IDEAS home Printed from https://ideas.repec.org/a/wly/jmoncb/v56y2024i6p1573-1594.html
   My bibliography  Save this article

On the Controversy over the Origins of the Chicago Plan for 100% Reserves: Sorry, Frederick Soddy, it was Knight and (Most Probably) Simons!

Author

Listed:
  • GEORGE S. TAVLAS

Abstract

The idea of 100% reserve requirements against demand deposits received a renewed impetus in recent years. In 1933, a group of University of Chicago economists, led by Frank Knight and Henry Simons, circulated two memoranda that proposed the scheme in what became known as the Chicago Plan of Banking Reform. That same idea had been proposed in 1926 by Frederick Soddy, a Nobel Laureate in chemistry. Soddy claimed precedence, a claim that caught on. I provide evidence showing that Knight, and probably Simons, conceived the idea of 100% reserves prior to the publication of Soddy's 1926 book.

Suggested Citation

  • George S. Tavlas, 2024. "On the Controversy over the Origins of the Chicago Plan for 100% Reserves: Sorry, Frederick Soddy, it was Knight and (Most Probably) Simons!," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 56(6), pages 1573-1594, September.
    • Handle: RePEc:wly:jmoncb:v:56:y:2024:i:6:p:1573-1594
    DOI: 10.1111/jmcb.13046
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/jmcb.13046
    Download Restriction: no
    File URL: https://libkey.io/10.1111/jmcb.13046?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Henry C. Simons, 1936. "Rules versus Authorities in Monetary Policy," Journal of Political Economy, University of Chicago Press, vol. 44(1), pages 1-1.
    2. Milton Friedman & Anna J. Schwartz, 1963. "A Monetary History of the United States, 1867–1960," NBER Books, National Bureau of Economic Research, Inc, number frie63-1.
    3. Bordo, Michael D. & Rockoff, Hugh, 2013. "The Influence Of Irving Fisher On Milton Friedman’S Monetary Economics," Journal of the History of Economic Thought, Cambridge University Press, vol. 35(2), pages 153-177, June.
    4. Samuel Demeulemeester, 2018. "The 100% money proposal and its implications for banking: the Currie–Fisher approach versus the Chicago Plan approach," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 25(2), pages 357-387, March.
    5. James R. Lothian & George S. Tavlas, 2018. "How Friedman and Schwartz Became Monetarists," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 50(4), pages 757-787, June.
    6. Nelson, Edward, 2020. "Milton Friedman and Economic Debate in the United States, 1932–1972, Volume 1," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226683775, December.
    7. Nelson, Edward, 2013. "Friedman's monetary economics in practice," Journal of International Money and Finance, Elsevier, vol. 38(C), pages 59-83.
    8. Tavlas, George S., 2021. "A Reconsideration Of The Doctrinal Foundations Of Monetary Policy Rules: Fisher Versus Chicago," Journal of the History of Economic Thought, Cambridge University Press, vol. 43(1), pages 55-82, March.
    9. Harris Dellas & George S. Tavlas, 2022. "Retrospectives: On the Evolution of the Rules versus Discretion Debate in Monetary Policy," Journal of Economic Perspectives, American Economic Association, vol. 36(3), pages 245-260, Summer.
    10. Allen, William R, 1993. "Irving Fisher and the 100 Percent Reserve Proposal," Journal of Law and Economics, University of Chicago Press, vol. 36(2), pages 703-717, October.
    11. Thomas M. Humphrey, 1987. "The theory of multiple expansion of deposits: what it is and whence it came," Economic Review, Federal Reserve Bank of Richmond, vol. 73(Mar), pages 3-11.
    12. Herman E. Daly, 1980. "The Economic Thought of Frederick Soddy," History of Political Economy, Duke University Press, vol. 12(4), pages 469-488, Winter.
