A Program for Monetary Reform

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A Program for Monetary Reform was a proposal for reforming the banking system in the United States following the Great Depression, to aid the return of the American economy to full employment. It was written in 1939 by a group of prominent economists and circulated within the academic community.


A Program for Monetary Reform (1939) was never published. A copy of the paper was apparently preserved in a college library.[citation needed] Copies of the paper, stamped on the bottom of the first and last pages, “LIBRARY – COLORADO STATE COLLEGE OF A. & M. A. – FORT COLLINS COLORADO” were circulated at the 5th Annual American Monetary Institute Monetary Reform Conference (2009) and the images were scanned for display on the internet.[1]

Ronnie J. Phillips, then a Professor of Economics at Colorado State University, referenced the paper in his book, The Chicago Plan & New Deal Banking Reform (1995). Phillips is currently a Senior Fellow at the NetWorks Financial Institute at Indiana State University.[1]


A Program for Monetary Reform was attributed on its cover page to six American economists: Paul H. Douglas, Irving Fisher, Frank D. Graham, Earl J. Hamilton, Wilford I. King, and Charles R. Whittlesey.

Historical significance[edit]

Many of the efforts made by economists to reform the banking system in the wake of the Great Depression found their way into the history books. Perhaps the most notable proposals were first put forward by economists at the University of Chicago in a six-page memorandum on banking reform which was given limited and confidential distribution to about 40 individuals on March 16, 1933. A copy of the memorandum was sent to Henry A. Wallace, then Secretary of Agriculture, with a cover letter signed by Frank Knight. Paul Douglas was listed among the supporters of the plan.

During the period March to November, the Chicago economists received comments from a number of individuals on their proposal and in November 1933 another memorandum was prepared. The memorandum was expanded to thirteen pages, there was a supplementary memorandum on "Long-time Objectives of Monetary Management" (seven pages) and an appendix titled "Banking and Business Cycles" (six pages). Evidently written by Henry Simons the memorandum was again supported by Paul Douglas.

The collective recommendations of these memorandum have come to be known as the Chicago plan. The memorandum generated much interest and discussion among lawmakers but the suggested reforms, such as the abolition of the fractional reserve system and imposition of 100% reserves on demand deposits, were set aside and replaced by watered down alternative measures. The Banking Act of 1935 institutionalized Federal deposit insurance and the separation of commercial and investment banking; it successfully restored the public's confidence in the banking system and ended discussion of banking reform until the Recession of 1937–1938.[2]

The July 1939 draft proposal, coauthored by Paul Douglas and five others, resurrected proposals for banking and monetary reform from the Chicago plan but did not result in any new legislation.

"A Program for Monetary Reform": full text[edit]

See also[edit]


  1. ^ Ronnie J. Phillips website
  2. ^ Phillips, Ronnie J. (June 1992), The 'Chicago Plan' and New Deal Banking Reform,Working Paper No. 76 (PDF), The Levy Economics Institute. 


  • Douglas, Paul H.; Hamilton, Earl J.; Fisher, Irving; King, Willford I.; Graham, Frank D.; Whittlesey, Charles R. (July 1939), A Program for Monetary Reform (PDF), (draft proposal – scanned image). 
  • Douglas, Paul H.; Fisher, Irving; Graham, Frank D.; Hamilton, Earl J.; King, Willford I.; Whittlesey, Charles R. (July 1939), A Program for Monetary Reform (PDF), (draft proposal – text)., archived from the original (PDF) on 2012-11-03 
  • Phillips, Ronnie J. (January 1995). The Chicago Plan & New Deal Banking Reform. M.E. Sharpe. ISBN 1-56324-469-1. 

External links[edit]