From Political Economy to Economics
Notes on the Passage of Time

Edward J. Dodson

[Part 2 of 2 / Compiled 2003]

1802

• Geor Wilhelm Friedrich Hegal calls for unification of the German states into one nation.

1814

• The Hartford Convention is held, where disenchanted Federalists met to promote secession by the New England states from the U.S. (and then seek a separate peace with Britain).

1816

• The U.S. Congress (at the urging of James Madison) passes a general tariff against imports and grants a charter to the second Bank of the United States.

1816

• The second Bank of the United States is chartered. In 1823, Nicholas biddle comes in to head the Bank and oversee its expansion. Biddle kept a close watch over the state banks and their ability to redeem notes in gold and silver. This brought him into conflict with state-chartered banks (and their political friends) on the frontier, where specie was scarce. With the election of Andrew Jackson as President, the Bank's charter was not renewed in 1836.

1816

• Robert Owen's pamphlet, New View of Society, is published. He believed strongly that environment could be modified to change and improve individual behavior.

1817

• David Ricardo's book, The Principles of Political Economy, is published in England. Ricardo is credited with improving on Adam Smith's work by more scientifically explaining the law of rent and the law of wages.
  
  Ricardo, as with Smith, makes no firm moral argument regarding wealth distribution. He merely describes the process by which this occurs. He writes:
  
  "Independently of ... improvements, in wich the community have an immediate and the landlords a remote interest, the interest of the landlord is always opposed to that of the consumer and manufacturer."

1817

• David Ricardo's book, On the Principles of Political Economy, is published. Ricardo writes about money:
  
  "Experience shows that neither a state nor a bank ever has had the unrestricted power of issuing money without abusing that power; in all states, therefore, the issue of paper money ought to be under some check and control; and none seems so proper for that purpose as that of subjecting the issuers of paper money to the obligation of paying their notes either in gold coin or bullion."

1819

• The Bank of Amsterdam fails, due to losses generated by loans to the Dutch government and commercial interests.

1820

• British economist Alfred Marshall's book, Principles of Economics, is published.

1820

• William Godwin's book, On Population, is published as a response to Reverend Malthus.

1820

• Robert Owen comes from Britain to the United States to found an experimental community in the state of Indiana called New Harmony.

1821

James Mill's book, Elements of Political Economy, is published.

1827

• Frederick List, leader of German nationalism, opens an attack on the free trade ideas of Adam Smith. His lectures are published under the title Outline of American Political Economy. He champions what was becoming known as "the American System," which protected domestic industries with tariffs and limits on imports, used Federal power to develop the nation's physical infrastructure, and instituted a national banking system to provide credit to government. List also advocated the creation of a European confederation that would permit free trade within the member states.

1834

• The gold content of the U.S. "Eagle" was decreased to 232 grains of gold, which increased the price of silver in terms of gold and brought gold coins back to the U.s. during the 1840s and 1850s.

1835

• Alexis de Tocqueville's Democracy in America is published. A second volume appears several years later.

1836

• The U.S. Congress passes legislation introduced by Henry Clay authorizing a revenue sharing with the states based on a $35 million surplus generated from the sale of public lands and tariff revenues collected.
  
  Another law required that all purchases of public lands be paid for with specie (i.e., gold or silver coinage) and not bank notes.

1837

• Charles Francis Adams' book, Reflections Upon the Present State of the Currency in the U.S., is published.

1837-1840

• Henry C. Carey's three-volume work, Principles of Political Economy, is published in the U.S. Carey argues that economic growth will overcome any problems of wealth distribution by ensuring the demand for labor is always greater than the supply.

1838

• Jerome Adolphe Blanqui's book, The History of Political Economy, is published. Blanqui argues the case that government power must be invoked to protect workers from exploitation.

1840

• Pierre-Joseph Proudhon's book, What Is Property?, is published in France. Proudhon is the architect of Mutualism, which would replace the system of finance capitalism (i.e., what is more properly identified by the term industrial landlordism) with worker cooperatives.

1840s

• Richard Cobden is elected to the British Parliament as an advocate for free trade.

1841

• Frederick List's book, National System of Political Economy, is published in Germany.
  
  List and others use their knowledge of political economy to assist in building a modern military-industrial complex within the German state.

1843

• Thomas Caryle's book, Past and Present, is published. Carlyle opposed Smith's advocacy of laissez-faire and described politcal economy as the "dismal science."

1845

• Claude-Frederic Bastiat's book, Sophismes economiques, is published. He argues against protectionism and socialism, and also challenges Malthus' view on the problems caused by population.

1848

• Karl Marx comes to England for a meeting of the Communist League, where he teams with Frederick Engels to write The Communist Manifesto.

1852

• John Stuart Mill becomes one of the first political economists to suggest paper currency could be an efficient and appropriate substitute for coinage and certificates of deposit, so long as the quantity in circulation corresponded to the production of goods and services. This is roughly what economists such as Milton Friedman later suggested be adopted as a so-called "monetary rule."
  
  In his book, Principles of Political Economy, Mill writes: "The value or purchasing power of money depends, in the first instance, on demand and supply. ...The supply of money ... is all the money in circulation at the time. ...The demand for money, again, consists of all the goods offered for sale."

1854

• The book, Elements of Political Science by Patrick Edwrad Dove, is published. Dove, attacks the system of landlordism and calls for a single tax on land to solve the economic problems created by landlordism.

1856

• Francis Bowen's book, The Principles of Political Economy, is published in the U.S. This book expresses the view that the laws of political economy developed by Ricardo, et al. did not apply to the U.S. because of its expansive natural bounty.

