Jacob Viner, Milton Friedman, and the Chicago Monetary Tradition: A Reconsideration

Milton Friedman claimed that Jacob Viner's views in the early 1930s on (a) the monetary origins of the Great Depression and (b) the need of expansionary open-market operations established a linkage between the 1930s Chicago monetary tradition and Friedman's monetarist economics. I show that Viner's views on those issues and on such issues as the retention of the gold standard, money-financed versus bond-financed deficits, 100 percent reserves, the usefulness of cost cutting to combat the Depression, and rules-versus-discretion differed fundamentally from a core group of Chicagoans. I conclude that Viner's views were not representative of the Chicago tradition.