In today's America the delegation of monetary policy making to the peculiar complex of governmental and private institutions known as the Federal Reserve System appears at long last to be paying substantial dividends. Under the unifying leadership of Alan Greenspan, the "Fed" has largely displaced the Office of Management and Budget and the Council of Economic Advisers as the nation's major instrument of economic fine tuning, has received credit for the "soft landings," sustained economic growth, and remarkable price stability of recent years, and seems to have all but silenced calls for equipping the country with new economic planning and monetary management institutions. At last, it seems, a combination of piecemeal reform, economic learning, and institutional evolution has produced something approaching what the system's champions have long envisioned for it. At least it was winning the kind of accolades that had been notably absent during much of its history.
That history, however, deserves fuller and more detailed study, both to help us explain why such success was so long deferred and as an aid to understanding the tensions within and pressures upon the system that may eventually reemerge and prevent it from taking the actions required for continuing economic stability. It is only in recent years that historians of the system have begun viewing its policy output as a product of interest group and bureaucratic interaction rather than decisions generated by the search of disinterested and independent experts for a socio-economic optimum. And while it has become clear that its history has been a troubled one, involving periods of marginalization and domination by outside agencies as well as factional strife and protracted struggles for liberation from its would-be masters, we still know relatively little about these periods and struggles or about the external pressures, internal dynamics, and individual policy makers that have shaped the course of events. A new history of the system,