<p>The gold standard is often blamed for causing “the Great Contraction” – the unprecedented collapse of the U.S. money stock that began after the 1929 stock market crash and led to the Great Depression.</p><p>In <em>Gold, the Real Bills Doctrine, and the Fed: Sources of Monetary Disorder, 1922-1938, </em>preeminent monetary historians Thomas M. Humphrey and Richard H. Timberlake thoroughly refute that claim. Instead, they identify the culprit as a now relatively unknown, but once highly influential, theory: the Real Bills Doctrine. The Fed’s failure to stem the Great Contraction was due, not to any shortage of gold, but to Fed official’s devotion to a doctrine that made them unwilling to make full use of the United States’ ample gold reserves.</p><p>Anyone interested in understanding the causes of Great Depression, and particularly the part prevailing economic theories played in it, should regard <em>Gold, the Real Bills Doctrine, and the Fed: Sources of Monetary Disorder, 1922-1938</em> as an absolutely essential work.</p>
