The Essential Rothbard - Ludwig von Mises Institute

52 The Essential Rothbard
In the agitation to establish a central bank, the House of Morgan
was in the ascendant; and Rothbard stresses the importance of
the conference held at Jekyll Island, Georgia, under Morgan control,
in planning for the Federal Reserve System.
Throughout his narrative, Rothbard stresses a point vital to the
understanding of monetary history. A popular belief holds that
poor people, likely to be in debt, favor easy money, while their rich
creditors oppose it.
Often, this turns out to be the reverse of the truth.
Debtors benefit from inflation and creditors lose; realizing
this fact, older historians assumed that debtors were largely
poor agrarians and creditors were wealthy merchants and
that therefore the former were the main sponsors of inflationary
nostrums. But, of course, there are no rigid “classes”
of creditors and debtors; indeed, wealthy merchants and land
speculators are often the heaviest debtors. 127
Here Rothbard continued the work of his mentor Joseph Dorfman.
Dorfman, in the mid-1940s, arrived at the conclusion that the
Beardian class-struggle thesis—the old debtor vs. creditor,
East-West, farmer-merchant, interpretation of all the struggles
of American economic policy (e.g., over cheap money)
was complete nonsense. . . . Dorfman’s thesis was that on each
side of every economic dispute were merchants, respectable
men, farmers, etc. 128
Investment bankers profit by encouraging debt. Rothbard
maintains that investment bankers are especially likely to form
alliances with the government; hence their activities must be
viewed with the greatest suspicion.
127 A History of Money and Banking in the United States, p. 58.
128 Letter to Ivan Bierly, November 14, 1959; Rothbard Papers.