Federal Reserve Independence and Congressional Intent: A Reappraisal of Marriner Eccles’ Role in the Reformulation of the Fed in 1935

Gary Richardson and David Wilcox

No 33174, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Congressional intent concerning the independence of the Federal Reserve matters because it protects the public from the politicization of monetary policy. Attempts to subordinate monetary policy to the President could easily end up in front of the Supreme Court. The outcome of such a case would depend importantly on the historical record. Understanding what Congress intended when it designed the decision-making structure of the Fed requires a clear understanding Marriner Eccles’ proposal for the structure of monetary policymaking in Title II of the Banking Act of 1935 and the Congressional response. Eccles' proposal vested monetary policymaking in a body beholden to the President. Eccles argued that leaders of the Fed should serve at the discretion of the President and implement the President's monetary program. The Senate and House rejected Eccles' proposal and explicitly designed the Fed's leadership structure to limit politicians'—particularly the President's—influence on monetary policymaking.

JEL-codes: B22 B26 E5 G2 N12 N22 N42 (search for similar items in EconPapers)
Date: 2024-11
New Economics Papers: this item is included in nep-cba, nep-his, nep-hpe and nep-mon
Note: DAE ME POL
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