A new book by NYU Professor William Silber has just come out offering an explanation for the 4-1/2-month shutdown of the New York Stock Exchange in 1914 on the eve of World War I.
First, he points out that the explanation given at the time (to protect share prices on the market) doesn’t even make sense, so it must have been a lie. Silber says it was to keep the US on the gold standard, which begs the question, how is the US “on the gold standard” if the government is conducting massive interventions in markets to “keep it” there?
And he reveals the impetus for the move to be yet another of the immortal lies that constitute what passes for history among the few who even care about it: the move was not initiated by the Exchange’s Board of Governors – it was ordered by William McAdoo, Woodrow Wilson’s Secretary of the Treasury.
For this, McAdoo makes the grade as Silber’s hero. Silber’s evident attitude toward what staying on the gold standard justifies leads me to surmise that his book in fact does not disclose the true purpose of the measure. I even have my own theory of it, admittedly on little evidence. Since I haven’t even read the book, I’ll spare my fellow bloggers the particulars.
But the incident and the period, not to mention That War, make fascinating subjects, and I suspect there are many on this blog who would be interested.