1858

• Karl Marx completes his Critique of Political Economy, which is read by hardly anyone outside the community movement during his lifetime.

1860

• Walter Bagehot is appointed editor of the London newspaper, the Economist. Bagehot is in general agreement with Ricardo's perspectives. He writes with an historical perspective and expresses conditional acceptance of the arguments for laissez-faire competition.

1860

• Richard Cobden, a Member of the British Parliament, supports a Treaty to reduce tariffs between Britain and France. He had joined with John Bright to form the Manchester Anti-Corn Law Association and to fight for free trade.

1861

• Henry James Sumner Maine's book, ancient Law, is published. This book is a study of comparative law that revealed how ancient ideas continued to influence modern thought and were integral to the laws then in effect.

1863

• John Stuart Mill's book, Utilitarianism, is published. He has become one of the leaders of this school of thought.

1867

• Karl Marx completes the manuscript for the first volume of Das Kapital. A small edition of 1,000 copies is published in Germany.

1869

• Charles Franklin Dunbar becomes professor of political economy at Harvard University. after two years of study in Europe, Dunbar begins to train a new generation in the science of economics. This is the beginning of the university-trained economist.

1871

• William Stanley Jevons' book, The Theory of Political Economy, is published in England. Jevons is one of the pioneers of neo-classical economics and a proponent of the theory of marginal utility.

1873

• A Coinage Act passed by the U.S. Congress contains no provision for the minting of the silver dollar. Subsequent legislatoin gave to the U.S. Mint the sole authority to issue coinage, bringing an end to "free coinage."

1876

• The German Reichsbank is established as the central bank of a unified German state. This is accomplished virtually without discussion after several years of financial panic.

1879

• Frank W. Taussig graduates from Harvard University, then goes on to study economics at the University of Berlin. He specializes in the effects of tariffs and protectionism on international trade.

1879

• Henry George's book, Progress and Poverty, is published in the U.S. George identifies monopoly -- and land monopoly in particular -- as the primary cause of industrial depressions. He calls for the removal of all taxese on labor and capital, replacing them with a tax that collects the annual rental value of land (as broadly defined).

late 1800s

• In 1937, economist Wilhelm Roepke makes the following observation regarding structural changes adopted in the last portion of the 19th century:
  
  "The close of the 19th century brought the beginnings of a real international monetary homogeneity paralleling that existing on the national level, thanks to the gold standard which united all countries within the framework of one monetary system."

late 1800s

• In A History of Interest Rates, written by Sidney Homer and published in 1963, he writes:
  
  "Nineteenth-century Ministers of Finance or chancellors of th Exchequer thought of the burden of their national debts in terms of the annual interest charge against the revenues rather than in terms of a principal amount which must be repaid. Principal repayment only occurred when it was considered a benefit to the state. Refundings wre almost always conversions at lower rates."

1883

• Henry George's book, Social Problems, is published. George argues that the issuance of money (i.e., coinage) is the appropriate business of government. Banking, he argues, ought to be private and limited to "the safekeeping and loaning of money, and the making and exchange of credits."

1883

• Yale University professor of sociology and economics William Graham Sumner's book, What Social Classes Owe to Each Other, is published. Sumner condemned socialism and most state interference in economic affairs.

1884

• Frederick Engels completes the second volume of Marx's Das Kapital following Marx's death in 1883.

1884

• Eugen von Bohm-Bawerk's book,Capital and Interest, is published in Germany and translated into English in 1890. Bohm-Bawerk serves as finance minister in the Austrian government and champions tax reform.

1884

• Friedrich Engels' book, The Origin of the Family, of Private Property and of the State, is published.

1884

• German reformer Michael Flurscheim's book, Auf friedlichem Wege is published. Flurscheim was a strong proponent of the public collection of location rent as advanced by Henry George. He advocated that government have the right to purchase land at a price that would remain stable, and then lease the land in order to collect its location rent.

1885

• John Bates Clark's book, The Philosophy of Wealth, is published. He stressed the relation between ethics and economics, advocating cooperative institutions.

1886

• Simon Newcomb's book, Principles of Political Economy, is published. Newcomb, a professor of mathematics at the U.S. Naval Academy, a strong proponent of free markets and sound currency.

1888

• Richard Ely's book, Problems Of To-Day, is published in the U.S. Ely was by this time a tenured professor of political economy at Johns Hopkins University. As was the case with many others whose positions were privately funded (often by industrial, banking or real estate interests) he attempted to justify monopolistic arrangements on the basis that they were embedded in the system as traditional practics.

1893

• John R. Commons' book, The Distribution of Wealth, is published. Early in his life he had joined Henry George's campaign for a single tax on location rent. He became a strong proponent of an ongoing role for government to mitgate economic and social problems.

1894

• Friedrich Engels completes editing of the third volume of Karl Marx's Das Kapital.

1896

Herbert Davenport's book, Outlines of Economic Theory, is published prior to earning a Ph.D. at the University of Chicago. Davenport believed the study of economics should not concern itself with ethical matters.

1897

• Henry George's book, The Science of Political Economy, is published in the U.S., posthumously.

1899

• John Bates Clark's book, The Distribution of Wealth, is pubished. Clark made use of marginal utility analysis in this work. He also argued that workers should receive all or most of the value they added to production.

1899

• Vladimir Ilyich (Ulyanov) Lenin's book, The Development of Capitalism in Russia, is pubished. Lenin declares that non-Marxist economists are unable to understand the basic problems of societies.

