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CARTER GLASS, VA., CHAIRMAN
FREDERICK HALE, MAINE
KENNETH MCKELLAR, TE"NN.
HENRY W. KEYES, N. H.
ROYAL S. COIfttLAND, N. Y.
GERALD P. NYE, N. DAK.
CARL HAYDE*1, ARIZ.
FREDERICK STEIWER, OREO.
ELMER THOMAS, OKLA.
PETER NORBECK, S. DAK.
JAMES F. BYRNES, S. C.
U J. DICKINSON, IOWA
MILLARD E. TYOINGS, MD.
RICHARD B. RUSSELL, JR., GA. JOHN G. TOWNSEND, JR., DEL.
ROBERT D. CAREY, WYO.
MARCUS A. COOLIDGE, MASS.
F
\ V A B. ADAMS, COLO.
ATRICK MCCARRAN, NEV.
JOHN H. OVERTON, LA.
JOHN H. BANKHEAD, ALA.
JOSEPH C. 0*MAH0N£Y, WYO.
WILLIAM GIBBS MCADOO, CAUF.
HARRY S. TRUMAN, MO.

^tniUb £>iaie* £>en*ie
C O M M I T T E E ON APPROPRIATIONS

February 15-1937

KENNEDY F. REA, CLERK
JOHN W. R. SMITH, ASST. CLERK

Honorable Marriner S. Eccles
Chairman, Board of Governors of the
Federal Reserve System
Washington, D. C.
!l dear Mr. Eccles:
/y
The Constitution provides that the Congress shall have power to regulate the value of money. This power has never been exercised in
any formal or Constitutional manner. It is the opinion of many that
the regulation and stabilization of the value of the dollar vd.ll
serve to stabilise not only our currency but the currencies of many
if not all of the major governments of the world.
I have prepared a draft of a bill having for its purpose the regulation, adjustment and stabilization of the value of our dollar and am
enclosing copy of such draft herewith. You will note that the suggested bill, for the purposes mentioned in the Act, converts the Board
of Governors of the Federal Reserve System into a governmental agency
designated as a Monetary Authority. Also, you will note that the suggested bill gives your Board, as such Monetary Authority, a number of
additional and increased powers. For example, Section 7 enlarges the
powers of your Board.
I might suggest that this draft is an attempt to provide a system for
the regulation of the value of the dollar similar to that provided and
followed by Governor Strong. I might further suggest that the bill
seeks to provide a plan for bringing about the kind of a dollar referred
to by the President in several of his radio addresses.
If you vd.ll write me frankly just what you think of the several suggestions, the favor will be sincerely appreciated. The bill will be
referred to the Committee on Banking and Currency and when a hearing
is ordered, no doubt you will be asked to testify. I shall be glad to
accept your suggestions in the strictest confidence and will not permit any suggestions you make to become public without your expressed
permission.




Respectfully submitted

For Release when introduced in the Senate by
ELMER THCMAS
United States Senator, Oklahoma
0 - -

A BILL

To regulate and stabilize the value of the dollar pursuant
to the power conferred on the Congress by Paragraph 5 of
Section 8 of Article 1 of the Constitution, and for other
purposes.

Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
Sec. 1. MONETARY POLICY - Pursuant to the authority conferred
in Paragraph 5 of Section 8 of Article 1 of the Constitution -wherein
the Congress is authorized to coin money and to regulate the value
thereof, the Congress does hereby declare that the monetary policy
of the United States shall embrace, among others, the following principles:




a. To coin and keep constantly available an
adequate supply of sound money;
b. To regulate the value of the dollar so as to
best serve the domestic economy of the people; and
o»

To place and keep in circulation a sufficient amount
of properly valued currency to adequately supply
the demands and needs of the people of the United
States; Provided, that the regulation and stabilization
of the value of the dollar shall be a fixed policy of
the government of the United States, and, in order to
give stability to industry, commerce, manufacturing,
agriculture, mining, forestry, fisheries and other
human activities, the regional Federal Reserve Banks
and the member banks of the Federal Reserve System,

