80:. Its main provision was to require 100% reserves on deposits subject to check, so that "the creation and destruction of effective money through private lending operations would be impossible". The plan, in other words, envisaged to separate the issuing from the lending of money. This, according to its authors, would prevent the money supply from cyclically varying as bank loans were expanded or contracted. In addition, the payment system would become perfectly safe. No
625:"I am not convinced that eliminating the role of private banks in the supply of âbroadâ money is a good idea, as there is no guarantee that governments would, on the whole, do a better job at providing financing for the real economy. Furthermore, if banks face such severe restrictions on their ability to lend, one can expect that private credit would quickly migrate to unregulated parts of the financial system, with unknown consequences."
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123:. Other proponents of 100% reserves, however, such as Currie and Fisher, would still have allowed commercial banks to make loans out of savings deposits, as long as these could not be made transferable by check. As Fisher put it in 1936, the banks would be free to lend money âprovided we now no longer allow them to manufacture the money that they lendâ.
249:. In the paper, the authors have updated the original Chicago plan proposal to fit into today's economy. They conclude that the advantages of such a system, according to the authors, are a more balanced economy without the booms and busts of the current system, the elimination of bank runs, and a drastic reduction of both public and
171:
Between March and
November 1933, 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
221:
The proposal was never published. A copy of the paper was apparently preserved in a college library. Copies of the paper, stamped on the bottom of the first and last pages, âLIBRARY â COLORADO STATE COLLEGE OF A. & M. A. â FORT COLLINS COLORADOâ were circulated at the 5th Annual
218:, Wilford I. King, and Charles R. Whittlesey. It claimed that 235 economists from 157 universities and colleges had expressed approval of the draft with 40 more had "approved it with reservations" and "43 have expressed disapproval."
106:
Although the
Chicago Plan is often likened to other 100% reserve plans (such as Fisher's), there were some important differences between them, for example regarding bank intermediation. The Chicago Plan would not only have subjected
130:
of the banking sector, which, in the context of the Great
Depression, was considered by some as a real possibility. This concern was shared by Fisher: "In short: nationalize money, but do not nationalize bankingâ.
183:
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.
144:
A six-page memorandum on banking reform was given limited and confidential distribution to about forty individuals on 16 March 1933. The plan was supported by such notable economists as
642:
531:
514:
383:
310:
268:
when the paper was published), said she was not convinced "that eliminating the role of private banks in the supply of âbroadâ money is a good idea".
646:
535:
518:
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175:
These memoranda generated much interest and discussion among lawmakers. However, the suggested reforms, such as the imposition of 100% reserves on
395:
Demeulemeester, S. (2018). The 100% Money
Proposal and its Implications for Banking: The CurrieâFisher approach versus the Chicago Plan Approach,
203:
149:
61:
641:
Douglas, Paul H.; Hamilton, Earl J.; Fisher, Irving; King, Willford I.; Graham, Frank D.; Whittlesey, Charles R. (July 1939),
530:
Douglas, Paul H.; Hamilton, Earl J.; Fisher, Irving; King, Willford I.; Graham, Frank D.; Whittlesey, Charles R. (July 1939),
513:
Douglas, Paul H.; Hamilton, Earl J.; Fisher, Irving; King, Willford I.; Graham, Frank D.; Whittlesey, Charles R. (July 1939),
198:, this caused renewed discussion of the key elements of the Chicago plan, and in July 1939 a new proposal was drafted, titled
495:
680:
369:
Simons, H.C. et al. Banking and
Currency Reform, Memorandum dated November 1933, reprinted in Samuels, W. (ed.), 1994,
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238:
223:
654:
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713:
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Phillips, R.J. (1995), The
Chicago Plan and New Deal Banking Reform, Armonk, NY, M.E. Sharpe, pp. 45, 63, 191
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45:
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328:. Banking and Currency Reform, Memorandum dated November 1933, reprinted in Samuels, W. (ed.), 1994,
296:. Banking and Currency Reform, Memorandum dated November 1933, reprinted in Samuels, W. (ed.), 1994,
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The
Chicago plan, and was submitted to the Government, but did not result in any new legislation.
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Management" (seven pages) and an appendix titled "Banking and
Business Cycles" (six pages).
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41:
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Monetary Reform
Conference (2009) and the images were scanned for display on the internet.
