Profile Major Works Resources

Oliver Mitchell Wentworth Sprague, 1873-1953.

Portrait of O.M.W. Sprague

Moneary and business cycle theorist at Harvard

Oliver Mitchell Wentworth Sprague was a Massachusetts native.  Sprague received his Ph.D. from Harvard in 1897, under Charles Dunbar   In 1900, O.M.W. Sprague was appointed to the economics faculty at Harvard, to take up some of the work with the departure of the major figures of the department.  He quickly became T.N. Carver's right-hand man.  Sprague had a stint at the University of Tokyo between 1905 and 1908.  After returning to the United States in 1908, Sprague joined the faculty of the newly-founded Harvard Business School.  Sprague was thus a almost constantly at Harvard, from his beginnings until his retirement in 1941.

O.M.W. Sprague made a name for himself as an expert on money and banking, writing an authoritative and highly influential  1910 book on the financial crises of 1873, 1883, 1893 and 1997, which helped pave the way for the establishment of the Federal Reserve System in 1913..

In the 1930s, Sprague was an frequent economic advisor, both for the US as well as foreign governments.  Sprague was an advisor to the Bank of England from 1930 to 1933 and the US Treasury in 1933.  A strong supporter of the Gold Standard, Sprague split with Frank Delano Roosevelt in 1933 over the departure from gold. 

Among his more interesting contributions, Sprague tried to draw attention to the concept of "financial fragility" that was later taken up by Hyman Minsky.  In effect, Sprague argued that booms encourage the accumulation of debt, thereby making the economy quite vulnerable to small fluctuations in prices and interest rates that it might otherwise be able to absorb.  In his testimonies to Congress in the 1930s, Sprague pointed out that the wave of bank failures that precipitated the Great Depression was largely caused by the devastating impact of the fall in commodity prices on over-accumulated farm debt (taken out on highly-appreciated farm equipment during the boom years).  

Although his earlier works had emphasized the importance of monetary factors in intensifying recessions, he did not regard them as causes by themselves. Sprague did not believe the Great Depression could be recovered by monetary policy alone, that there were more problematic underlying structural problems. Sprague went on to denounce other FDR policies of the New Deal, and argued strenuously that price and wage deflation were key.

 

  

top1.gif (924 bytes)Top

Major Works of O.M.W. Sprague

  • History of Crises under the National Banking System, 1910 [bk, av, mis]
  • A Central Bank of Issue: Roberts versus Sprague. 1910 [bk]
  • Banking Reform in the United States: A series of proposals including a central bank of limited scope, 1911 [bk, av]
  • "Fisher's Purchasing Power of Money", 1911, QJE (Nov), p.140 [js]
  • Loans and Investments, with Kemmerer et al, 1916 [bk, av]
  • "Money and Credit and their Effect on Business" with W. Randolph Burgess, 1929, in Recent Economic Changes in the United States, p.661[nber]
  • Theory and History of Banking, with Charles Dunbar, 1917 [av] (rev ed of Dunbar 1891), [1922 ed, av; 1929 ed]
  • Recovery and Common Sense, 1934
  • "Prerequisites to Monetary Stabilization", 1937, Foreign Affairs.
  • "The Recovery Problem in the United States", 1938, AER

 
HET

 
top1.gif (924 bytes)Top

Resources on  O.M.W. Sprague

  • "Professor Sprague retires" 1941, Harvard Crimson [online]
  • 1954 memo on Sprague papers [pdf] at FRB St. Louis
  • Sprague papers at NBER
  • Sprague profile at Mises institute
  • "O.M.W. Sprague (the Man who "Wrote the Book" on Financial Crises) and the Founding of the Federal Reserve", by Hugh Rockoff, 2013, NBER

 

 
top1.gif (924 bytes)Top
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

All rights reserved, Gonçalo L. Fonseca