Imagining the Fed: Central Bank Structure and United States Monetary Governance (1913-1968)
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This dissertation analyzes the institutional development and policy performance of the Federal Reserve System from 1913-1968. Whereas existing scholarship assumes Federal Reserve institutions have remained static since 1913, this project demonstrates that the Federal Reserve was a site of extensive institutional experimentation across its first half century of operations. The 1913 Federal Reserve Act created thirteen autonomous agencies without offering guidance regarding how these units should function as a coherent system. The extent to which this institutional jumble congealed into a central bank-like organization has fluctuated over time. Institutional changes were driven by external shocks and shaped by an ongoing internal debate about normative systemic governance. Some agents called for greater institutional centralization to increase the system’s strategic capacity. Others drew upon shared liberal ideals to defend the system’s decentralized governance traditions. These debates resulted in frequent reconstitutions of the policy-making regime. This dissertation argues the Fed’s temporally-specific institutional configurations were consequential for United States monetary and exchange rate policies. During periods of relatively centralized Federal Reserve governance, internationally-oriented agents wielded control over the system’s policy-making levers to help stabilize the dollar’s exchange rate. During periods of institutional fragmentation, by contrast, monetary policies grew increasingly rigid, promoting dollar instability. Consequently, the structure of American central banking institutions has important implications for both the domestic and international political economies. This project suggests that insights from the positive study of institutions should be applied to the design of central banking institutions. Although institutional fragmentation can check arbitrary power, it likewise can paralyze the policy-making process and undermine the formation and steady pursuit of long-term strategic goals.