A new oil rush is taking place in Iraq. The country is emerging as a new oasis of opportunity, while the rest of the world struggles to emerge from the global financial crisis. And as Al Jazeera's Jane Arraf reports from Baghdad, it is not just oil that is attracting hungry foreign companies.Read More

Robert Mundell has accomplished a great deal, during his long career in the field of economics and international and national policies. He has worked as a consultant and aid to several nations and international organizations. With his extensive knowledge based on research and history, he was able to predict the inflation that occurred in the 1970s.

Working with Marcus Fleming, who was a colleague at the IMF (International Monetary Fund), Mundell and Fleming put forth the Mundell-Fleming model, or the IS-LM-BP model. This economic model was presented as an extension to the IS-LM model. But the key difference is that the IS-LM model was based on a closed economy while the Mundell-Fleming model was based on an open economy.

Mundell also participated in the supply-side economics movement. He did extensive research into the historical gold standard and studied and theorized on optimum currency rates. And he paired up with James Tobin to come up with the Mundel-Tobin effect, describing the theory that people would hold money in other assets, rather than in bank balances, during a time of inflation and that nominal interest rates would thus not follow the rise of inflation because interest rates would be driven down by the lack of holding onto money.

Perhaps most notable was Mundell’s work on developing the euro, which revolutionized the money systems of European countries, a contribution which led to his 1999 Nobel Prize in Economics. But this was not the only honor Mundell received. Some of his awards and honors include an honorary doctorate from the University of Paris and honorary professorships and fellowships from several universities.

In 1971, he was awarded the Guggenheim Fellowship. In 1998, the American Academy of Arts and Sciences made him a fellow. Mundell earned the Global Economics Prize from the World Economics Institute in Germany, in 2005. That same year, he received a special title from Principe Don Carlo Ugo di Borbone Parma. And today he works at the Chinese University of Hong Kong as the Distinguished Professor-at-Large. Mundell’s contributions to the United States, Europe, other countries, and international organizations will stand as a legacy in the books of history for generations to come.Read More

Robert Mundell was born October 24, 1932 in Kingston, Ontario, Canada. He earned his Master’s degree from the University of Washington, in Seattle, Washington, USA. Not wanting to stop there, he also attended the University of British Columbia for continued education and went on to earn additional credits at the London School of Economics in 1956.

In the same year, he went on to the Massachusetts Institute of Technology, earning his PhD in economics. Many years later, he went back to school at the University of Waterloo in Canada to gain his Doctor of Law degree in 2006. In the interim, he accomplished many other worthy goals.

He taught at Stanford University and Johns Hopkins University. In 1961, he worked for the International Monetary Fund. Acting as a professor of economics and the editor of the Journal of Political economy for the University of Chicago, he stayed there from 1965 to 1972. He moved to the University of Waterloo in 1972 to become the Chairman of the Department of Economics. He served in that position for just two years before taking a position as a professor of economics with Columbia University.

In 1989, Mundell became a Repap professor of economics for McGill University. At this time, he began his international work on monetary policies. He helped form the euro, a pioneering development that helped the countries of Europe unite, stabilize, and compete in in the global economy. For this contribution, he earned the 1999 Nobel Memorial Prize in Economics. Mundell’s international work did not end there. He served on the Federal Reserve Board, was a United Nations economic adviser. He worked for the International Monetary Fund. He did some work for the United Sates Department of the Treasury and various national governments including his homeland of Canada.Read More

Milton Friedman was born July 31, 1912 in Brooklyn, New York. His parents were Jewish immigrants Jeno Friedman and Sára Landau from Austria-Hungary. Growing up in New Jersey, he graduated early from high school, at age 16. He went on to gain a mathematics degree from Rutgers University. Two of his professors, Homer Jones and Arthur F. Burns, instilled in Friedman the belief that proper economic management could resolve the Great Depression.

After he graduated, he had a choice to take a graduate-level mathematics scholarship from Brown University or an Economics scholarship from the University of Chicago. With his new passion in economics, he chose to attend the University of Chicago and there graduated with his Masters in 1933.

For the next year, Friedman worked in a fellowship position with Harold Hotelling at Columbia University, studying statistics. The year after that, from 1934 to 1935, he assisted in the research of Henry Schultz, who was writing, “Theory and Measurement of Demand.” It was during this time period, back in Chicago, that Friedman joined forces with W. Allen Wallis and Read More

Louis Renault was born May 21 of 1843 in Autun, France. His father was a Burgundian bookseller and bibliographer, offering his son exposure to and a love for books. Renault graduated high school and went on to the Collège d'Autun. There he took prizes for math, literature, and philosophy. From there he went to the University of Dijon and earned a bachelor’s in literature.

