When Washington Shut Down Wall Street unfolds like a mystery story. It
traces Treasury Secretary William Gibbs McAdoo's triumph over a monetary
crisis at the outbreak of World War I that threatened the United States
with financial disaster. The biggest gold outflow in a generation
imperiled America's ability to repay its debts abroad. Fear that the
United States would abandon the gold standard sent the dollar plummeting
on world markets. Without a central bank in the summer of 1914, the
United States resembled a headless financial giant.
William McAdoo stepped in with courageous action, we read in Silber's
gripping account. He shut the New York Stock Exchange for more than four
months to prevent Europeans from selling their American securities and
demanding gold in return. He smothered the country with emergency
currency to prevent a replay of the bank runs that swept America in
1907. And he launched the United States as a world monetary power by
honoring America's commitment to the gold standard. His actions provide
a blueprint for crisis control that merits attention today. McAdoo's
recipe emphasizes an exit strategy that allows policymakers to throttle
a crisis while minimizing collateral damage.
When Washington Shut Down Wall Street recreates the drama of America's
battle for financial credibility. McAdoo's accomplishments place him
alongside Paul Volcker and Alan Greenspan as great American financial
leaders. McAdoo, in fact, nursed the Federal Reserve into existence as
the 1914 crisis waned and served as the first chairman of the Federal
Reserve Board.
