The case made for market-determined, flexible exchange rates by Princeton economist Frank D. Graham between the 1920s and the late 1940s is examined. It is argued that Graham's case embodied all essential elements of a monetary approach to exchange rates and the balance of payments. Exchange rates are monetary variables, and monetary policy strongly influences their movement. Contrary to received commentaries, Graham was the first twentieth-century economist to make a coherent case for flexible rates; he was an unappreciated forerunner of postwar, Chicago-based advocacy of flexible rates culminating in Friedman's 1953 classic. Graham's antipathy toward the Bretton Woods plans for exchange rates mirrored that of the Chicagoans. He advanced a liberal policy agenda including flexible exchange rates, capital mobility, rule-based independent monetary policies, and free trade. In the form of Frank Graham, Princeton was not far from Chicago.
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