100% Money
Irving Fisher
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In order to enact the foregoing plan into law, the main provisions necessary would be as follows:

(1) Establish a Currency Commission1 (or "Monetary Authority"); this Currency Commission to have the following powers:

(a) to issue money2 - "Commission Currency" or "C. C.";

(b) to rediscount3 promissory notes for, and guaranteed by, a Federal Reserve Bank (the granting of any request for such rediscount being mandatory, but the rate charged to be at the discretion of the Currency Commission);

(c) to buy and sell United States bonds and other United States obligations and such other sorts of securities as are "eligible" to be bought and sold by the Federal Reserve Banks;

(d) to buy and sell gold and silver, and to administer all laws regarding the buying and selling of gold and silver by the United States;

(e) to buy and sell foreign exchange;

(2) Require that, in the United States, all loans by the Currency Commission and all purchases by it be made in C. C. (or else in credit on the books of the Commission).

(3) Require the Currency Commission to buy of the 12 Federal Reserve Banks sufficient United States bonds (or other eligible items) to equip each of the said Federal Reserve Banks with a 100% reserve against all its demand liabilities - including not only the deposits of the member banks but also the Federal Reserve notes.4 Require each Federal Reserve Bank thereafter to redeem (with C. C.) any of its notes outstanding and retire them.

(4) Require the Currency Commission to buy further (through the Federal Reserve Banks and with C. C. or credit) from all other existing banks conducting a checking deposit business, sufficient United States bonds (and other assets designated to be eligible) to provide each of said banks with a 100% reserve against its deposits subject to check and (in the case of a national bank) against its national bank notes5; require every bank thereafter to redeem (with C. C.) any of its notes outstanding and retire them.

(5) Require that all checking deposits shall have the legal status of trust funds. Forbid all banks and other organizations or person thereafter to open or maintain checking accounts without providing and maintaining a 100% cash reserve in actual money against such accounts (and obtaining a license from the Currency Commission, through the Federal Reserve Bank, and submitting all books to appropriate examination).

(7) Require that all checking deposit business shall henceforth be conducted by special "Check Banks." (Any existing bank may set up a check bank very simply, by creating a separate department for the purpose, said department to be given a separate corporate existence to avoid confusion in the mind of the public.)

(8) Under suitable rules and regulations of the Currency Commission, prohibit all substitutes for checks on the authorized check banks, as well as any other evasions of the 100% principle. For instance, forbid the use of checks against savings deposits and the use of any other evidence of ownership designed to circulate in the place of money.

(9) Under suitable rules and regulations of the Currency Commission, permit banks offering checking accounts, to make warehouse and service charges for use of these accounts.6

(10) Require that all monetary operations shall henceforth be conducted either with actual bearer money or against it by check on accredited check banks.

(Sections (11)-(14) are to be included only in case a Stable Money Policy is to be combined with the 100% plan.)

(11) Require the Currency Commission to control the value of the dollar in order to reach and maintain the index as stipulated in "(12)" by increasing or decreasing the quantity of money in circulation through

(a) varying the Commission's re-discount rate,

(b) "open-market" operations of the Commission, i.e., buying or selling Government bonds, or any other eligible items, from, or through, the Federal Reserve Banks,

(c) changing the price of gold, when necessary.

(12) Let the criterion7 for said control of the value of the dollar be a retail index number of the cost of living at a legally designated normal, and require the Currency Commission to use its best endeavors: first to restore the retail price level to this normal, and then to keep it constant thereafter.

(13) Require that the Currency Commission conduct a thorough investigation of index numbers and, from time to time, report to Congress its recommendations for improving said index by suitable modifications, or for replacing it entirely by some more suitable criterion; also that it investigate all the important proposals for effecting stabilization and monetary control (including the proposal to tax currency according to the "stamp scrip" plan as a means of controlling velocity) and, from time to time, report on its investigations and make recommendations.

(14) Authorize the Currency Commission to advise the United States Treasury, the Reconstruction Finance Corporation, the Federal Reserve Banks, and other banks and persons, about such policies as may help toward the full and efficient cooperation of all concerned in establishing a stable dollar.

(15) Restore the limit of 6% on the profits of Federal Reserve Banks as originally provided.

(16) Make appropriations for the necessary expenses of the Currency Commission, and require that all its revenues be turned into the United States Treasury.

(17) A few possible further details are mentioned in later chapters, especially Chapter IX.

    1. As an alternative it has been proposed that the Government take over the Federal Reserve System buy buying stock. (see Chapters IX and XI.) A compromise plan would be to place the Currency Commission in the Federal Reserve System, as party of the Federal Reserve Board.

    2. Or credit, if preferred, to avoid carrying unnecessary stocks of money in bank vaults. Such bank credit carried on the books of the Commission would be transferable by check and would be redeemable in money if, as, and when desired. This credit would be exactly analogous to bank credit - in fact would be bank credit if the Currency Commission were called a bank.

    3. This function could be dispensed with, though it might be convenient in the first months after the inauguration of the system, especially if, as supposed in the present book, it were inaugurated over night. But, in practice, a year might well be allowed for accomplishing the full inauguration of the system.

    4. But see Chapter IX for an alternative as to notes; also as to lending on the security of the assets instead of buying them outright.

    5. But see Chapter IX for alternatives as to notes; also as to lending on the security of the assets instead of buying them outright.

    6. But see Chapter IX for alternatives.

    7. But see Chapter VI for alternatives.