ABSTRACT
This chapter examines what the situation was at the end of the war. The post-war period has seen a dramatic change in the views of academic students of economics about monetary theory and of governmental officials about monetary policy. Economic thought at the end of the war was greatly affected by the Keynesian revolution which occurred in the 1930's. Keynes himself was much less extreme in rejecting the importance of money than were some of his later disciples. A more fundamental and more basic development in monetary theory has been the reformulation of the quantity theory of money in a way much influenced by the Keynesian liquidity analysis. The developments in post-war monetary policy have not been the same throughout the world. The US in that earlier period developed a monetary system which turned out to be an effective device for smoothing minor difficulties.
