Review of America's Bank: The Epic Struggle to Create the Federal Reserve by Roger Lowenstein

Quarterly Journal of Austrian Economics 19, no. 2 (Summer 2016)

“The problem with economic historians,” Murray Rothbard once quipped, “is that half of them are historians who don’t know any economics and the other half are economists who don’t know any history” (Rothbard, 1986, 0:01:05). After reading America’s Bank: The Epic Struggle to Create the Federal Reserve by Roger Lowenstein, I was reminded of Rothbard’s remark, which is as prescient as ever. Succinctly captured in the subtitle, Lowenstein’s book is about the grand—and often secretive—story behind the founding of the Federal Reserve System. It is informative about the unique personalities and interests of the people involved and the historical steps, including various congressional maneuvers, leading up to the passage of the Federal Reserve Act in 1913. However, the book suffers some serious shortcomings when describing the economics of central banking (and economics without central banking), in particular the economy of the United States before and after the Federal Reserve. The consequences of this is that Lowenstein overlooks other potential reforms that were advocated to alleviate the contemporary monetary problems and simply assumes that a central bank was the only effective solution, which weakens his analysis of events and understanding of the personal motives of those involved.