1900

• Britain's national debt stands at 639 million pounds. This figure represents a decline from earlier in the century.

1900

• Scottish industrialist and professor William Smart's book, Taxation of Land Value and the Single Tax, is published.

1901

• Max Hirsch's book, Democracy Versus Socialism, is published in England. Hirsch is a free trade proponent and leading supporter of Henry George's campaign for the societal collection of location rent.

1902

• Peter Kropotkin's book, Mutual Aid, a Factor in Evolution, is published. Kropotkin believes the state is the enemy of the people and should be replaced by cooperative organizations.

1903

• William James Ashley's book, The Tariff Problem is published. Ashley also authored an Introduction to English Economic History and Theory in two volumes, published in 1888 and 1893.

1907

• Panic and depression spread across the United States. Nearly 250 banks fail. This set the stage for creation of the Federal Reserve System.

early 1900s

• Historian Carroll quigly writes in Tragedy and Hope, published in 1966, that the world's dynastic bankers were pursuing "nothing less than to create a world system of financial control in private hands to dominate the political system of each country and the economy of the world as a whole."

early 1900s

• In Britain, the Round Table groups were formed as first step to, as described by Lord Milner (a British Secretary of State for War), "seek to federate the English-speaking world along lilnes laid down by Cecil Rhodes..." who funded the project. This effort included Thomas W. Lamont, head of the House of Morgan in the U.S.

early 1900s

• The Council on Foreign Relations is organized in the U.S. Edward Gay, an economic historian and founding member, wrote: "When I think of the British Empire as our inheritance I think simply of the natural right of succession. That ultimate succession is inevitable."

1909

• The book, The Essential Reform: Land Values Taxation In Theory & Practice, by British writers C.H. Chomley and R.L. Outhwaite, is published in London. The book restates the extensive moral and economic case for public collection of the rental value of locations.

1911

• Edward Bernstein's book, Evolutionary Socialism, is published in Germany and translated into English. Bernstein points to mistakes made by Marx, particularly regarding the collapse of capitalism. He is an advocate of the use of political democracy to achieve constructive change.

1911

• Frank W. Taussign's book, Principles of Economics, is published in the U.S. Taussig accepts the limited role of the economist, writing:
  
  "Complex political and social questions present themselves, quite beyond the scope of a book on economics." No longer, in his view, is the role of the economist to challenge socio-political arrangements and institutions based on their impact on the just distribution of wealth. This, he argues, is a political problem.
  
  Taussig, along with John Bates Clark and Herbert Davenport, are instrumental in discarding the three factor model (land, labor and capital) of political economy, substituting a two-factor model that treats land as just another form of capital.

1911

• Irving Fisher's book, The Rate of Interest: Its Nature, Determination and Relation to Credit, Interest and Crises, is published. This book is co-written with Harry Gunnison Brown.

between 1885-1913

• Something like 70-80 percent of all money in circulation consisted of coinage with specified gold and silver content.

1913

• The Federal Reserve Act is passed in the U.S. This act creates a system of privately-owned banks to act as lenders of last resort to banks in neeed of cash to meet depositor demands. The Federal Reserve also becomes a clearinghouse for checks issued against member banks. Member banks deposit 6% of their capital with the Federal Reserve and are required to maintain reserves against deposits (in gold or gold certificates issued for gold deposited in the U.S. Treasury), or currencies then in circulation.
  
  The Federal Reserve was also authorized to issue its own notes in return for deposits of gold, gold certificates or other currencies. Only a 40 percent reserve requirement was established (in gold or gold certificates).

1913

• Charles A. Beard's book, An Economic Interpretation of the Constitution of the United States, is published. Beard comes under heavy criticism by challenging the motives of some of the "founding fathers" and detailing the fact that those who made the new government were perhaps more concerned with preserving their economic positions than in creating a truly democratic republic and conditions for equality of opportunity.

1913

• Rosa Luxemburg's book, Die Akkumulation des Kapitals, is published. She argued that the survival of capitalism depended on a continuous expansion of markets.

1914

• With the outbreak of the First World War, Britain, France, Germany and Austria suspend specie (i.e., gold) payments. Thereafter, gold coins (consistent with Gresham's Law) were drawn out of circulation and hoarded.

1914

• Oxford educated economists John A. Hobson's book, Work and Wealth, is published. Hobson develops an underconsumption theory of business cycles and a solution to poverty of taxing all surpluses away (not merely the taxation of location rent as proposed by Henry George).

1914

• Louis Brandeis wrote a series of articles for Harpers Weekly attacking the U.S. nation's entrenched financiers as a "financial oligarchy."

1914-1917

• The gold stock of the U.s. doubled as a result of sales of goods (and corporate shares of stock) to European governments and investors. John Kenneth Galbraith later wrote, in Money: "The U.S. faced an inflation caused by gold." Wholesale prices in the U.S. doubled during the same period.

1917

• Harry Gunnison Brown, who studied under Irving Fisher at Yale University, begins a long career defending political economy against the rise of the more resrictive theoretical framework of economics. He is a firm supporter of the analysis presented by Henry George.

1919

• Thorstein Veblen's essay, "The Preconceptions of hte Classical Economists" is published in the U.S. Veblen attacks existing socio-political arrangements and institutions as organized to preserve privilege and monopoly.

1920

• John Maynard Keynes' book, The Economic Consequences of the Peace is published. Keynes warns against trying to return to the gold standard at pre-1914 parities becuase of gold's unstable price.

