The Business Cycle in the Post-war World: A Review James Tobin James Tobin Cowles Foundation for Research in Economics, Yale University Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 72, Issue 2, May 1958, Pages 284–291, https://doi.org/10.2307/1880601 Published: 01 May 1958

Journal Article The Fallacies of Lord Keynes' General Theory: Comment Get access James Tobin James Tobin Harvard University Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 62, Issue 5, November 1948, Pages 763–770, https://doi.org/10.2307/1883470 Published: 01 November 1948

Journal Article A Note on the Money Wage Problem Get access James Tobin James Tobin National Scholar, Harvard University Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 55, Issue 3, May 1941, Pages 508–516, https://doi.org/10.2307/1885642 Published: 01 May 1941

T HE crisis will no doubt be surmounted. dollar will be saved. Its parity will be successfully maintained, and world will be spared that ultimate and unmentionable calamity whose consequences are more dreaded for never being described. The world monetary system will stay afloat, and its captains on both sides of Atlantic will congratulate themselves on their seamanship in weathering storm. But storm is in good part their own making. And if financial ship has weathered it, it has done so only by jettisoning much of valuable cargo it was supposed to deliver. Currency parities have been maintained, but full employment has not been. The economic growth of half advanced noncommunist world has been hobbled, to detriment of world trade in general and exports of developing countries in particular. Currencies have become technically more convertible but important and probably irreversible restrictions and discriminations on trade and capital movements have been introduced. Some government transactions of highest priority for foreign policy of United States and West have been curtailed. Others have been tied to a degree that impairs their efficiency and gives aid and comfort to bizarre principle that practices which are disreputably illiberal when applied to private international transactions are acceptable when government money is involved. These are costs. Were, and are, all these hardships necessary? To what end have they been incurred? They have been incurred in order to slow down and end accumulations of obligations in hands of European central banks. It is fair to ask, therefore, whether these accumulations necessarily involved risks and costs serious enough for countries concerned and for world at large to justify heavy costs of stopping them. Which is easier? Which is less disruptive and less costly, now and in long run? To stop private or public transactions that lead one central bank to acquire another's currency? Or to compensate these transactions by official lending in opposite direction? I do not suggest that answer is always in favor of compensatory finance. But issue always needs to be faced, and especially in present case. Several courses were open to European countries whose central banks had to purchase dollars in their exchange markets in recent years. (a) They could have built up their holdings quietly and gladly, as they did before 1959. (b) By exercising their right to buy gold at United States Treasury, they could have forced devaluation of or suspension of gold payments. (c) They could have taken various measures to correct and reverse chronic European payments surpluses. (d) By occasional withdrawals of gold and by constant complaints they could have brought tremendous pressure for discipline upon United States without forcing a change in parity. European central banks and governments chose fourth course, with token admixtures of third. They have made world opinion, and American opinion, believe there is no other choice. Almost everyone agrees that pressure of balance of payments deficit upon United States is inescapable arithmetic rather than deliberate policy of foreign governments. Yet for almost ten years previously, United States deficits were no problem. Clearly it is a change in human attitude and public policy, not inexorable circumstance, which has compelled us to take corrective actions. It is true that concern of financial officials about the dollar was only an echoand a subdued echo at that of fears, hopes, anxieties, and speculations that arose in private financial circles in late 1950's. But financial officials do not have to follow private exchange markets; they can lead instead. By an equivocal attitude toward private suspicions of dollar, European officials kept pressure on United States. Never did they

THE documents produced by the Patman inquiry are a remarkable contribution to monetary literature. The first title, Compendium for short, consists of replies to questions propounded by the committee. The first volume of the Compendium contains the careful answers of the Treasury and the Board of Governors of the Federal Reserve System to the lengthy questionnaires submitted to them. The second volume includes replies from the Presidents of Federal Reserve Banks, the Council of Economic Advisers, federal and state bank-examining authorities, the Reconstruction Finance Corporation, economists, bankers, life insurance executives, and dealers in United States government securities. The questionnaires varied with the respondent and were designed to obtain both factual information and expressions of opinion. The answers provide a wealth of legal, institutional, statistical, and historical information. Whether you wish, for example, a complete chronology of Federal Reserve policy actions since I9I4, a summary of the reserve requirements of nonmember banks, a world survey of Treasurycentral bank relationships, or a study of the density of banking offices relative to population in the several states, the Patman Compendium is your source. The replies also provide a variety of opinion, comment, and theory concerning the role of monetary policy in the postwar United States economy. The second title, Hearings for short, reports oral testimony on these same subjects and includes also numerous documents and written statements submitted to the committee. The committee heard testimony from the principal contributors to the Compendium and from many others; the witnesses represented a wide variety of experience, interest, and viewpoint. The Hearings include four panel discussions on aspects of monetary policy. Two of these, How should our monetary and debt management policy be determined? (pp. 747 ff.) and What should our monetary and debt management policy be? (pp. 685 ff.), are especially deserving of the attention of the reader who can only hit the high spots of these volumes. The third title, Report for short, gives the findings and recommendations of the committee majority, with dissenting observations by Senator Douglas. The Report is an admirable review of the events investigated by the committee; and its findings on the issues discussed in the Compendium and Hearings are, in my opinion, well balanced and moderate. For this Report, and indeed for the skillful design of the whole inquiry, there can be no doubt that Henry C. Murphy, the committee's economist, deserves tremendous credit. It is patently impossible for a review to do justice to the masses of material in these three documents. I hope I have given some idea of their scope. For the rest, I shall confine myself to three major topics of the committee's inquiry: (i) the Treasury-Federal Reserve conflict, (2) the theory of the operation of monetary controls, (3) the place of monetary restriction in an anti-inflationary program. -