Shut Down Wall Street

The Great Financial Crisis of 1914 and the Origins of America`s Monetary Supremacy

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At the Financial Brink

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