-2-

under the supervision and direction of the Monetary
Authority, shall cooperate in carrying out the policy
and principles herein set forth and as provided in
this Act.
Sec* 2. CREATION OP MONETARY AUTHORITY - The Congress, in order
to vitalize the provision of the Constitution and to carry into effect
the monetary principles and financial policy set forth in Section 1
hereof deems it necessary to, and does hereby, create the Board of
Governors of the Federal Reserve System into a governmental agency to
be designated as a Monetary Authority (herein referred to as the Monetary
Authority) for the express purpose of regulating the value of money:
Provided, that the Constitutional clause - regulating the value of money
- shall be construed to mean adjusting the value of the dollar to that
point which will serve the best interests and best promote the domestic
economy of the people of the United States; and, Provided further, that
said clause - regulating the value of money - shall be construed to mean
not only the adjustment of the value of money but also the stabilization
of such regulated and adjusted value as hereinafter provided*
Sec# 3. DOLLAR VALUE COHTROL ITEMS - The Monetary Authority, in
regulating, adjusting and stabilizing the value of the dollar as herein
provided, shall take into account and give consideration to, among other
things, the following:




af

The amount of the annual total tax bills necessary
to support the several units of government,

b.

The amount of the annual total public and private
interest items;

c«

The amount of consolidated or massed debts, public
and private, owed by the several units of government, corporations, and the people jointly and
severally;

d# The general price level and the relation of such
price level to the price of basic commodities
produced within the United States; and

The interests of tax payers, mortgagors, debtors,
producers, consumers, wage earners, holders of
fixed investments, and those who live on fixed
incomes*
Sec* 4.

STANDARDS AND LIMITATIONS - Immediately upon the passage

and approval of this Act, the said Monetary Authority shall assume and
exercise the powers herein delegated and conferred according to the
standards and within the limitations herein set forth; Provided, that
the said Monetary Authority is hereby authorized and directed to proceed without delay and as provided herein to so regulate the value of
the dollar as to raise the general price level to a point equal to the
average of the general price level for the year 1926, as shown by the
Bureau of Labor Statistics; and, Provided further, that, pending the
regulation and adjustment of the value of the dollar to the 1926 level
as provided herein, the said Monetary Authority shall proceed to investigate, consider and determine the proper value of the dollar as
provided in Section 3, of this Act; and, Provided further, that the
adjusted, regulated and stabilized value of the dollar, as may be
determined and officially decreed by the said Monetary Authority, as
provided herein, shall not be at a point of value in excess of the
average value of the dollar during the year of 1926, as shown by the
said Bureau of Labor Statistics*
Sec* 5. EQUILIBRIUM PRICE LEVEL - The Monetary Authority, in
carrying into effect the principle of monetary policy stated in (b)
of Section 1 hereof, and after full consideration of said items (a),
0b)* (c), (d), and (e) in Section 3 hereof, shall regulate and adjust
the value of the dollar, as provided herein, so as to effectuate,
produce and bring about an equilibrium price level designed to serve
the best interests of the people of the United States as mentioned in
(e) of Section 3 hereof*
Sec. 6. STABILIZATION - Immediately upon the completion of the
regulation and adjustment of the value of the dollar, as provided




