James Laurence Laughlin (April 2, 1850 – November 28, 1933) was an

American American(s) may refer to: * American, something of, from, or related to the United States of America, commonly known as the "United States" or "America" ** Americans, citizens and nationals of the United States of America ** American ancestry, pe ...

economist An economist is a professional and practitioner in the social sciences, social science discipline of economics. The individual may also study, develop, and apply theories and concepts from economics and write about economic policy. Within this ...

and Professor at

Cornell University Cornell University is a private statutory land-grant research university based in Ithaca, New York. It is a member of the Ivy League. Founded in 1865 by Ezra Cornell and Andrew Dickson White, Cornell was founded with the intention to teach an ...

Harvard University Harvard University is a private Ivy League research university in Cambridge, Massachusetts. Founded in 1636 as Harvard College and named for its first benefactor, the Puritan clergyman John Harvard, it is the oldest institution of higher le ...

, and the

University of Chicago The University of Chicago (UChicago, Chicago, U of C, or UChi) is a private research university in Chicago, Illinois. Its main campus is located in Chicago's Hyde Park neighborhood. The University of Chicago is consistently ranked among the b ...

, who helped to found the

Federal Reserve System The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States of America. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a ...

and was "one of the most ardent defenders of the

gold standard A gold standard is a monetary system in which the standard economic unit of account is based on a fixed quantity of gold. The gold standard was the basis for the international monetary system from the 1870s to the early 1920s, and from the la ...

Early life

Laughlin was born in Deerfield, Ohio on April 2, 1850. He received a

Ph.D. A Doctor of Philosophy (PhD, Ph.D., or DPhil; Latin: or ') is the most common degree at the highest academic level awarded following a course of study. PhDs are awarded for programs across the whole breadth of academic fields. Because it is a ...

from

in history. His thesis regarded "

Anglo-Saxon The Anglo-Saxons were a Cultural identity, cultural group who inhabited England in the Early Middle Ages. They traced their origins to settlers who came to Britain from mainland Europe in the 5th century. However, the ethnogenesis of the Anglo- ...

Legal Procedure" and was supervised by

Henry Adams Henry Brooks Adams (February 16, 1838 – March 27, 1918) was an American historian and a member of the Adams political family, descended from two U.S. Presidents. As a young Harvard graduate, he served as secretary to his father, Charles Fra ...

. The other members of his program were

Henry Cabot Lodge Henry Cabot Lodge (May 12, 1850 November 9, 1924) was an American Republican politician, historian, and statesman from Massachusetts. He served in the United States Senate from 1893 to 1924 and is best known for his positions on foreign policy. ...

and Ernest Young. A conservative, he generally subscribed to the economic theories of

John Stuart Mill John Stuart Mill (20 May 1806 – 7 May 1873) was an English philosopher, political economist, Member of Parliament (MP) and civil servant. One of the most influential thinkers in the history of classical liberalism, he contributed widely to ...

and opposed

bimetallism Bimetallism, also known as the bimetallic standard, is a monetary standard in which the value of the monetary unit is defined as equivalent to certain quantities of two metals, typically gold and silver, creating a fixed rate of exchange betwee ...

. Laughlin taught at

Boston Boston (), officially the City of Boston, is the state capital and most populous city of the Commonwealth of Massachusetts, as well as the cultural and financial center of the New England region of the United States. It is the 24th- mo ...

for five years, at

for two years, and then became the department-head of the new economics department at the

from 1892 to 1916. Notably, he appointed many economists with whom he avidly disagreed, such as

Thorstein Veblen Thorstein Bunde Veblen (July 30, 1857 – August 3, 1929) was a Norwegian-American economist and sociologist who, during his lifetime, emerged as a well-known critic of capitalism. In his best-known book, ''The Theory of the Leisure Class'' ...

, to high positions at the university. Laughlin was a member of the Indianapolis Monetary Commission, organized in 1897, and prepared its report, one of the important documents in the history of American banking and monetary reform. The presidential election of 1896 and the economic turmoil surrounding it spurred the writing of the 600-page report. This report advocated for the maintenance of a decentralized approach to the banking system, an approach which proposed that banks issue their own notes backed by loans to factories, merchants and farmers. In this way, the amount of currency in circulation would automatically expand or contract with business, in contrast to the then existing system where notes were issued based on the procurement of government bonds. This real bills theory was in line with the aversion to centralized banking of the era, and is considered to be naive from a modern view. In 1906 Laughlin lectured, by invitation, in

Berlin Berlin ( , ) is the capital and largest city of Germany by both area and population. Its 3.7 million inhabitants make it the European Union's most populous city, according to population within city limits. One of Germany's sixteen constitue ...

, and in 1909 he served as delegate to the Pan-American Scientific Congress at

Santiago, Chile Santiago (, ; ), also known as Santiago de Chile, is the capital (political), capital and largest city of Chile as well as one of the largest cities in the Americas. It is the center of Chile's most densely populated Regions of Chile, region, t ...

. From 1911 to 1913 he was chairman of the Executive Committee of the National Citizens League for the Promotion of a Sound Banking System. Under his leadership the league promoted banking reform in the United States. In addition to teaching, he edited the ''

Journal of Political Economy The ''Journal of Political Economy'' is a monthly peer-reviewed academic journal published by the University of Chicago Press. Established by James Laurence Laughlin in 1892, it covers both theoretical and empirical economics. In the past, the ...