After that, his pursuit of higher education continued for another seven years, culminating in 1868 with three law degrees, including a doctorate, and receiving high honors in all of them. With his final graduation, he took a job as a Roman lecturer and a professor of commercial law. In 1873, he began teaching law at the University of Paris.

In 1874, he made another move when he was asked to fill in, teaching international law. It was the beginning of his true career, as he committed himself to the field of international law wholeheartedly, publishing a book and over 200 notes and articles in political science journals, law reviews and other publications. He received the position of chair of international law, in 1881.

Filling positions at the University of Paris and two military schools, he supervised 252 doctoral theses, inspiring many students who later went on to serve important positions in France and other nations. Becoming ever more involved in political affairs, Renault participated in conferences on everything from obscene literature to military aviation. He helped revise the Red Cross Convention of 1864 and argued for the abolition of white slavery.

He received the title of Minister Plenipotentiary and Envoy Extraordinary in 1903. His involvement only became more intense from that point on as he was placed on the panel of 28 arbitrators for the Hague Tribunal, a tribunal assigned to solving cases of international arbitration. He served in six major cases including the Japanese House Tax case involving Japan, Great Britain, Germany, and France, and the Canevaro case between Peru and Italy.

Renault was the reporter for the Second Commission at the initial Hague Peace Conference in 1899. He helped resolve issues on naval warfare and was the primary writer of the Final Act, the conference summary. For the second Hague Peace Conference, he handled many other important resolutions such as defining rights for neutral nations during naval war. For his services to so many countries, Renault was awarded many honors including being named to the Academy of Moral and Political Sciences in France and to the Legion of Honor. Renault won the nobel peace prize in 1907. He was decorated by 19 nations outside of his native France and became the President of the Academy of International Law in 1914.Read More

The first president of the World Bank, John McCloy, decided to lend first to France, while turning down Poland and Chile. The $250 million loan was only half of what France had asked for, and the loan carried strict requirements. In addition, bank staff was to watch over France’s expenditures with the money and make sure that France would repay the World Bank before its debts to other nations.

Additionally, in order to receive the loan, France had to comply with the United States State Department’s demand that they eliminate the communist activities within their cabinet. As soon as France complied, the loan was approved.

When the Marshall Plan of 1947 brought competition to World Bank loans, the World Bank shifted its focus to countries outside of Europe, especially for projects like power plants, ports, and highway systems. These types of loans would be more easily paid back, and thus received priority.

In 1968, Robert McNamara was appointed by President Lyndon B. Johnson as President of the World Bank. McNamara had been the United States Secretary of Defense and the President of the Ford Motor Company.

He began working in earnest to help developing countries with humanitarian needs. Instead of servicing just infrastructure loans, social services and other interests were earning loans as well. McNamara set his sights on helping to build schools, expand agricultural programs, and improve literacy in developing countries.

With his emphasis on streamlining, he developed a system that sped the loan application process considerably. He also reached beyond just the northern banks for funding sources, to increase the amount of lending the bank could do. This allowed the World Bank to do a lot more good in its humanitarian efforts with developing countries.Read More

The World Bank is an institution established on the international level, in order to help developing countries on their path to self-sufficiency. It was created for humanitarian reasons, in the hopes of helping to reduce international poverty.

The World Bank thus promotes international trade, capital investment, and foreign investment, on behalf of developing countries. The World Bank consists of two entities: the International Development Association (IDA) and the International Bank for Reconstruction and Development (IBRD).

The World Bank is not to be confused with the World Bank Group, which works with the same two entities but also with the Multilateral Investment Guarantee Agency (MIGA), the International Finance Corporation (IFC), and the International Centre for Settlement of Investment Disputes (ICSID).

The founders of the World Bank were Lord Keynes and Harry Dexter White. They were acting under direction of the plans developed by the Bretton Woods Conference of 1944, which brought together many nations. The countries that held the most sway in this meeting were the United Kingdom and the United States.

The World Bank was developed at the same time as the International Monetary Fund (IMF). With the U.S. and U.K in charge of negotiations, both the World Bank and IMF were started up in Washington D.C., but with the IMF always being managed by someone from Europe.

From 1944 to 1965, very little lending was actually done by the World Bank. Loan applications were carefully screened and fiscal conservatism kept the lending to a minimum. It was an uphill battle for the operators of the bank to build the confidence of the international public, in the bank, before it could really take off.Read More

Although the Federal Reserve Act had passed, President Wilson had an uphill battle to rally the nation’s support. He spoke to the people of the west and south, promising them that the New York elites, who held too much power with the currency, would lose control with the help of the bill. He stated that these elites of Wall Street had actually conspired to cause the Panic of 1907.