herein, the Monetary Authority shall proceed to stabilize the value
of said dollar at the point of value so determined and officially
decreed as provided in Section 4 hereof; Provided, that in the
regulation, adjustment and stabilization of such value at such
point, the said Monetary Authority shall have all the authority
herein delegated and conferred and, in addition, shall have all the
authority heretofore delegated and conferred upon the members of
the Federal Reserve Board and the Board of Governors of the Federal
Reserve System.
Sec. 7. SPECIFIC POWERS - In order to carry into effect the
principles of the monetary policy set forth in this Act, the Monetary
Authority, acting under the powers conferred herein and acting as the
Board of Governors of the Federal Reserve System, shall have the
following specific powers:
a. Full and complete control over all open market
operations in all regional Federal Reserve Banks,
both in the buying and selling of securities at
home and abroad;
b. Full and complete control over the discount rate
at each of the regional Federal Reserve Banks;
and
c. Full and complete control over the eligibility
of all kinds and classes of collateral to be
accepted by the several regional Federal Reserve
Banks, their branches and other member Banks of
the Federal Reserve System*
Sec. 8. MONETARY AUTHORITY STATISTICS - For the purpose of assisting in the regulation, adjustment and stabilization of the value of the
dollar, the said Monetary Authority is hereby authorized to investigate,
prepare and officially adopt a system of statistics to be known as the
Monetary Authority Statistics; Provided, that in preparing such statistics,
the Monetary Authority shall have authority to call upon other departments




-5~

of the Government for such statistics, data and information as may be
desired and requisitioned; and, Provided further, that, pending the
adoption of such Monetary Authority Statistics,' the said Monetary
Authority shall make use of, and be governed by, the Bureau of Labor
Statistics as provided herein*
Sec* 9. OFFICERS A3© EMPLOYEES - In carrying into effect the
provisions of this Aot, the Monetary Authority shall have power to
appoint officers and employees, to define their duties, fix their
compensation, require bonds of them, and fix the penalty thereof, and
to dismiss at pleasure such officers and employees*

The said Monetary

Authority is hereby empowered to adopt and promulgate such rules and
regulations as it may deem necessary to carry out the provisions of
this act*
Sec* 10*

INTERPRETATION OF DELEGATED POVTCKS - The powers con-

ferred upon and delegated to the Monetary Authority herein created
shall be construed to be a delegation of legislative powers conferred
upon the Congress by Paragraph 5, of Section 8, of Article 1, of the
Constitution, to regulate the value of money; Provided, that such
powers so delegated shall be further interpreted and oonstrued to be
a delegation of such legislative powers to a Governmental agency to
carry out a fixed policy of Congress according to definite and fixed
standards, and within definite and fixed limitations, as set forth
herein and as provided by this Act*
Sec* 11* All provisions of the Federal Reserve Act of 1913,
with amendments, including Title 3 of Public numbered 10, 73d Congress,
and amendments thereof, and other public Acts of the 73d, 74th and 75th
Congress, when not in conflict and not inconsistent with the provisions
of this Act, shall be, and are hereby, continued in full force and effect*
Sec* 12* There is authorized to be appropriated out of any
money in the Treasury not otherwise appropriated annually, such sums




as may be necessary for carrying into effect the purposes of this
Act*
Sec. 13 • If any provision of this Act, or the application
thereof to any person or circumstance, is held invalid, the
remainder of the Act and the application of such provision to other
persons or circumstances shall not be affected thereby.
Sec, 14, The short title of this Act shall be tho
"Monetary Authority Act",




(EKD)

these letters from Senator Thomas — all the
board members received one and they dedided
just to acknowledge receipt of them and then
decide whether they wished to answer any more
fully. Morrill has sent Goldenweiser or someone else over there a copy with the request
that it be returned with comments*
It was upon Morrill! s request that I sent the
formal acknov/ledgment of Its receipt.


http://fraser.stlouisfed.org/CHAIRMAN'S
Federal Reserve Bank of St. Louis

OFFICE

February 13, 1937.

ly dear Senator Thonas:
In Mr. Eceles* absence from the city, I am acknowledging your letter of February 15th with which you enclosed
copy of a draft of a bill which you projjose to introduce
having for its purpose the regulation, adjustment and
stabilization of tho value of our dollar^ Your letter and
the enclosure will be called to Mr* Eccles* attention upon
his return to the office next week*
Very truly yours,

Secretary to Mr. M* S. Eccles*

Honorable Elmer Thomas,
Onited States Senate,
Washington, D* C*

VE:b