O.M.W. Sprague (the man who “wrote the book” on financial crises) and the founding of the Federal Reserve

• O.M.W. Sprague was America's leading expert on financial crises when the Federal Reserve was founded.
• Sprague wrote the History of Crises under the National Banking System.
• Sprague thought that a European style central bank would not work in America.
• Political pressures would force an American central bank to be too inflationary.
• Sprague believed that an institution that could provide emergency currency in a panic would be enough.

O.M.W. Sprague was America's leading expert on financial crises when America was debating establishing the Federal Reserve. His History of Crises under the National Banking System is the most enduring intellectual legacy of the National Monetary Commission; a still frequently cited classic. Since the Commission recommended a central bank, and its recommendation after some modifications became the Federal Reserve System, it might be assumed that Sprague was a strong supporter of establishing a central bank. But he was not. Initially, Sprague favored far more limited reforms, a position that he did not abandon until the Federal Reserve became a fait accompli. Here I discuss the sources of Sprague's opposition to a central bank and the relationship of that opposition to his understanding of the history and structure of the American banking system at the turn of the nineteenth century.