Large bankers had expressed disapproval of the bill, right before it passed, but many of the Congressman felt that it was feigned disapproval for the purpose of distraction. Congressmen Murdock, Lindbergh, Owen, and LaFollette believed that the bankers actually wanted Congress to pass the bill.

Overall, President Wilson was satisfied with the amount of effort and expense that had gone into getting the bill to pass, feeling that it would be of “lasting benefit to the country.” In his inaugural address of March 4, 1913, only 8 months before the bill passed, he had made promises of improving the situation of the economic system. Once the Federal Reserve Act was instated, he felt he had delivered on that promise.

The Federal Reserve Act established 12 regional banks as part of a greater whole, to prevent any one bank, especially eastern bankers, a concentration of power. However, the Federal Reserve Bank of New York is in charge of conducting open market operations, under the supervision of the Federal Open Market Committee.

To prevent inflation with the bill, especially with the concerns about inflation expressed publically by Elihu Root, the bill ensured that each bank would hold 40% of all outstanding loans in gold. But, years after the bill, Congress changed this requirement to allow more discretion of the banks in lending.

The new banking system established by the Federal Reserve Act began operating in 1915. It had a lot to do with the financing of both Allied and American military needs. Warburg, whom President Wilson had attempted to place over the banking system, initially refused the position. But once World War I broke out, he took the appointment, knowing he would take heat about his connections to some money trusts, but nonetheless hoping to make a difference.Read More

Despite an incredible amount of controversy and outrage, the Federal Reserve Act was passed through Congress in December of 1913. Woodrow Wilson had based the Act largely off of the infamous rejected Aldrich Plan. He, of course, made adjustments to the Aldrich Plan before presenting anything to Congress.

It took months of debating, meetings, and amendments for a majority to agree on the Federal Reserve Act’s passing, but pass it finally did. Primarily, it was the Democrats in favor of the bill involving centralization of the nation’s banking system, as the more conservative Republicans were mainly against it.

Progressive Democrats and Conservative Democrats, however, were divided on the issue. Conservative Democrats wanted a privately owned and controlled system without centralization. Progressives desired a government controlled reserve system and a way to end the power of the majority of credit resources held by Wall Street.

While Republicans favored the Aldrich Plan, it was also the best medium between the two groups of Democrats. Thus it was necessary to develop a similar plan to appease all three groups.

Frank Vanderlip was one of the individuals who had attended the private retreat at Jekyll Island, to develop the Aldrich Plan. He commented that the key points of that plan were contained in the Federal Reserve Act, despite the original rejection of the Aldrich proposal itself.

But even Vanderlip had his doubts, proposing his own alternative plan almost in time to derail the Federal Reserve Act. And Charles Lindbergh Senior stated that Wall Street would hold power just as easily through the Federal Reserve Act as it had before. Even Republican Congressman Victor Murdock, who voted for the bill, felt that the act was far from perfect and would not be able to change the concentrated control of credit.Read More

During the second half of the 19th century, banks still did not have federal backing. So, if there was even so much as a rumor that a bank might have lent out more than it had assets for, account holders would race to the bank to withdraw their funds.

These bank runs caused several financial panics over the ensuing decades. In 1907, a rather serious panic occurred, leading the country to acknowledge the need for banking reform. In 1908, the Aldrich-Vreeland Act allowed for currency in emergency situations and instituted the National Monetary Commission to research the potential for currency and banking reform.

The Chief of this Commission, Nelson Aldrich, was an expert in financial affairs and the Senate Republican leader. He decided to study not only the United States banking system, but also the European banking system.

Originally against central banking, Germany changed Aldrich’s view. When he came back to present his ideas on central banking, he was met with opposition and suspicion. Nonetheless, he saw an opportunity to stabilize the credit problems in the U.S. and ran a secretive 10-day meeting with several executives to discuss what changes might benefit the national banking system.

It was at this retreat to Jekyll Island, Georgia that some ideas formed that would later lead to the development of the Federal Reserve System. Goals such as stabilizing and standardizing interest rates were discussed. The “Aldrich Plan” was introduced as a bill but was not supported at the time. People feared monopoly and government control.

Aldrich pressed forward despite opposition. But it wasn’t until President Woodrow Wilson and his democratic party were charged with banking reform that the public got behind an idea to stabilize United States currency and banking. In 1913, Wilson put forth the Federal Reserve Act, based largely on the Aldrich Plan, and used his political influence to get it passed.Read More