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The U.S. Dollar During WWI and the Recession of 1920

The U.S. Dollar During WWI and the Recession of 1920

This week we will look at a funny and little-known episode in the history of the U.S. dollar and Federal Reserve, notably the wartime years of WWI and the Recession of 1920 that immediately followed.

The Federal Reserve was, of course, signed into law in 1913, just in time for WWI. There was something of a liquidity crisis upon the outbreak of war, but that was handled by the existing "bank clearinghouse system" which was legitimized by the Aldrich-Vreeland Act of 1908. The Federal Reserve system had not yet been set up, and was not operational...



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