1922

• An International Economic Conference is held at Genoa, Italy to discuss reinstituting a system of fixed exchange rates between national currencies and a return to a gold exchange standard.
  
  The U.S. dollar and British pound are established as reserve currencies in lieu of having to deliver gold bullion to settle accounts.

1922

• Philosopher John Dewey's book, Human Nature and Conduct, is published. Among other influences on Dewey's thinking, he largely accepts the system of political economy of Henry George.

1923

• Germany returns to a commodity-backed currency (the Rentenmark). This, along with other fiscal reforms restore a balanced budget and tame inflation. (See the study performed by economist Thomas Sargent of the National Bureau of Economic Research.)

1924

• Between 1890-1924 consolidation of English banking interests reduce the number of joint-stock banks from 104 to 18 -- five of which held 84% of all deposits.

1925

• Harry Gunnison Brown's book, Economic Science and the Common Welfare, is published in the U.S. Brown is now professor of political economy at the University of Missouri.

1925

• Winston Churchill, as Britain's Chancellor of the Exchequer, restores Britain to the gold standard, causing a rush by holders of sterling to convert currency into gold at the artificially low exchange rate. Britain finally ends convertibility in 1931.

1925

• The U.S. and Britain agree to reset the price of gold at $20.67 an ounce and restore the "gold standard."

1928

• Economist Irving Fisher's book, The Money Illusion, is published. Fisher joins with other economists to form the Stable Money League and calls for reformof the existing gold standard system, which failed to stabilize the purchasing power of component currencies.
  
  Fisher's proposal is to define the dollar not in terms of a weight of gold but to devalue or revalue the gold weight of the dollar to offset movements in a broad price index that included most basic commodities.

1928

• Swedish economist Gustav Cassel testifies before a U.s. House of Representatives Committee on Banking and Currency, urging the U.S. government to limit speculation on the New York Stock Exchange, but without increasing the Federal Reserve's bank rate. If this does not take place, he predicts, there will be a rapid increase in prices followed by a serious depression.

1928

• George Bernard Shaw's book, The Intelligent Woman's Guide to Socialism and Capitalism, is published.

1929

At the end of October, the U.S. stock market crashes.

1929

• Swedish economist Gunnar Myrdal's book, The Political Element in the Development of Economic Theory, is published.

1929-1933

• The supply of the U.S. currency in circulation falls by over a third, and one-fifth of all all commercial banks (holding 10% of all deposits) collapse.

1930

• The Hawley-Smoot Tariff Act is passed in the United State.

1930-1933

• Country after country erects stiff trade barriers. The contraction of trade contributes to the deepening global depression.
  
  Only France and Belgium permit their currencies to fall against the British pound during the 1920s. Thus, during the early stages of the depression, their exports become cheap in terms of foreign currencies, which keeps their economies going longer.

1931-1933

• 3,700 banks fail and close their doors in the United States.

1932

• The Federal Home Bank System is created in the U.S. Its member banks are chartered to make loans to savings institutions and others engaged in residential mortgage lending.

1932

• Swedish economist Karl Gustav Cassel's book, The Crises in the World's Monetary System, is published. In 1928 he had testified before the U.S. House of Representatives on the monetary problems of the post-First World War era.

1932

• Franklin Roosevelt takes the U.S. off the gold exchange standard.

1932

• In his book, The Economic Basis of Tax Reform, economist Harry Gunnison Brown argues that the most efficient and fair system of taxation is that which captures unearned income and gains. He classifies land rent for gains on the sale of natural resource-laden and agricultural lands, aw well as building sites) as the major sources of unearned income.

1933

• Harry Gunnison Brown, in an article appearing in the Beta Gamma Sigma Exchange, urges abandonment of the gold exchange system, writing:
  
  "It would be better to stabilize the general price level by open market purchases and sales of eligible securities as well as goods and not be dependent upon any ned to interfere with the importation and exportation of gold."

1933

• The Banking Act passed in the U.s. declares all coins and currency of the U.S. to be the only forms of legal tender.

1934

• The U.S. National Housing Act is passed in the U.S., creating the Federal Savings and Loan Insurance Corporation to insure deposits at all federally chartered savings banks.

1934

• Franklin Roosevelt orders devaluation of the U.S. dollar and reestablishes the price of gold in terms of dollars at $35 an ounce.
  
  The U.S. government enforces a return of all gold coins and bullion to the U.S. Treasury. In this way, virtually all the profits from devaluation are captured by the governmnent.
  
  The higher price of gold creates enormous purchasing power in the U.S. for foreign holders of gold. Exports flow out of the U.S. and gold is accumulated.

1935

The Federal Reserve System is reorganized to centralize power in the hands of the Washington, D.C. Board of Governors.

1935

• Italian economist Vilfredo Pareto's 1916 book, Mind and Society, is translated into English and published.

1936

• John Maynard Keynes' book, The General Theory of Employment, Interest, and Money, is published in England. He advocates government intervention in markets, resorting to deficit spending if necessary to pull a nation's economy out of a recession.

1936

• The U.S., Britain and France enter into an agreement to keep the price of gold stable and hold each other's currencies to minimize gold flows.

1936

• Ludwig von Mises' book, Socialism, is published.

1937

• Wilhlem Roepke's book, Econics Of The Free Society, is published in Austria. Roepke argues that it was "inflation ... especially the insidious inflation of credit money, which constitutes the greatest and most imminent danger."
  
  Franklin Roosevelt's economic advisers, and others in Europe, are concerned with declining prices -- with deflation -- and believe that by stabilizing prices businesses will be encouraged to renew production and begin to hire unemployed workers back.

