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The Money Makers: How Roosevelt and Keynes Ended the Depression, Defeated Fascism, and Secured a Prosperous Peace

Eric Rauchway

3.82 · Rating details · 130 ratings · 19 reviews

Shortly after assuming office in early 1933, Franklin D. Roosevelt made the bold decision to take the United States off the gold standard. This was only the first act in his quest to use monetary policy as a political tool. In The Money Makers, the distinguished historian Eric Rauchway shows how FDR and his brilliant team of advisers—John Maynard Keynes, Harry Dexter White

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Kindle Edition, 338 pages

Published October 27th 2015 by Basic Books (first published October 13th 2015)

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Apr 04, 2016 Mal Warwick rated it it was amazing · review of another edition

Shelves: nonfiction

Call it selective memory: we tend to forget that the survival of our democratic system was by no means assured on March 4, 1933, when Franklin Delano Roosevelt was sworn in as president. With the country paralyzed by twenty-five percent unemployment, shuttered factories, insolvent banks, and rapidly falling prices for farm commodities and consumer goods alike, both Communism on the Left and fascism on the Right were rapidly gaining adherents. It was far from clear that a catastrophic clash of th ...more

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Dec 09, 2015 Frank Stein rated it really liked it · review of another edition

There is a near universal consensus among contemporary economists, both left and right, that the monetary policies of Franklin Roosevelt were the real reason for the United States' recovery from the Great Depression. Yet this argument, until recently, had not penetrated the history of the New Deal. This brisk, well-written book puts monetary policy back at the center of the story.

The opening sections, on Roosevelt's 1933 decision to take the United States off gold, show how conscious and planned There is a near universal consensus among contemporary economists, both left and right, that the monetary policies of Franklin Roosevelt were the real reason for the United States' recovery from the Great Depression. Yet this argument, until recently, had not penetrated the history of the New Deal. This brisk, well-written book puts monetary policy back at the center of the story.

The opening sections, on Roosevelt's 1933 decision to take the United States off gold, show how conscious and planned this decision was, and how it aimed at moving the US back to its old price level, after four years of disastrous deflation, despite the pleas of Roosevelt's advisors like James Warburg and William Woodin. While other historians hesitate around these esoteric subjects, Rauchway deftly dives into both the political and economic significance of the decision. He shows how Roosevelt outmaneuvered goldbugs by helping drum up "demands" by rural radicals for inflation, so that his own policy could be seen as a mere compromise with more drastic measures.

The latter parts of the book, however, can be frustrating. Rauchway often seems to feel that his job is to write a brief for a managed dollar and the international Bretton Woods system. Instead of using economic arguments, however, he uses the historian's tool of guilt by association. In this story, opponents of the plans are just fascist goldbugs allied with craven banks, who only want to further grind the faces of the poor. Fascism, at home and abroad, is lingering behind almost all reaction. In a sense, this portrayal is the mirror image of Benn Steil's "The Battle of Bretton Woods," to which Rauchway is responding. In that, communists, and specifically Soviet spy and Roosevelt economic advisor Harry Dexter White, are the impetus behind the international managed currency experiment, and international institutions like the IMF and World Bank are forever tarnished by that connection.

Instead of merely admitting or investigating White's influence and moving on, Rauchway spends pages and pages tying himself in knots, trying to minimize every indication of White's espionage. Rauchway argues that White only joined the communists during a "nearly respectable time for communism and the Soviet Union," an astounding statement about an ideology and country that Americans hated and feared more than any other (even if that hatred was not as peaked as it would be later). Rauchway notes that White's espionage is "puzzling" and that "he surely knew he was doing something he should not," again an amazing understatement. Every example of White's espionage seems to be provided only to dismiss its importance. Rauchway notes that by 1942 White saw his handler "less frequently" for fear of his career, that White caused endless "frustration" to the KGB, that most of the information he passed on only came from a secretary he hired at request of the KGB. Yet if one came at this story with fresh eyes, the "lede" here is surely that White was spying, not how vigorously he did it.

