Anna Schwartz (1915-2012) was a United States economist, chiefly known for her work at the National Bureau of Economic Research (NBER) in New York City and her collaborations with Milton Friedman. Her career in economics began at NBER in 1941, and she stayed there for most of her professional life.
Her contributions to the field of economics are vast and includes nine books and over 100 published academic articles and comments. She is considered one of the world´s foremost monetary scholars and a part of the neoclassical school of economic thought known as the Chicago school of economics.
Early life
Anna Jacobson was born on November 11, 1915, in New York City, to Hillel Jacobson and Pauline (née Shainmark) Jacobson.
Education
She displayed an early aptitude for academics, leading her to pursue higher education at Barnard College, where she earned her undergraduate degree in 1934 and graduated Phi Beta Kappa at the age of 18. She continued her studies at Columbia University, obtaining a master’s degree in 1935, aged only 19. She started her career as a professional economist after this, and did not return to Columbia for her Ph. D. until later, earning it in 1964.
Early career
She worked for a brief time at the U.S. Department of Agriculture (1936) and for the Columbia University Social Science Research Council in 1936–1941, before joining the New York office of the National Bureau of Economic Research in 1941. Back then, she was focused on studying business cycles.
Schwartz’s first published paper was “ British Share Prices, 1811–1850”, written in collaboration with Arthur Gayer and Isaiah Finkelstein, and published in the Review of Economics and Statistics (1940).
“Growth and Fluctuations in the British Economy”
In collaboration with Arthur Gayer and Walt Whitman Rostow, Anna Schwartz wrote the monumental Growth and Fluctuations in the British Economy, 1790–1850: An Historical, Statistical, and Theoretical Study of Britain’s Economic Development, published in two volumes in 1953. It was completed much earlier, but publication was delayed by a decade because of World War II, and Gayer died before he could ever see his book published. Whitman and Schwartz wrote a substantial new introduction to the book prior to publication, where they reviewed notable literature on the subject that had been published after the work´s original completion.
Both Schwartz and Whitman admitted that over time, they developed an “amicalbe divergence of view” regarding the interpretation of certain facts in the book. Schwartz noted that in light of recent theoretical and empirical research, she had revised her opinion regarding the importance of monetary policy and her interpretation of interest rate movements.
“A Monetary History of the United States”
Schwartz’s most notable work was created in collaboration with Milton Friedman (who received the 1976 Nobel Memorial Prize in Economic Sciences).
Together, Schwartz and Friedman co-authored “A Monetary History of the United States, 1867-1960“, which was published in 1963. This seminal work analyzed the role of monetary policy in the U.S. economy and argued that changes in the money supply have profound effects on economic fluctuations. This work points to the Federal Reserve System as being largely responsible for the Great Depression.
In 1965, the part of the book dealing with the Great Depression was published as a separate book named “The Great Contraction”. Some later editions include an appendix with a surprising endorsement from Ben Bernanke.
“Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression, you’re right. We did it. We’re very sorry. But thanks to you, we won’t do it again.”- Ben Bernanke
Later, Friedman and Schwartz would co-author the books Monetary Statistics of the United States (1970) and Monetary Trends in the United States and the United Kingdom: Their Relation to Income, Prices, and Interest Rates, 1867–1975 (1982).
The Monetarist Revolution
The insights from “A Monetary History of the United States” played a significant role in the development of monetarism, an economic theory emphasizing the importance of controlling the money supply to manage economic stability. Schwartz and Friedman’s research challenged the then-dominant Keynesian perspective, shifting the focus of policymakers toward the impacts of monetary policy.
Later work
In addition to her work with Friedman, Schwartz authored and co-authored numerous books and articles on monetary history and policy. Her later work included analyses of financial crises and the role of government intervention in the economy. She continued to be an active voice in economic discussions well into her later years.
She gained public recognition for her role as staff director on the U.S. Gold Commission in the early 1980s, became president of the Western Economic Association International in 1988, and was the president of the International Atlantic Economic Society in 2002-2003. From 2007, she focused on researching U.S. official intervention in the foreign exchange market based on Federal Reserve data from 1962.
Even after suffering a broken hip and a stroke in 2009, Schwartz continued to be a skilled and astute economic researcher.
Opinions
Over the years, Schwartz changed her opinion on financial regulation. In a series of studies in the 1970s and 1980s, she emphasized price level stability as being essential for the stability of the financial system. Based on economic data spanning over 200 years, Schwartz alleged that business failures will not have a major impact on the economy if their effects are kept from spreading through the financial system. She championed that individual institutions should be allowed to fail and should not be bailed out using taxpayer´s money.
During the financial crisis of 2007-2008, Schwartz was a vocal critic of the U.S. government´s response to it, including Ben Bernanke’s fondness for bailouts and keeping interest rates persistently low. In an interview with Barrons in 2008, Schwartz stated that interventions such as injecting liquidity into markets and reacting to the credit crisis with ad hoc programs were not the answer.
Legacy
Anna Schwartz’s research had a lasting impact on monetary policy, particularly in the understanding of the Great Depression. Her analysis suggested that the Federal Reserve’s failure to prevent the collapse of the money supply exacerbated the economic downturn. This interpretation influenced the way central banks approach economic crises, highlighting the importance of maintaining a stable money supply.
Her legacy lives on through her influential work in economics, which continues to shape economic thought and policy today. Schwartz’s contributions to economics have been recognized with numerous awards and honors, including her being named a Distinguished Fellow of the American Economic Association, her being elected a Fellow of the American Academy of Arts and Sciences, and her being inducted into the National Women’s Hall of Fame.
Examples of books written or co-written by Anna Schwartz
Growth and Fluctuations in the British Economy, 1790–1850: An Historical, Statistical, and Theoretical Study of Britain’s Economic Development (with Arthur Gayer and Walt Whitman Rostow), 1953
Monetary History of the United States, 1867–1960 (with Milton Friedman), 1963
Monetary Statistics of the United States: Estimates, Sources, Methods (with Milton Friedman), 1970
Money in Historical Perspective (with an introduction by Michael D. Bordo and Milton Friedman), 1987
Personal life
Anna Jacobson married Isaac Schward in 1936. He was a financial officer and fellow Columbia University graduate, and together they had four children. They were married for over 60 years, until his death in 1999.
Anna Schwarz died on June 21, 2012, in her home in Manhattan, New York, aged 96. At this point, she had not just four children (Jonathan Schwartz, Joel Schwartz, Naomi Pasachoff and Paula Berggren), but also seven grandchildren and six great-grandchildren.