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Press Release

Contact: Chriss Swaney
(412) 268-5776

For immediate release:
February 2, 2001

Carnegie Mellon Professor Writes Book About Federal Reserve System's Role and Development

PITTSBURGH—Carnegie Mellon University Professor Allan H. Meltzer's new book, "A History of the Federal Reserve: Vol. I, 1913-1951," explores the Federal Reserve's inadequate response to the Great Depression and the struggle for dominance in the economic system.

Meltzer, who led a federal commission formed to reevaluate and overhaul the World Bank, the International Monetary Fund, the World Trade Organization and other international institutions, describes in detail the roles played by the Federal Reserve Bank presidents in the new book.

Meltzer pays particular attention to the early dominance of the Federal Reserve System by Benjamin Strong, governor of the Federal Reserve Bank of New York. Meltzer found that Strong was credited more than anyone else with recognizing in the years after World War I the financial and economic impact of Reserve Bank purchases and sales of Treasury debt and the need to coordinate those important transactions.

He also talks about the development of the Federal Open Market Committee from the old Banking Act of 1935. The Federal Open Market Committee determines key interest rates and the growth of the nation's money supply.

The book carries the reader through the challenges of a developing institution faced with enormous economic upheaval and the strong personalities that influenced both policy and the culture of the system. It also looks at how successful America has been with its experiment in central banking.

For more than two decades, Meltzer has been studying monetary economics. He is co-founder of the Shadow Open Market Committee. The group of eminent economists monitors the Federal Open Market Committee. Meltzer was on President Ronald Reagan's Council of Economic Advisers and served in the Treasury Department during the Kennedy administration.

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