This is frustrating not because one should take Steil's extreme view that White's espionage defined world politics in this period, but that somehow being a bad spy for Stalin's dictatorship proves something counter to Steil's arguments. In fact, besides being argumentative, this constant minimizing seems to prove nothing at all. The same partisan tone, tarring the plans' opponents as fascists while bending over backwards to excuse communists, is evident again when Rauchway discusses the "one politician willing to act against the spread of domestic fascism," New York congressman Samuel Dickstein, while failing to mention that Dickstein is now widely regarded to be a communist agent. The issue is not that one side or the other was worse in this period, but that Rauchway is laboring to be one-sided.

On the whole, however, the book stands on its deep research and solid writing. The descriptions are rich and thick, and the political legerdemain skillfully played out. If one can ignore the same argumentative tone that also colored Steil's book, one can learn a lot about a real triumph of economic policy, which would be no less a triumph if some of the actors were even less savory than they appear here. ...more

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Mar 02, 2016 Laurie rated it really liked it · review of another edition

I have long enjoyed reading books about FDR and Churchill. When my husband, who was reading this book, discussed it with me, I determined to read it as well. Eric Rauchway shed much light on a part of Roosevelt's tenure that I was unfamiliar with – that of taking the world off the gold standard. I had read of Bretton Woods but do not recall reading about it to the degree Rauchway describes. Nor was I as familiar with the politics of economics that Roosevelt faced upon becoming President.

The plan ...more

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Dec 17, 2020 Julian Douglass rated it it was amazing · review of another edition

Shelves: history

What a great book, and what a great History about these two amazing men. Both people are hero's of the western Liberal international order and setting the peace for the past 75 years. Mr. Rauchway does a great job of combining economic theory with history to make the ideas and solutions come to life in an easy and understandable way. This book makes me long for brave and courageous leaders like Keynes and Roosevelt. Maybe one day, we will get men or women like these two again. People who know wh ...more

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Feb 27, 2016 Patrick rated it really liked it · review of another edition

Shelves: biography, economics, history-long-periods, political-philosophy, politics, world-war-ii, us-history

I really think that I am slowly shifting to at least a weird middle position on Keynesian economics. This author is gung-ho that Keynes and Roosevelt were geniuses. He is an economics professor. I need to read a few economic books in a row rather than occasionally to really come to good conclusions.

I loved the book. It is probably too esoteric for most of my Goodreads friends--the minute details about Roosevelt's rationale for leaving the gold standard, currency valuation, central banking, the g ...more

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Oct 22, 2018 G. rated it really liked it · review of another edition

The author manages to make economic policy change gripping. He definitely has an opinion, which I agree with, so it didn't bother me. Parallels and juxtapositions to the present are striking. ...more

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Aug 21, 2016 Rob S rated it liked it · review of another edition

Shelves: economics, history

The Money Makers runs into a major problem from the title onwards, Roosevelt and Keynes never worked closely together and their histories are largely separate. There is already a glut of books out there about Roosevelt and his actions when it came to financial policy. There are also other established books about Keynes that better flesh out his economic policy, including going into detail about why the things he were fighting against were so terrible.

There's nothing severely wrong with The Money ...more

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Jan 05, 2021 David Childers rated it liked it · review of another edition

I have mixed feelings about this book, which was entertaining, well researched, and not quite the book I thought I was going to read. As a work of political and diplomatic history, covering Roosevelt and Keynes and the discussions around currency policy during the Roosevelt administration, from abandoning the gold peg up through the negotiations over the Bretton Woods institutions, this is a valuable peek into how policy got made, drawing on extensive archival work on the major players and their I have mixed feelings about this book, which was entertaining, well researched, and not quite the book I thought I was going to read. As a work of political and diplomatic history, covering Roosevelt and Keynes and the discussions around currency policy during the Roosevelt administration, from abandoning the gold peg up through the negotiations over the Bretton Woods institutions, this is a valuable peek into how policy got made, drawing on extensive archival work on the major players and their writings and conversations. As a work of economic history, it is a bit less tightly structured. While making a case that the arc from the 1933 devaluation and break from gold to the establishment of the Bretton Woods institutions at the end of WWII represented a culmination of a coherent and successful intellectual and political program by Roosevelt to institute Keynesian monetary ideas in the US and worldwide, the actual discussion of these ideas and their interaction with the economic situation faced during the 1930s and 1940s feels a bit superficial. The coverage of the impetus for break from the gold standard is coherent, though the economics are pretty much drawn from Eichengreen, who I would read first if looking for coverage of this (or Liaquat Ahmad, who also rehashes Eichengreen but much more entertainingly than the original). The Bretton Woods coverage, in contrast, is hindered by cutting off the passage of the bill (soon after Roosevelt's death, which clearly drove the coverage decision), with only a brief epilogue on the outcome, and more generally by a lack of clarity on the economic issues at stake and theories behind the implementation, which might have illuminated the importance of implementation of an institution to coordinate exchange rate adjustments and the fights over the details, like the well known argument between the Keynes plan based on a global reserve currency and the White plan for a dollar-based Fund.

