The Chicago Plan is a plan for the United States to emerge from the economic crisis of the 20s and 30s . Developed by staff at the University of Chicago in 1933. The document was signed by: Frank Knight , Lloyd Mints, Henry Schultz , Henry Simons , Garfield Cox, Aaron Director , Paul Douglas and Albert Hart. A week after the release, the plan was handed over to President Franklin Roosevelt . It envisaged a number of specific measures aimed at ensuring strict control over financial structures by the Federal Reserve , turning the central bank into the only source of money emission (thus excluding commercial banks from these sources). [one]
The following measures were proposed:
1. The transition of the Federal reserve banks in full state ownership (instead of joint-stock).
2. Deposit insurance of member banks and at the same time tight control over the management of these banks by the Federal Reserve.
3. Issuance of the Fed's banknotes in any amount to pay depositors' claims.
4. The liquidation of the assets of all member banks and their payment obligations, as well as the dissolution of all banks with the formation of new institutions that will only accept demand deposits with 100% redundancy.
5. Term deposits must be handled by investment trust companies.
6. The government should cause prices to rise by 15% through fiscal and monetary measures, while inflation above 15% is not allowed.
7. Suspend the minting of gold coins; impose an embargo on gold imports; prohibit the export of gold by individuals; remove from circulation all gold coins with their replacement by banknotes; suspend items relating to gold in all debt contracts, as well as suspend state gold exports.
Sometimes this plan is mistakenly interpreted as the transfer of control over the monetary system from the hands of banks to the hands of the state. [2] In fact, control at the same time remains entirely in the hands of the Fed, although the role of commercial banks is weakening.
The full plan was never accepted. Deposit insurance was introduced, a separation of commercial and investment banks was carried out, however, a 100% reservation was not introduced.
Notes
- ↑ Phillips, Ronnie J. (June 1992), The 'Chicago Plan' and New Deal Banking Reform, Working Paper No. 76 , The Levy Economics Institute. , < http://www.levyinstitute.org/pubs/wp/76.pdf > (eng.)
- ↑ World finance and economics. Fighting the global crisis. Chicago plan