This may be a dumb question, but I was wondering why there were boom and bust cycles before the creation of the Fed in 1913 (or were there any?). Was the government inflating the currency then, and if so, how is that possible under a gold standard (or was it only the paper standards that were being inflated)?
Short Answer: There weren’t boom & bust cycles like there are now, but recessions did occur as part of a natural process of the buisness cycle.
It is also my understanding that inteventionism via the FED & Government would make recessions worse than they need to be, and that many say there is ample evidence & theory pointing that The Great Depression could’ve simply been the Panic of 1929 - 1930 something.
There are others on the forum that are better equipped to answer your question in detail though ;).
Fractional reserve banking.
The money supply was increased by banks issuing more paper than they have gold to back it. They would also eventually contract the supply or go out of business (bank runs) when their customers called them on it, reducing the overall money supply and causing a bust.
There were booms and busts before 1913 caused by the fraudulent practice of fractional reserver banking. Central banks only made the problem worse. Here’s some more info :
What is banking ? Robert LeFevre http://mises.org/mp3/lefevre/121.mp3
Separation of Bank and State - William Leggett (1826-1839)