Skip to main content



BROKERS date back to the colonial period. The colony of Massachusetts, in the throes of a price inflation in 1748, adopted a tabular standard made up of an assortment of goods, in specified quantities, to be used as a test of the value of money. All money payments had to be made according to the changes in the value of money as reflected by this goods assortment. The astronomer Simon Newcomb suggested the need for managing money to achieve a stable price level in an article in the North American Review (September 1879). In 1911 the economist Irving Fisher outlined a plan for stabilizing the dollar in his Purchasing Power of Money and again in 1920 in his Stabilizing the Dollar. Fisher's system presupposed no gold coins in circulation. To correct the trend of the price level, he would increase or decrease the amount of gold representing a dollar, such dollars being disbursed in ingots and chiefly in international payments. In 1922 he wrote The Making of Index Numbers, explaining how to measure the price level scientifically. Americans were particularly conscious of price level changes at this time. In the previous sixty years wholesale prices had undergone wild fluctuations, more than doubling during the Civil War, falling by two-thirds between 1865 and 1896, rising moderately until 1913, more than doubling between 1914 and 1920, and plummeting 40 percent in one year, mid-1920 to mid-1921. All these changes had political repercussions, some of them severe.

Many prominent economists, who felt there must be some way to improve the situation, helped Fisher organize the Stable Money League in 1921. Because some league members differed with Fisher as to the appropriate solution, the organization changed its name that autumn to the National Monetary Association. Dissension among its members killed the association in early 1924. The next year Fisher promoted a new group called the Stable Money Association, whose avowed goal was educational instead of legislative. It nevertheless gave thinly veiled support to other bills by Goldsborough and by Rep. James G. Strong of Kansas. The organization died in 1932.

Meanwhile, a Cornell University agricultural economist, George F. Warren, also concluded that decreasing the gold content of the dollar was the way to raise the general price level. In early 1933 farm prices were only 59 percent of what they had been in "normal" 1926, and he felt that the way to restore prosperity, especially agricultural prosperity, was to raise the price level to that 1926 level. Warren influenced then Under Secretary of the Treasury Henry Morgenthau, Jr., his former student, who had the ear of President Franklin D. Roosevelt. The United States temporarily abandoned the gold standard in March 1933 and called in all gold coins. In a 22 October radio address, Roosevelt, discussing his gold purchase plan (to drive up the price of gold), said, "We are thus continuing to move toward a managed currency." On 30 January 1934, Congress passed the Gold Reserve Act and the next day, acting on its authority, the president created a new gold dollar (never coined) of 13.71 grains, 59 percent the size of the old gold dollar. There were other managed money bills introduced in the 1930s, especially by Rep. Wright Patman of Texas, who thought himself a modern "populist," but nothing came of them.

In the early 1960s a school of economists, soon known as monetarists, headed by Milton Friedman of the University of Chicago, achieved prominence. They believed that the quantity of money in circulation, measured in a sophisticated manner, greatly affected both the severity of business cycles and the general price level. Their solution was to increase the money supply by a steady 4 percent a year, the country's annual average rate of economic growth.

In the 1980s President Reagan appointed one of Friedman's allies, Alan Greenspan, as chairman of the Federal Reserve Board. The Fed's successful battle against inflation in the 1980s and 1990s, and the rapid growth of the American economy in those years, turned Greenspan into a national icon of prosperity and increased public confidence in the efficacy of monetarist policies. But the rapid increase in consumer debt and the proliferation of credit-card borrowing remain major challenges to efforts to manage the money supply.


Friedman, Milton. A Program for Monetary Stability. New York: Fordham University Press, 1960.

Greider, William. Secrets of the Temple: How the Federal Reserve Runs the Country. New York: Simon and Schuster, 1989.

Woodward, Bob. Maestro: Greenspan's Fed and the American Boom. New York: Simon and Schuster, 2000.

Donald L.Kemmerer/t. g.

See alsoBimetallism ; Business Cycles ; Consumer Purchasing Power ; Economic Indicators ; Federal Reserve System ; Gold Reserve Act ; Great Depression ; Keynesianism ; Money ; Reaganomics .

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"Brokers." Dictionary of American History. . 19 Aug. 2018 <>.

"Brokers." Dictionary of American History. . (August 19, 2018).

"Brokers." Dictionary of American History. . Retrieved August 19, 2018 from

Learn more about citation styles

Citation styles gives you the ability to cite reference entries and articles according to common styles from the Modern Language Association (MLA), The Chicago Manual of Style, and the American Psychological Association (APA).

Within the “Cite this article” tool, pick a style to see how all available information looks when formatted according to that style. Then, copy and paste the text into your bibliography or works cited list.

Because each style has its own formatting nuances that evolve over time and not all information is available for every reference entry or article, cannot guarantee each citation it generates. Therefore, it’s best to use citations as a starting point before checking the style against your school or publication’s requirements and the most-recent information available at these sites:

Modern Language Association

The Chicago Manual of Style

American Psychological Association

  • Most online reference entries and articles do not have page numbers. Therefore, that information is unavailable for most content. However, the date of retrieval is often important. Refer to each style’s convention regarding the best way to format page numbers and retrieval dates.
  • In addition to the MLA, Chicago, and APA styles, your school, university, publication, or institution may have its own requirements for citations. Therefore, be sure to refer to those guidelines when editing your bibliography or works cited list.