Expectations and Planning at the FED: 1939–1941

This paper examines a previously overlooked episode in the history of the Federal Reserve involving the relationship between expectations at the outset of WWII regarding the possibility of German victory in Europe and its economic implications for the USA and Western Hemisphere. And this, as seen in the economic studies conducted by economists such as Hansen at the Board of Governors in the context of the Fed’s own effort at assessment, and within the framework of that undertaken under the aegis of the interagency “National Defense Program.” In the paper, the changing nature of expectations regarding the war in Europe over the period 1939–41, that is to say, before US entry, and its impact on the assessments and economic directions as pointed out by economists at the Fed shows how expectations of politico-economic events and their outcomes, and economic policy assessments are interconnected.