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on checking deposits would be advocated by other economists in the 1930s, including
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202:. The draft paper was attributed on its cover page to six American economists:
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253:. The authors rely on economic theory and historical examples, and state that
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Answers by
Christine Lagarde to the questionnaire by the European Parliament
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675:
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of Yale. A more recent variant of this reform idea is to be found in the "
119:, and would be replaced in their lending function by equity-financed
111:
to 100% reserves, but further eliminated fractional-reserve banking
477:
The 'Chicago Plan' and New Deal Banking Reform,Working Paper No. 76
237:
In August 2012, the proposal was given renewed attention after the
27:
Collection of narrow banking reforms proposed for the US in 1935
126:
An important motivation of the Chicago Plan was to prevent the
564:"IMF's epic plan to conjure away debt and dethrone bankers"
371:
Research in the History of Economic Thought and Methodology
330:
Research in the History of Economic Thought and Methodology
298:
Research in the History of Economic Thought and Methodology
373:, Archival Supplement 4, JAI Press Inc., 31â40 (pp. 34-35)
179:, were shelved and replaced by less drastic measures. The
397:
The European Journal of the History of Economic Thought
332:, Archival Supplement 4, JAI Press Inc., 31â40 (p. 35)
257:, according to their calculations, would be very low.
652:
343:
The Supply and Control of Money in the United States
649:), archived from the original (PDF) on 26 July 2011
538:), archived from the original (PDF) on 26 July 2011
521:), archived from the original (PDF) on 26 July 2011
345:, New York, NY, Russell & Russell, pp. 151-156
503:, Ludwig von Mises Institute, pp. 731â735
300:, Archival Supplement 4, JAI Press Inc., 31â40
232:
84:as that of 1929-1933 could ever occur again.
8:
550:The Chicago Plan and New Deal Banking Reform
423:The Chicago Plan and New Deal Banking Reform
115:: banks could no longer make loans out of
386:. The University of Chicago Press, p. 25
659:
497:Money, Bank Credit, and Economic Cycles
276:
602:"On Kumhof The Chicago Plan Revisited"
360:, 2nd ed., 1936, New York, NY: Adelphi
40:program suggested in the wake of the
7:
384:A Positive Program for Laissez Faire
312:A Positive Program for Laissez Faire
189:A Program for Monetary Reform (1939)
241:(IMF) published a working paper by
233:IMF's Chicago plan revisited (2012)
25:
474:Phillips, Ronnie J. (June 1992),
315:. The University of Chicago Press
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674:
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425:, Armonk, NY, M.E. Sharpe, p. 53
156:, as well as by Lloyd W. Mints,
483:, The Levy Economics Institute.
260:Asked about the paper in 2019,
589:Presentation by Michael Kumhof
494:Huerta de Soto, JesĂșs (2006),
436:100% Money and the Public Debt
1:
643:A Program for Monetary Reform
532:A Program for Monetary Reform
515:A Program for Monetary Reform
200:A Program for Monetary Reform
18:A Program for Monetary Reform
264:, (managing director of the
239:International Monetary Fund
224:American Monetary Institute
38:monetary and banking reform
735:
82:great monetary contraction
645:(original scanned PDF), (
534:(original scanned PDF), (
517:(original scanned PDF), (
399:, vol. 25, no. 2, 357â87
421:Phillips, R.J. (1995),
382:Simons, Henry C. 1934.
309:Simons, Henry C. 1934.
194:As America entered the
168:, and Albert G. Hart.
681:Business and economics
196:Recession of 1937-1938
341:Currie, L.B. (1934),
48:economists including
46:University of Chicago
647:transcript text here
591:, 12. September 2012
536:transcript text here
519:transcript text here
464:(London 2017) p. 262
451:(London 2017) p. 388
434:Fisher, I., 2009, â
412:(London 2017) p. 263
354:Fisher, I. (1935),
181:Banking Act of 1935
462:The End of Alchemy
449:The End of Alchemy
410:The End of Alchemy
408:Quoted in M King,
570:. 21 October 2012
262:Christine Lagarde
121:investment trusts
109:checking deposits
16:(Redirected from
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609:. Retrieved
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572:. Retrieved
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103:" proposal.
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70:Frank Knight
62:Paul Douglas
54:Garfield Cox
50:Henry Simons
34:Chicago plan
33:
31:
29:
611:30 November
574:30 November
74:Lloyd Mints
703:Categories
357:100% Money
272:References
255:inflation
460:M King,
447:M King,
438:â, p. 15
655:Portals
135:History
152:, and
113:per se
36:was a
693:Money
669:Banks
501:(PDF)
481:(PDF)
326:et al
294:et al
613:2020
576:2020
245:and
76:and
32:The
266:IMF
705::
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578:.
20:)
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