Recessions Under the Gold Standard? How about GDP Growth Under a Gold Standard?

There’s another fact-defying entry from Paul Krugman. His blog post from January 30 is titled, “Recessions Under the Gold Standard,” and the text manages to undermine both terms in that title. A total of one recession is adduced, that surrounding the panic of 1893, which as they used to teach in school, came about specifically because the US had recently balked at the gold standard and permitted the mass monetization of silver. No “recessions” plural and no gold standard.

You’ve got to look under a lot of rocks to find recessions in the era before the silver purchase act of 1890. For the 1880s, when the US was closest to being on a full gold standard, were the greatest decade of real economic growth in the nation’s history, and the only competition is the 1870s, when the US made the decision to commit to gold. We’re talking 5-6% growth per annum for the long haul.

As for the Historical Statistics Millennial Edition graph of chronic high unemployment in the 1890s adduced in the post, here is what I wrote about precisely this source in my book Econoclasts: “Some research has found acute unemployment in the 1890s [Historical Statistics of the United States Millennial Edition, pp. 2-82]. This represents an odd combination of both growth and unemployment at exceptionally high levels – a productivity feat unique in history….peak-to-peak, 1892-1913, the yearly increase in [industrial production] was 4.0 percent.”