occasions where the Federal Reserve acted strongly during relatively calm times and present these as an experiment for the reader to judge their thesis. The three actions by the Fed were the raising the discount rate in 1920, the raise of it in 1931, and the raise of the reserve requirement in 1937. Each of these actions caused a large contraction of the money supply over the next 12 months (9%, 14%, 3%). In fact, these were the three sharpest declines they saw in their data. In those 12 months, industrial production fell dramatically (30%, 24%, 34%). Other metrics fell at similar rates. These were 3 of the 6 worst 12-month periods for industrial production. The others were 1929-1931 (the Great Depression) and 1945, when the economy switched from wartime to peacetime production. Having demonstrated their thesis, they can now use it. They claim that the Great Depression was due to the Fed letting the money supply shrink from 1929 to 1933. Great Depression Friedman and Schwartz identified four main policy mistakes made by the Federal Reserve that led to a sharp and undesirable decline in the money supply: In the spring of 1928, the Federal Reserve began to tighten its monetary policy (resulting in rising interest rates) and continued that same policy until the stock market crash of October 1929. This tight monetary policy caused the economy to enter a recession in mid-1929 and triggered the stock market crash a few months later. In the fall of 1931, it raised interest rates to defend the dollar in response to speculative attacks, ignoring the difficulties this caused to domestic commercial banks. After lowering interest rates early in 1932 with positive results, it raised interest rates again in late 1932, causing a further collapse in the U.S. economy. The Federal Reserve was also to be blamed for a pattern of ongoing neglect of problems in the U.S. banking sector throughout the early 1930s. It failed to create a stable domestic banking environment by supporting the domestic banks and acting as lender of last resort to domestic banks during banking panics. Influence The book was the first to present the then novel argument that excessively tight monetary policy by the Federal Reserve following the boom of the 1920s turned an otherwise normal recession into the Great Depression of the 1930s. Previously, the consensus of economists was that loss of investor and consumer