Marriner S. Eccles and the Federal Reserve Policy, 1934-1951
Eccles believed that the only institution that would be capable of turning the [economic] cycle around was the government. In particular, he argued that only the federal government had the capacity to increase debt without going bankrupt. In his own words:
“If a man owed to himself he could not be bankrupt, and neither can a nation. We have got all the wealth and resources we ever had, and we do not have the sense, the financial and political leadership to know how to use them.
We are trying to apply a theory of economy as obsolete as the Ark. (…) If the Government in order to finance the War [World War I] could spend billions of dollars in order to give protection to life and property, and not have a single thing to show for it when it is over but the destruction of the flower of the youth of the nation, then certainly the Government is justified in supplying sufficient credit or money to take care of the unemployed through public works, or an unemployment wage or a combination of both” (Marriner S. Eccles Papers, Box 74, Folder 2).
I first wrote this essay for my Facebook Community page - Pax Village Voice.