1937

• Adolph Lowe's book, The Price of Liberty, is published in London. Lowe leaves Germany after dismissal from his teaching position by the Nazi government and accepts a position at the University of Manchester.

1940

• Richard T. Ely's book, Land Economics, is published.

1940s

• Simon Kuznets develops the National Accounts system, out of which comes tools for measuring economic growth, such as Gross National Product.

1941

Alvin Hansen's book, Fiscal Policy and Business Cycles, is published. Hansen (at Harvard University) goes way beyond Keynes in calling for government planning and sustained intervention in the economy.

1943

Harry Dexter White and John Maynard Keynes contribute to a plan for the postwar international monetary system. The decison is made to have the U.S. dollar replace the British pound as the primary currency of international exchange.

1943

• Harold J. Laski's book, Reflections on the Revolution of Our Time, is published. Laski, who taught economics at the London School of Economics and the University of London, aksi served at chair of the British Labour Party from 1945-46.

1944

• The Bretton Woods Conference in New Hampshire is held. Here, Keynes proposes a worldwide central bank charged with balancing pressures between borrowers and creditors. He also proposes the introduction of a new global currency.
  
  Harry Dexter White proposes the creation of the International Monetary Fund, in which all members contribute currency and would be able to obtain loans when necessary to settle currency balances with other members.

1944

• Austrian economist Karl Polanyi's book, The Great Transformation, is published.

1945

• The United States emerges from the Second World War with its industrial plant modernized and in possession of most of the world's gold reserves.
  
  The U.S. national debt stands at $250 billion.

1946

• President Harry S. Truman signs the Employment Act of 1946, which commits the full resources of the U.S. government to the maintenanceof full employment.

1947

• Marriner Eccles, chairman of the Federal Reserve System, calls for the Federal Reserve System's independence from the public debt management decisions of the U.S. Treasury.

1948

• A Preliminary Draft of a World Constitution is prepared and signed by a group of intellectuals, including Mortimer J. Adler, Robert M. Hutchins, Harold Innis and Rexford Tugwell.

1947-1956

The General Agreement on Trade and Tariffs is negotiated and modified three more times.

The GATT establishes the principle of "Most Favored Nation" status for multilateral adjustments in tariffs.

1950

• The U.S. government holds gold worth $25 bilion (at the official price of $35 per ounce).

1950s

• Economist Robert Triffin (who had worked for the Federal Reserve and the IMF) warned that meeting the world's need for currency reserves by relying on U.S. payments deficits and dollar outflows was a sure route to disaster.

1952

• John Kenneth Galbraith's book, American Capitalism, is published. Galbraith argues that both liberals and conservatives operate under ideologically-based assumptions about how economies funcation that have little to do with the real world.

1952

• British Labour Party leader and historian, R.H. Tawney, writes on wealth distribution in Britain:
  
  "Where conditions are such that two-thirds of the wealth is owned by approximately one percent of the population, the ownership of the property is more properly regarded as the badge of a class than as the attribute of a society."

1957

• Ludwig von Mises' book, Theory and History is published. In this work and elsewhere, he challenges the assertion that the market system does not result in a win/win result for "all members of society."

1958

• Louis Kelso and Mortimer J. Adler introduce the idea of "universal capitalism" (through the use of employee stock ownership plans) in their book, The Capitalist Manifesto.

1958

• Between 1946-1958 the purchasing power of the U.S. dollar falls by one-third.

1958

• During the year, 10 percent of the U.S. gold stock is claimed in return for U.S. dollars held by foreign central banks.

1960s

• Per capita income in the top 22 developed countries rose by 50 percent. Martin Mayer writes in The Fate of the Dollar, that "much of this improvement in the international standard of living can be credited directly to the expansion of foreign trade, which permit's each nation to specialize more efficiently in what it does best."

early 1960s

• Unrepatriated U.S. dollars are circulated in the Eurodollar Market, acting very much like a common currency in Europe. This leads to establishment by U.S. banks of overseas branches that operate outside U.S. banking regulations.

1963

Economist Milton Friedman, in testimony before the Joint Economic Committee, calls for floating exchange rates to help solve the U.S. balance of payments problem.

1963

• Douglas Dillan, U.S. Secretary of the Treasury under Dwight D. Eisenhower and John F. Kennedy, writes that moved to floating exchange rates has one great danger:
  
  "If its own citizens lose confidence in its currency and start to try to transfer funds abroad, ... it is perfectly obvious that any amount of gold could be swamped very quickly."

1965

• Conservative economist Henry Hazlitt describes the steady growth in government expenditures as "an open conspiracy not to pay the national debt."

1965

• During the administration of U.S. President Lyndon B. Johnson, the U.S. dollar drops the statement: "Payable in silver to the bearer on demand."

1965

• Despite the buildup of U.S. military forces in Southeast Asia, the recorded Federal deficit is just $2 billion. Lyndon Johnson declares is commitment to keepin the U.S. dollar freely convertible into gold at $35 an ounce.

1967

• U.S. President Lyndon Johnson eliminates the Kennedy era investment tax credit on the grounds that it had slowed the flow of investment reserves from the U.S. to overseas markets.

1968

• The U.S. budget deficit reaches $25 billion, the largest deficit since the Second World War. Investment in foreign ventures by U.S.-based companies reaches new heights.

1968

• Economist Milton Friedman writes:
  
  "The link between gold and the quantity of money has become a rubber band. ...Whether desirable or not, it is impossible to restore now the close link that prevailed before 1933."

