Introduction

This chapter is a history of the beginnings of Friedman and Schwartz's monetary project. Our purpose in considering this history is to provide another important piece of the background for Friedman's debates with his critics. It gives a picture of the presumptions and expectations Friedman brought to the project. The chapter that follows extends the history through the 1950s into the 1960s to examine issues of causality in Friedman's analysis that arose within the National Bureau.

What began in 1948 as a three-year project eventually stretched over a third of a century and was brought to a close with the long-delayed publication of Monetary Trends in 1982. When he and Schwartz embarked on their investigation of money in business cycles, Friedman was less than two years into his tenure as Professor of Economics at the University of Chicago. By the time Monetary Trends was published, he had retired from the University and moved west to California five years before. The first joint publication by Friedman and Schwartz did not come out until 1963; they worked together intensively for fifteen years before publishing a major product from their efforts.

There were three publications from the project before Friedman and Schwartz's “Money and Business Cycles” in 1963. Two of these were articles written by Friedman, “The Demand for Money: Some Theoretical and Empirical Results” (1959b) and “The Interpolation of Time Series by Related Series” (1962b).