Anna J. Schwartz, one of the world’s leading monetary economists, passed away early this morning at her home in Manhattan at age 96. She was a legend in her field and co-authored the most important book on money in the 20th century, A Monetary History of the United States, 1867–1960 (Princeton University Press, 1963), with Nobel laureate Milton Friedman. In that book, they blamed the Great Depression largely on a failure of monetary policy: the Federal Reserve let the money supply fall by over a third between 1929 and 1933.
Anna remained a prolific scholar into her early nineties and was a long-time participant at Cato’s Annual Monetary Conference, having spoken at the first conference in 1983 and in November 2008. In her paper from the 2008 conference, published in the Cato Journal, she argued that “if monetary policy had been more restrictive, the asset price boom in housing could have been avoided.” She blamed Alan Greenspan and the Fed, in part, for the crisis. In July 2009, at age 93, she wrote an op-ed in the New York Times criticizing Ben Bernanke for vastly expanding the Fed’s balance sheet and opposed his reappointment as Fed chairman.
As a member of the Shadow Open Market Committee, Anna was a close observer of Fed policy and a sharp critic of discretionary monetary policy. Like Friedman, she preferred a simple monetary rule that would bind the Fed to long-run price stability by controlling the quantity of money, not interest rates. She did not think the Fed or any central bank could control real variables or bring about full employment by fine-tuning. The best policy would be to let individuals be free to choose in the marketplace and keep government regulation to a minimum. Meanwhile, the limits of monetary policy should be recognized. As executive director of the U.S. Gold Commission in 1981, she didn’t think a gold standard would be feasible today, but did recognize that the pre-World War I gold standard was a successful monetary regime.
Based on her vast knowledge of monetary history and alternative monetary regimes, she was skeptical about the future of the euro. Without political union, monetary union would not last, in her opinion. Certainly, she would not agree that the Eurozone was an optimal currency area.
Her long career with the National Bureau of Economic Research is unprecedented. She began in 1941 and worked in her New York office for more than 70 years! At her 50th anniversary party, she got up before the distinguished guests and said, “Thank you. I’ll be back at my desk in the morning.” She never wasted time looking at her past achievements. Long after Milton Friedman stopped writing articles for scholarly journals, Anna was still doing serious research, publishing, and serving on editorial boards. She earned her Ph.D. from Columbia University at age 48.
Anna published many articles in the Cato Journal and was co-editor of The Search for Stable Money, which Cato co-published with the University of Chicago Press. I had the honor of working with Anna on that book and came to respect her more and more, not only as an outstanding scholar but as a person who believed in clear thinking, honesty, and hard work. She helped many younger scholars with their research and was very generous with her time. She will be deeply missed.