1968

• Charles de Gaulle, President of France, calls for return to a gold standard. In the U.S., Brookings Institution economists lead the way in a call for just the reverse -- a separation of gold from the U.S. dollar and other currencies altogether.

1968

• The U.S. Treasury announces it will no longer redeem the U.S. dollar for gold at $35 an ounce, except for demands by official monetary institutions in foreign nations.

1968

• A two-tiered gold market is agreed to -- one between central banks at the office price of $35 an ounce, and a second private market at whatever the market will absorb.
  
  The market price of gold temporarily falls, as speculators liquidate their holdings. Contributing to the fall in gold prices is the fact that France is forced to sell off half of its gold stock to settle its accounts.

1969

• U.S. President Richard Nixon, in order to close the budget deficit, introduces a 10 percent tax surcharge and removes certain exemptions from capital gains taxes.

1969

• Rising interest rates in the U.S. initiates the creation of uninsured and unregulated "money market accounts" that attract funds away from the savings banks and commercial banks. This loss of low-cost deposits reaches $500 million in 1966 and $1 billion in 1969.

1969

• Georges Pompidou succeeds Charles de Gaulle as President of France. He devalues the franc by 12 percent in order to stimulate the economy.

1970

• Libertarian economist Murray Rothbard calls for privatization of the minting of coinage and reestablishment of the gold standard.

1970

• The IMF begins issuing "Special Drawing Rights" (from a basket of paper currencies held) to expand liquidity, to replace gold that had disappeared from the system through the private markets, and to accommodate a gradual increase in the global price of gold.

1971

• U.S. President Richard Nixon takes the U.S. off fixed exchange rates and suspends convertibility of U.S. dollars for gold (closing the "gold window"). The official price (which becomes meaningless, since the government refuses to redeem dollars for gold) is raised to $38 an ounce in 1972, and $42.22 in 1973.

1971

• U.S. dollars held by foreign central banks increases from $3 billion in January to $30 billion. The system of fixed exchange rates collapses. The Germans shift to a floating exchange rate system. The British follow early in 1972.

1971

• In August, the U.S. devalues the dollar, imposing a 10 percent tax on all imports.
  
  Low inflation and low interest rates in the U.S. contribute to a renewed outflow of financial reserves.

1972

• Decentralist author and philosopher, Ralph Borsodi, designs a new money system for introduction into societies left impoverished by modernization. A model system of local currency (backed by basic commodities) is established in Indian and then brought back to the U.S. to New Hampshire (the "Exeter Experiment") with paper notes called "Constants."

1973

• Janos Fekete of the Hungarian National Bank, writes on the fate of gold:
  
  "There are about 300 economists in the world who are against gold, and they think that goldis a barbarous relic -- and they might be right. Unfortunately, there are three billion inhabitants of the world who believe in gold. Now the problem is how can we three hundred convince the other three billion of the correctness of our ideas."

1973

• The U.S. again devalues the U.S. dollar and raises the official price of an ounce of gold to $42.22.
  
  The beginnings of a new round of global commodities inflation is unleashed. Russian gran purchases contribute to an enormous rise in agricultural prices.
  
  OPEC imposes an oil embargo against the U.S. and the Netherlands for supporting Israel. The price of oil increases from $3 to $5 per barrel (and reaches $11.65 by the end of 1974). This trade takes place almost exclusively in U.S. dollars, which are deposited at interest in U.S. banks and invested in U.S. businesses, land, real estate, stocks, etc. -- or, more often, deposited in Eurobanks to be lent to LDCs to provide funds to pay for oil and other essential commodities.

1974

• Economist Leondard Silk writes:
  
  "The reconstructed world monetary system ws founded on the strength of the American economy, ...the dollar and on the deficits in the U.S. balance of payments. Therein lay a serious contradiction: A strong dollar and chronic deficits in the U.S. balance of payments would in time prove to be incompatible; either the dollar would weaken or the American deficits would have to be ended. There was a further contradiction: If the American deficits ended, the flow of dollars that was providing the monetary reserves for world economic expansion would also cease."

1974

• Economist Arthur Laffer, architect of the "supply side" resurgency among economists, writes to U.S. Treasury Secretary William Simon:
  
  "Marginal taxes of all sorts stand as a wedge between what an employer pays his factors of production and what they ultimately receive in after-tax income. ...Taxes of all sorts must be reduced. These reductions will be most effective where they lower marginal tax rates the most."

1974-1975

• Oil shortages and the appearance of stagflation (i.e., high unemployment and high inflation simultaneously) in the U.S. and elsewhere.
  
  The value of industrial output fell 13 percent in the U.S., 10 pecent in Germany, somewhat more in the rest of Europe and 17 percent in Japan.

mid-1970s

• Wall Street Journal writer Jude Wanniski introduces the supply-side ideas of economist Arthur Laffer to Republican Party member and U.S. Representative Jack Kemp, and eventually to Ronald Reagan.

1976-1977

• The U.S. deficit reaches $60 billion in each year.

1977

• Henry Wallich, member of the Federal Reserve's Board of Governors, expresses his optimism that Federal Reserve actions will steady the U.S. economy.

1977

• Going from virtually zero in 1973, by 1977 international banks had made loans to LDCs and Eastern European governments of $250 billion. By 1980 this amount doubled to over $500 billion.
  
  Anticipating that oil prices woud go even higher, Mexico and Venezuela borrow heavily from the world's banks to fund development projects.

