The first book Dr. Schwartz wrote with Friedman, “A Monetary History of the United States, 1867-1960,” had “critical influence” on the outlook “of a generation of policymakers,” Bernanke said in 2003, when he was a Fed governor.
Published in 1963, the book advanced the idea that the Great Depression had been triggered by the central bank’s reduction in the U.S. money supply from 1928 until the early 1930s. That contradicted the prevailing view that it resulted from the 1929 crash of the stock market.
“Nobody knew as much about the history of monetary theory and the history of monetary policy in the United States as she did,” Philadelphia Fed President Charles Plosser said.
Dr. Schwartz wrote or edited nine books on monetary policy, including three with Friedman. Friedman won the Nobel Prize in 1976 for work that included his projects with Dr. Schwartz, but her name was not included in Friedman’s Nobel commendation.
“Anna did all of the work, and I got most of the recognition,” Friedman once said, according to the New York Times.
“Anna was neglected in the citation,” said Edward Nelson, chief of the monetary studies section at the Fed in Washington, who interviewed Dr. Schwartz in 2003 for Macroeconomics Dynamics, an academic journal. Still, “the phrase ‘Friedman and Schwartz’ has become second nature in economics when discussing the importance of monetary policy.”
At a Cato Institute conference in November 2006 after Friedman’s death, Dr. Schwartz said that Friedman was “a great person to work with.”
“He could tell me I was wrong — ‘You have to rewrite,’ ” she recalled. “And I could tell him, ‘No, what you’ve written isn’t clear. You’ve got to go over it.’ It was that kind of exchange that made it possible for the ‘Monetary History’ to have such an extended life.”
Dr. Schwartz worked at the National Bureau of Economic Research into her 90s. The Cambridge, Mass.-based organization is the arbiter of U.S. recessions.
In recent years, she emerged as an outspoken critic of efforts by the Fed and Treasury to revive credit and bail out companies during the financial crisis of 2008 and to combat the recession that lasted from December 2007 until June 2009. She called the 2008 rescue of Bear Stearns a “rogue operation” and an unwise widening of the government’s safety net.
“To me, it is an open-and-shut case,” she said in a 2008 interview. “The Fed had no business intervening there.”
In an interview that same year with Barron’s, Dr. Schwartz said that the government needed to stop injecting liquidity into markets and reacting to the credit crisis with ad hoc programs.
“If I regret one thing, it’s that Milton Friedman isn’t alive to see what’s happening today,” she told the financial publication. Referring to Bernanke, she said, “It’s like the only lesson the Federal Reserve took from the Great Depression was to flood the market with liquidity. Well, it isn’t working.”