That being said, if you are already familiar with the broad outlines of policy in this era, this book does have quite a bit of new information on the motivations of the key actors. While it has been remarked (often critically) that Roosevelt drew largely on agricultural economists like George Warren for the ideas behind the 1933 devaluation rather than Keynes per se, Rauchway makes clear that Keynesian ideas were well known to the president and his advisors at the time, but also vividly illustrates the degree to which the decision was driven by political pressure from agricultural interests in response to commodity price falls to get commodity prices back up. The coverage of the economics somewhat elides the distinctions, but rather than the (new) Keynesian intertemporal substitution channel of expected inflation lowering real ex ante interest rates emphasized by Eichengreen and Eggertsson, among others, the descriptions suggest a motivation based more on redistribution motives via ex post interest changes, either via Fisherian real revaluation of nominal debt contracts, or a (less explored) increase in real relative prices of commodities. Of these latter two, the quotes make it hard to distinguish, because the extensive quotes about raising commodity prices which establish it as the main justification in both private and public communications do not distinguish between real and nominal quantities. In terms of the opposition to the policy, Rauchway has a splendid knack for finding pithy and damning quotes from assorted bankers expressing their opposition in terms of material interest in preserving asset values. All of this seems to suggest that distributional conflict, rather than ideas about macroeconomic management per se, were forefront at least in the discussions at the time.

Where Rauchway excels is in digging up entertaining anecdotes and bon mots from the archives of key players; I get the impression this ostentatious display of command over primary sources plays a similar role in terms of disciplinary prestige for historians as florid overuse of mathematics does for economists. The value provided is real, but it can lead to distorted focus. In the coverage of post-war monetary plans, the stolid Harry Dexter White is largely portrayed as a boring nerd with few strong convictions (which, to be fair, is exactly what you should behave like if you are a Soviet spy at the highest level of US government), while the charming, witty, and prolific Keynes is lionized, with less discussion of the economic merits and demerits of their plans per se. This is admittedly a complicated issue and whether Keynes plan would have succeeded in avoiding the issues leading to the demise of the dollar based adjustable peg system in the 70s or whether it was inevitable due to asymmetric adjustment incentives is (to my knowledge) not fully settled, but neither is it here discussed. Nor is the issue of the adequacy of the adjustable peg system as a remedy to the forces that lead to the Great Depression and associated international adjustments. The book does, however, review the children's book produced to sell the treaty to Americans (I would love to find a copy) and describe who won at the volleyball games between the delegates (the Soviets, twice).

Overall, this is a nice source if your interest is in the politics behind the monetary policy decisions of the Roosevelt administration, worth picking up if you are already a Great Depression buff. ...more

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Dec 26, 2015 Steve added it

Nice monetary history of the US before great depression through Bretton Woods. Historically informative but still a fun read.

Historically interesting, informative, yet reads like a story. Enjoyable. Great way to keep educated monetary history that shaped the world economy, yet it won't put you to sleep. ...more

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Feb 21, 2018 Kelsey rated it it was ok · review of another edition

If I had to describe it in two words: vanilla and superfluous.