'' from 1892 to 1933, but refused to become a member of the

American Economic Association The American Economic Association (AEA) is a learned society in the field of economics. It publishes several peer-reviewed journals acknowledged in business and academia. There are some 23,000 members. History and Constitution The AEA was esta ...

because of differences in philosophy. He advised various state and national governments on economic matters, including overhauling the monetary system of

Santo Domingo , total_type = Total , population_density_km2 = auto , timezone = AST (UTC −4) , area_code_type = Area codes , area_code = 809, 829, 849 , postal_code_type = Postal codes , postal_code = 10100–10699 (Distrito Nacional) , websi ...

. He prepared an abridgment of

's ''Political Economy'' (1884) and wrote many important books on

macroeconomics Macroeconomics (from the Greek prefix ''makro-'' meaning "large" + ''economics'') is a branch of economics dealing with performance, structure, behavior, and decision-making of an economy as a whole. For example, using interest rates, taxes, and ...

and

monetary policy Monetary policy is the policy adopted by the monetary authority of a nation to control either the interest rate payable for very short-term borrowing (borrowing by banks from each other to meet their short-term needs) or the money supply, often a ...

. He died at his home in

Jaffrey, New Hampshire Jaffrey is a town in Cheshire County, New Hampshire, United States. The population was 5,320 at the 2020 census. The main village in town, where 3,058 people resided at the 2020 census, is defined as the Jaffrey census-designated place (CDP) a ...

on November 28, 1933.

Reception

One of Laughlin's students at the

was the American economist

Wesley Clair Mitchell Wesley Clair Mitchell (August 5, 1874 – October 29, 1948) was an American economist known for his empirical work on business cycles and for guiding the National Bureau of Economic Research in its first decades. Mitchell was referred to as Thor ...

(1874–1948), who recalled:

Professor Laughlin's indubitable success as a teacher puzzled many who did not pass through his classroom. He was not an original thinker of great power. He did not enrich economics. He did not even keep abreast of current developments in
economic theory Economics () is the social science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics analyzes ...
. He had a prim and tidy mind, which he kept in perfect order by admitting nothing that did not harmonize with the furnishings installed in the 1880s. Yet he held that a teacher's aim should be "the acquisition of independent power and methods of work, rather than specific beliefs.As quoted in:
Laughlin, James Laurence
" by
Milton Friedman Milton Friedman (; July 31, 1912 – November 16, 2006) was an American economist and statistician who received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory and the ...
(1987).

According to

Milton Friedman Milton Friedman (; July 31, 1912 – November 16, 2006) was an American economist and statistician who received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory and the ...

(1987) Laughlin's scholarly work "was almost entirely in the field of

money Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular country or socio-economic context. The primary functions which distinguish money are as ...

and

banking A bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital markets. Because ...

(1987). In ''The New Palgrave: A Dictionary of Economics,'' edited by John Eatwell, Murray Milgate, and Peter Newman, vol. 3, pp. 139-140. New York: Stockton. Friedman summarized:

Much of it, notably his ''History of Bimetallism in the United States (1885)'', consisted of a thorough and extremely careful presentation of historical evidence on the development of money and monetary institutions. But Laughlin also wrote extensively on monetary and banking theory, and on proposals for monetary reform. His work on these topics was marred by a dogmatic and rigid opposition to the quantity theory of money, an opposition that developed out of his public activities opposing the free silver movement. The proponents of free silver used a crude form of the quantity theory to support their position, which sufficed to render the theory anathema to Laughlin.

And furthermore:

Laughlin's attack on the
quantity theory In monetary economics, the quantity theory of money (often abbreviated QTM) is one of the directions of Western economic thought that emerged in the 16th-17th centuries. The QTM states that the general price level of goods and services is directly ...
had much in common with recent cost-push or structural or supply-shock theories of
inflation In economics, inflation is an increase in the general price level of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reductio ...
, in emphasizing the role of factors affecting specific goods and services rather than general monetary influences. Then, as now, such theories ran against the major stream of monetary analysis as exemplified in Laughlin's time by the work of
Irving Fisher Irving Fisher (February 27, 1867 – April 29, 1947) was an American economist, statistician, inventor, eugenicist and progressive social campaigner. He was one of the earliest American neoclassical economists, though his later work on debt def ...
. As a result, his writings on theory have had no lasting influence on economic thought.

Selected publication

*
The Study of Political Economy
' (1885) *
History of Bimetallism in the United States
' (1886) *
Elements of Political Economy
' (1887
revised edition, 1902, 1915
* ''Facts about Money'' (1895) *
Credit
' (1902) *
Principles of Money
' (1903) * ''Reciprocity'' (1903), with H. P. Willis * ''Lectures on Commerce'' (1904) * ''Industrial America'' (1906) * ''Latter Day Problems'' (1909) * ''Banking Reform'' (1912) *
Money and Prices
' (1919) *
Banking Progress
' (1920) * ''The Federal Reserve Act: Its Origin and Problems'' (1933)

References

External links

* * *
Answer to "Coin" Harvey, 1895
- the text of a letter Laughlin wrote
Guide to the James Laurence Laughlin Papers 1885-1914
at th
University of Chicago Special Collections Research Center
{{DEFAULTSORT:Laughlin, James Laurence Federal Reserve economists Cornell University faculty People from Warren County, Ohio Harvard University alumni 1850 births 1933 deaths Economists from Ohio Harvard University faculty University of Chicago faculty Journal of Political Economy editors

Early life

Reception

Selected publication

References

Further reading

External links