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July 9, 1936. dear ir« Presidents I have read the enclosed cojaauaic&tion f roa Senator Thoaas and find nothing new in it* He wants to issue sore currency and to set up a aonetary authority. It is a pity that Senator Thoaas cannot understand that we are in effect doing the things he advocates* Since 1953 we hare expanded the supply of aoney in the fora of deposit currency by over $7,000,000,000, and the supply is now in excess of 1929* it one place in his enclosed speech he speaks of ^deposit money,* which indicates that at times at least he recognises the essential similarity of checking accounts to currency* In fact, his proposed issue of currency could only hare the effect of increasing deposits, since the currency would be iaoediately deposited in the banks* Moreover, a recognition of this essential similarity should likewise lead in turn to a recognition that the Board of Governors is in effect a monetary authority already* As for the sore specific objective of policy Senator Thomas proposes, we ourselves had proposed & more specific objective in the Banking Bill of 1955, but it was rejected by the Senate* Respectfully, X* S* Secies, Chalraan* The Honorable, The President of the United States, The White House* LC:em
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