1978

• Representatives of the nine Common Market nations meet in Bremen to establish their own European currency (the "Ecu") to protect their economies from U.S. monetary manipulations.

1978

• In October, the U.S. dollar collapses on the international exchange market.
  
  President Jimmy Carter authorizes a program to defend the dollar, sellilng 1.5 million ounces of gold per month, yielding roughly $400 million each month in repatriated dollars.

1978

• Economist Milton Friedman writes on taxation:
  
  "In my opinion the least bad tax is the proeprty tax on the unimproved value of land. The next least bad tax is a flat-rate teax on income above an exemption."

1978

• The U.S. National Debt reaches $1 trillion.

1978

• U.S. consumers pay over $40 billion annually for imported oil.

1978

• The exchange value of the U.S. dollar falls by four-fifths between 1973-1978.

1978

• Dollar denominated debt owed by the LDCs to the international bankers reaches $240 billion. The resulting demand for dollars keeps its exchange value from falling even more than it had.

1978

• E. C. Riegel's book, Flight From Inflation: The Monetary Alternative is published. The manuscript was finished in the late 1940s but not published until Riegel's papers were examined and organized by Spencer Heath MacCallum. Riegel looks at the actions and powers of the state as anathema to the survival of democracy, including the state's control over the monetary system:
  
  "We are neither grounded in the philosophy of personal enterprise nor intelligently opposed to socialism, if we do not realize that a socialized monetary system must generate socialism."

1979

• The external debt of developing countries as a whole (and of the 15 most heavily indebted countries) exceeds the value of all goods and services produced, by a favor of one and a half and growing.

1979

• The price of gold reaches $300 an ounce in mid-year.
  
  Paul Volcker is appointed by President Jimmy Carter as the new Chairman of the Federal Reserve. Volcker is committed to a program of monetary restraint and high interest rates. However, rising interest rates do not attract financial reserves because the rate of inflation is still as high or higher.

1975-1980

• A 1981 study issed by the Oversees Development Council in Washington, D.C. reveals that between 1975-80 nine countries were forced to renegotiate some $9 billion in payments.

1980

• In January, the price of gold reaches $875 an ounce, but falls to $600 by year end.

1980

• In the U.S., the Depository Institutions Regulation and Monetary Control Act is passed. This law effectively deregulates inerest rates and allows the savings banks and savings associations to begin competing with commercial banks and the money market funds.
  
  The ability to originate adjustable rate mortgage loans is approved in 1981.

1980

• Historian Arthur Schlesinger, Jr., in testimony before the U.S. Congressional Subcommittee on International Trade, links U.S. economic growth to "inflation, wild-cat paper money and bonds sold to foreign investors and subsequently repudiated. ...In preaching fiscal orthodoxy to developing nations, we were somewhat in the position of the prostitute who, having retired on her earnings, believes that public virtue requires the closing down of the red-light district."

1980

• Based on reports by the Federal Reserve, the total dollar claims outstanding in the U.S. reaches $7.45 trillion. This did not include Eurodollars held outside the U.S. Actual legal tender in circulation is said to be around $117 billion.

1980

• Economist Lester Thurow's book, The Zero-Sum Society, is published in the U.S. Thurow is one of a group of economists who argues that government, labor and industry must form a partnership. He calls for "massive public investment, budget surpluses to generate more savings, large compensation systems (to pay to retain displaced workers), increases in income transfer payments, tax cuts for the lower middle class" -- the funds for which ought to come from a shift in taxation to the wealthy.

1981

• The price of gold reaches $500 an ounce.

1981

• Economist Robert Mundell of Columbia University leads the drive for reintroduction of the gold standard, writing:
  
  "Since the breakdown of the U.S. gold standard the U.S. monetary system has produced more dollars than in the entire previous history of the republic. The prices of gold, oil, silver and other commodities have risen more than tenfold and, barring a drastic change in the monetary system, prospects are for more of the same in the future."

1981

• Alan Greenspan, on the feasibility of returning to a currency convertible into gold:
  
  "with dollar conversion into gold, the ability [of government] to issue dollar claims would be severely limited. Obviously, if you cannot finance federal deficits, you cannot create them. Either taxes would then have to be raised or expenditures lowered. The restrictions of gold convertibilty would therefore profoundly alter the politics of fiscal policy that have prevailed for half a century."
  
  At the time, the U.S. Treasury held 264 million ounces of gold. At $500 per ounce, the gold supported (momentarily) $132 billion in paper currency. Alan Greenspan proposes instituting the system gradualy by the issuance of five-year Treasury notes redeemable -- with interest -- in gold.

1982

• In this year the U.S. dollar volume of mortgage backed securities for the first time exceeds the dollar volume of loans savings banks and savings associatons make for their own portfolios. These institutions lose $25 billion in deposits in 1981 and $6 billion more in 1982. Seventy-two financial institutions fail.

1982

• Mexican debt payments coming due are over $29 billion, against oil revenues of $14 billion. The flight of financial reserves from Mexico leaves the Mexican government without dollars or gold. Mexico defaults on its loan payments.

1982

• U.S. President Ronald Reagan establishes a U.S. Gold Commission to evaluate the idea of returning to the gold standard. The Commission rejects this proposal in favor of some version of a monetary rule.

1982

• The Cato Institute holds a conference on money, where economist Friedrich Hayek proposs that governments return control over currency issuance to private banks. This is opposed to by Milton Friedman as unworkable without a central bank as lender of last resort.

1983

• The U.S. budget deficit is reported to be $179 billion (not counting the billions of expenditures in off-budget spending).