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Jun 27, 2020 Jordan Weissmann rated it really liked it · review of another edition

For economics history nerds. FDR's decision to break from the gold standard was a politically and economically momentous choice that set the stage for recovery from the Great Depression. But popular accounts of the New Deal, like David Kennedy's Pulitzer winning Freedom From Fear, oddly tend to play it down, or are outright critical. Rauchway corrects the record, showing how moving off of gold was central to the Roosevelt's economic program and, later, the U.S.'s effort to create a durable post ...more

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Apr 28, 2019 Streator Johnson rated it it was amazing · review of another edition

An excellent book combining the history of the period with lessons in Keynesian economics for the non-economist. It basically boils down to governments spending money on doing good things is, in fact a good thing.

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Nov 28, 2020 Melissa rated it it was amazing · review of another edition

Shelves: economics, history, political-science

This is the first book I've read on this subject, so I can't claim to have good reasons to agree or disagree with his points. It's engaging enough to wish to learn more, which is what I need. ...more

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Mar 07, 2021 Ken rated it really liked it · review of another edition

Great info but super dry. Idk if the authors could have done more given the subject matter. Glad I read it

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Nov 23, 2015 Cropredy rated it liked it · review of another edition

Shelves: business, history

Oh, so disappointing. As we live in an age where some politicians call for balanced budgets and even a return to the gold standard, a book that goes over the successful fiscal interventions led by the Roosevelt Administration should be a gold mine (pun intended) of information for creating an informed opinion as to why the gold standard is a really, really bad idea.

But no. Like so many economic histories, the author opts to tell a narrative that is character-driven (Keynes, Harry White, Warburg, Oh, so disappointing. As we live in an age where some politicians call for balanced budgets and even a return to the gold standard, a book that goes over the successful fiscal interventions led by the Roosevelt Administration should be a gold mine (pun intended) of information for creating an informed opinion as to why the gold standard is a really, really bad idea.

But no. Like so many economic histories, the author opts to tell a narrative that is character-driven (Keynes, Harry White, Warburg, Roosevelt, etc.) with throwaway lines of the ilk: "By adhering to the gold standard, the economy was constrained." How useless is this? While a plot-driven, character-based narrative helps move the book along, a few sidebars on exactly why sticking to the gold standard during the Hoover administration caused the Depression to deepen would have been useful. As the war reached its conclusion, the major & minor powers agreed to a new system for conducting trade, namely, the Bretton Woods agreement. But the author eschewed any sidebar that explained with examples why this was a better system. Instead, it was simply asserted it was better because the participants are quoted as saying it was better.

Put another way, I want, after reading a book like this to refute arguments made in the political arena on the desirability of returning to a hard money policy. The book gave me no tools to do this.

On the plus side, there were some interesting tidbits of narrative that I did not know, including extensive Soviet penetration of the highest levels of the US Treasury Department and the near insurrection of farmers at the start of the Depression due to low commodity prices. Balanced budget types in the 1930s claimed that we just had to suffer through enough business liquidations to drive prices sufficiently low that, in the long run, investment would return and restart growth. Keynes famously retorted that "in the long run, we're all dead". Perhaps not dead, but living under a communistic government as the landless and moneyless revolted.

So, read this book (which is much better than "Keynes versus Hayek" but not as good as "Lords of Finance") to get a decent economic history of the time but don't expect to become better qualified for the Sunday talk shows than the current cop of bloviators. ...more

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Dec 18, 2016 D.L. Morrese rated it it was amazing · review of another edition

It is said that history repeats itself. That's not quite true, but it does often rhyme. When FDR took office in in 1933, the United States was in much worse shape than it is today. The Great Depression had destroyed businesses and jobs. Discontent was raging, and there was a real threat of populist movements that saw democratic capitalism as a failure and were willing to consider fascism, communism, or some kind of totalitarian system to replace it as long as it provided a promise of security an ...more

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Mar 05, 2016 Steve rated it really liked it · review of another edition

Interesting and well-written story of the transformation of the United States and later the world from the "Gold Standard." Lots of information and analysis. ...more

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Nov 21, 2015 Lloyd Fassett marked it as to-read · review of another edition

Shelves: history

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Jan 27, 2016 Serge Boucher rated it really liked it · review of another edition

Entertaining economic history from the great depression to Bretton Woods.

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About Eric Rauchway

Eric Rauchway

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Eric Rauchway is an American historian and professor at the University of California, Davis. Rauchway's scholarship focuses on modern US political, social and economic history, particularly the Progressive Era and the New Deal. ...more