Marriner Eccles
was a banker, and by all accounts a very good one. He was called upon to help draft the Emergency Banking Act of 1933, the Federal Housing Act of 1934, and the 1933 act creating the Federal Deposit Insurance Corporation. In November 1934 FDR appointed him Chairman of the Federal Reserve.
Almost two years earlier, in February 1933, Eccles addressed the Senate Finance Committee. In that prepared testimony, he outlined a program to deal with the major problems of the Great Depression. The conditions he described then are disturbingly familiar to those which we face today, and the solutions he proposes are equally applicable to today's problems
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The original address contained in the Congressional Records has been reduced from over thirty pages (including questions and answers) to only three pages here that contain his essential message. The address has been edited by Thorvald Grung Moe, Visiting Scholar at Levy Economics Institute. Some parts have been slightly modified to fit the current time and crisis. Additions or alteration to the text has been marked by square brackets. All original figures used by Eccles in the address have been inflated by a factor of 16.4 according to the official US CPI index. |
Eccles 'plan' called for the Federal Government to take aggressive action to straighten out the economy. He first described the problem.
In the mad confusion and fear brought about by our present disordered economies, we need bold and courageous leadership more than at any other time in our history. The orthodox capitalistic system of uncontrolled individualism, with its free competition, will no longer serve our purpose. We can only survive and function under a modified capitalistic system controlled and regulated from the top by government.
Unless we adopt the necessary corrective measures, we can only expect to sink deeper in distress, with possible revolution, with social disintegration, with the world in ruins, the network of its financial obligations in shreds, with the very basis of law and order shattered. Under such a condition nothing but a primitive society is possible. Why risk such a catastrophe when it can be averted by aggressive measures in the right direction on the part of the Government?
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Eccles outlined four measures that the Federal Government should take.
First, make available to all states [eight billion dollars] on a per capita basis to be used for the destitute and unemployed, pending a revival in the economy which should result from this program.
Second, increase the amount of Government funds to [forty billion] dollars, and more if necessary, for self-liquidating projects and loans to cities, counties, and States for public works on a liberal basis at a low rate of interest.
Third, refinancing of [mortgages] on an immense scale and on a long term basis at a low rate of interest.
Fourth, a permanent settlement of [sovereign] debts on a sound economic basis, cancellation being preferable.
New Economic Perspectives
The original testimony was 33 pages long. I've been so far unable to locate the full text, but a longer version can be found here at London Banker