1984

• The U.S. National Debt raches $1.3 trillion, with annual interest payments of $220 billion.

1984

• Economist Lawrence H. White of New York University publishes his history of Scottish "free banking" in the early nineteenth century. He concludes this system operated with great stability without a central bank and without heavy government regulation.

1984

• Lewis E. Lehrman, chairman of an economic forecasting firm, offers a simple set of changes to reform the international monetary system:
  
  "Make the world's major currencies directly convertible to gold, as they were ot under Bretton Woods. Then, the U.S. must accept gold, self-liquidating Treasury bills and secured commercial paper as the backing for the U.S. currency. ...All governments would agree to rule out any further accumulation in their central banks of any national currency in the form of official reserves."
  
  In response, economist Brian Horrigan (than at the Federal Reserve) argues that Lehrman's proposals miss the point made by Irving Fisher in 1928 about gold not solving the problem of unstable prices for other goods.

1984

• Economist Henry Hazlitt writes in the Wall Street Journal that the Bretton Woods agreement was a serious mistake because it "deliberately encouraged inflation" by getting as far away from a gold standard as possible. He calls for a return to currency convertible into a fixed weight of gold on demand.

1984

• U.S. Congressman Jack Kemp introduces legislation calling for a Constitutional Amendment to require the U.S. Congress to balance the budget annually, discard the progressive rate income tax in favor of a lower, flat tax, require the Federal Reserve to follow an automatic monetary rule and restore a gold-backed dollar.

1985

• Continental Illinois Bank is rescued by a U.S. government bailout. All depositors, even those with balances above the insured $100,000 limit are paid off in full.

1985

• The external debt of the world's LDCs reaches $1 trillion. The top 15 debtors owe $650 billion.

1986

• Between 1980-1986, over 300 federally insured savings banks and savings associations fail.

1987

• The number of U.S. commercial banks in financial trouble reach 1,575.

1988

• Another 200 savings banks and savngs associations fail. Many are acquired by "healthy" institutions, commercial banks and other investors.

1989

• Another 350 savings banks and savings associations fail. By this time the total cost to U.S. taxpayers is forecasted by the Bush administration to be $50 billin. A year later, that number is revised to $150 billion.

1989

• The U.S. national debt reaches $3 trillion (thus, more than doubling in less than six years).

1989

• Decentralist writer Thomas H. Greco's monograph, Money and Debt: A Solution to the Global Crisis, states:
  
  "The present situation is not sustainable, neither morally, politically, economically nor ecologically. Social justice, world peace and the very survival of life on this planet depend upon a complete restructuring of monetary practics and financial accounts."

1990

• Wall Street Journal writers, MiachaelSesit and Marcus Brauchli report on Japanese financial markets:
  
  "Another pivotal support of the Japanese stock market during its heyday was land prices. The property market in Japan has zoomed in recent years, with prices in Tokyo doubling since 1986. Encouraged by these increases, Japanese banks lent money against property. The money often ended up in the stock market. And money made in the stock market was used to buy property."

1990

• By February, the price of gold reaches $425 an ounce, then falls during the year until November, when an ounce is back to $400.

1990

• The number of U.S. commercial banks in financial trouble reaches 1,000. Of these, 159 fail.

1990

• By June, the Japanese banks report $30 billion in outstanding loans on U.S. real estate. The total of all foreign bank loans on U.S. real estate reaches nearly $40 billion.

1990

• Barclays Bank of New York reports its portfolio of real estate loans reaches $1 billion, representing 40 percent of its lending. National Westminster Bankcorp writes off $350 million in real estate loans. Marine Midland Bank writes off $300 million in real estate loans.

1992

• In August, analysts estimate that Japanese banks would be forced to write off $100 billion in loans, a greater per capita loss to Japanese taxpayers than the U.S. savings and loan bailout.

1994

• Alan Greenspan, Chairman of the Federal Reserve Board of Governors, testifies before the U.S. Congress in July that gold is valued as an indicator of inflationary expectations. Greenspan expresses his view that directly linking the U.S. dollar to gold would result in lowering interest rates in the U.S. to the lowest in the world.
  
  At the time, the U.S. national debt reached $4.5 trillion. If refinanced at 3% there would be an annual savings of debt service in the area of $120 billion.

1994

• Economist Paul Krugamn's book, The Age of Diminished Expectations, is published. He writes:
  
  "Although Americans now freely admit that something has gone wrong, there is still great confusion about what the problem is, even among those who ry to follow public affairs."

1994

• Economist Mason Gaffney and economic journalist Fred Harrison write, The Corruption of Economics, tracing the history of the development of economics as a direct response to the challenge of the moral principles of political economy as presented by Henry George. Mason Gaffney writes:
  
  "Neo-classical economics has dominated thinking and policy now for half a century or so. The results are better than those achieved in Eastern Europe, but NCEists cannot take credit for our market economy, much as they boast of it. The North Atlantic nations had a well-oiled market economy functioning long before NCE drove out classical and Progressive economics."

1998

• The book, The Losses of Nations, edited by Fred Harrison, is published in London. In the introduction, Fred Harrison presents the challenge to economic policymakers:
  
  "The primary constraint on work and wealth is not to be found in the conventional explanation: inflexible labor markets. Historically, the latter are just one of the institutional responses to the changing character of public finance. The straightjacket that distorts people's motivations and work-related processes -- from factory-floor organization of employees to the use of secret off-shore bank accounts -- is the tax system. This straightjacket is the product of an obsolete philosophy of property rights which is designed to defeat the ambitions of people in a free society."