Skip to main content
    • Aa
    • Aa
  • Get access
    Check if you have access via personal or institutional login
  • Cited by 4
  • Cited by
    This article has been cited by the following publications. This list is generated based on data provided by CrossRef.

    Eichengreen, Barry 2016. The Great Depression in a Modern Mirror. De Economist, Vol. 164, Issue. 1, p. 1.

    Hausman, Joshua K. 2016. Fiscal Policy and Economic Recovery: The Case of the 1936 Veterans' Bonus†. American Economic Review, Vol. 106, Issue. 4, p. 1100.

    PARK, HAELIM and VAN HORN, PATRICK 2015. Did the Reserve Requirement Increases of 1936-37 Reduce Bank Lending? Evidence from a Quasi-Experiment. Journal of Money, Credit and Banking, Vol. 47, Issue. 5, p. 791.

    Eichengreen, Barry 2013. Does the Federal Reserve Care about the Rest of the World?. Journal of Economic Perspectives, Vol. 27, Issue. 4, p. 87.


Gold sterilization and the recession of 1937–19381

  • Douglas A. Irwin (a1)
  • DOI:
  • Published online: 31 October 2012

The recession of 1937–8 is often cited as illustrating the dangers of withdrawing fiscal and monetary stimulus too early in a weak recovery. Yet our understanding of this severe downturn is incomplete: existing studies find that changes in fiscal policy were small in comparison to the magnitude of the downturn and that higher reserve requirements were not binding on banks. This article focuses on a neglected change in monetary policy, the sterilization of gold inflows during 1937, and finds that it exerted a powerful contractionary force during this period. The transmission of this monetary shock to the real economy appears to have worked through lower asset (equity) prices and higher interest rates.

Corresponding author
Hide All

I wish to thank Tim Guinnane, seminar participants at Yale, Dartmouth and Wesleyan, and two anonymous referees for their helpful comments.

Linked references
Hide All

This list contains references from the content that can be linked to their source. For a full set of references and notes please see the PDF or HTML where available.

M. D. Bordo , E. U. Choudhri and A. J. Schwartz (1995). Could stable money have averted the Great Contraction?. Economic Inquiry, 33, pp. 484505.

T. F. Cargill and T. Mayer (2006). The effect of changes in reserve requirements during the 1930s: the evidence from nonmember banks. Journal of Economic History, 66, pp. 417–32.

G. B. Eggertsson (2008). Great expectations and the end of the Depression. American Economic Review, 98, pp. 14761516.

C. Hanes (2006). The liquidity trap and US interest rates in the 1930s. Journal of Money, Credit, and Banking, 38, pp. 163–94.

B.T. Mccallum (1990). Could a monetary base rule have prevented the Great Depression? Journal of Monetary Economics, 26, pp. 326.

F. Mishkin (1995). Symposium on the monetary transmission mechanism. Journal of Economic Perspectives, 9, pp. 310.

L. Peppers (1973). Full-employment surplus analysis and structural change: the 1930s. Explorations in Economic History, 10, pp. 197210.

C. D. Romer (1988). World War I and the postwar Depression: a reinterpretation based on alternative estimates of GNP. Journal of Monetary Economics, 22, pp. 91115.

C. D. Romer and D. H. Romer (1989). Does monetary policy matter? A new test in the spirit of Friedman and Schwartz. NBER Macroeconomics Annual, 4, pp. 121–70.

L. G. Telser (2001–2). Higher member bank reserve ratios in 1936 and 1937 did not cause the relapse into depression. Journal of Post Keynesian Economics, 24, pp. 205–16.

P. Temin and B. WIGMORE (1990). End to one big deflation. Explorations in Economic History, 27, pp. 483502.

Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

Financial History Review
  • ISSN: 0968-5650
  • EISSN: 1474-0052
  • URL: /core/journals/financial-history-review
Please enter your name
Please enter a valid email address
Who would you like to send this to? *