    13. Nelson, Edward, 2020. "Milton Friedman and Economic Debate in the United States, 1932–1972, Volume 2," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226684895, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. George S. Tavlas, 2020. "On the controversy over the origins of the Chicago Plan for 100 percent reserves," Working Papers 279, Bank of Greece.
    2. Tavlas, George S., 2021. "A Reconsideration Of The Doctrinal Foundations Of Monetary Policy Rules: Fisher Versus Chicago," Journal of the History of Economic Thought, Cambridge University Press, vol. 43(1), pages 55-82, March.
    3. Rockoff, Hugh, 2022. "Milton Friedman on bailouts," Journal of Financial Stability, Elsevier, vol. 63(C).
    4. Sylvie Rivot, 2020. "Information and Expectations in Policy-Making: Friedman's Changing Approaches to Macroeconomic Dynamics," GREDEG Working Papers 2020-39, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    5. George S. Tavlas, 2015. "In Old Chicago: Simons, Friedman, and the Development of Monetary‐Policy Rules," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 47(1), pages 99-121, February.
    6. Samuel Demeulemeester, 2020. "Would a State Monopoly Over Money Creation Allow for a Reduction of National Debt? A Study of the “Seigniorage Argument” in Light of the “100% Money” Debates," Research in the History of Economic Thought and Methodology, in: Research in the History of Economic Thought and Methodology: Including a Symposium on Public Finance in the History of Economic Thought, volume 38, pages 123-144, Emerald Group Publishing Limited.
    7. Samuel Demeulemeester, 2021. "The 100% money proposal of the 1930s: an avatar of the Currency School’s reform ideas?," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 28(4), pages 577-598, July.
    8. James R. Lothian & George S. Tavlas, 2018. "How Friedman and Schwartz Became Monetarists," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 50(4), pages 757-787, June.
    9. Samuel Demeulemeester, 2022. "What analytical framework for Sovereign Money? Some insight from the 100% Money literature, and a comment on criticisms," Working Papers hal-03751756, HAL.
    10. Samuel Demeulemeester, 2022. "Divorcing money creation from bank loans: revisiting the “100% money” proposal of the 1930s [Dissocier la création monétaire des prêts bancaires : retour sur la proposition "100% monnaie"," Post-Print hal-03938669, HAL.
    11. Tavlas, George S., 2022. "“The Initiated”: Aaron Director And The Chicago Monetary Tradition," Journal of the History of Economic Thought, Cambridge University Press, vol. 44(1), pages 1-23, March.
    12. Scott Sumner, 2022. "Whither monetarism?," Economic Affairs, Wiley Blackwell, vol. 42(2), pages 275-287, June.
    13. Dellas, Harris & Tavlas, George, 2021. "On the Evolution of the Rules versus Discretion Debate," CEPR Discussion Papers 15976, C.E.P.R. Discussion Papers.
    14. Hetzel, Robert L. & Humphrey, Thomas M. & Tavlas, George S., 2024. "Carl Snyder, the Real Bills Doctrine, and the New York Fed in the Great Depression," SocArXiv 5xqt9, Center for Open Science.
    15. Richard G. Anderson, 2022. "Nicholas Wapshott: Samuelson Friedman: The Battle Over the Free Market," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 57(3), pages 147-149, July.
    16. George S. Tavlas, 2015. "In Old Chicago: Simons, Friedman, and the Development of Monetary‐Policy Rules," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 47(1), pages 99-121, February.
    17. Samuel Demeulemeester, 2024. "The case for 100% money: Ten reasons for separating money issuance from banking," Economic Affairs, Wiley Blackwell, vol. 44(1), pages 57-70, February.
    18. Claudia Goldin & Lawrence F. Katz, 2024. "The Incubator of Human Capital: The NBER and the Rise of the Human Capital Paradigm," NBER Chapters, in: The Economic History of American Inequality: New Evidence and Perspectives, National Bureau of Economic Research, Inc.
    19. István Ábel & Pierre Siklos, 2023. "Macroeconomic Risks and Monetary Policy in Central European Countries: Parallels in the Czech Republic, Hungary, and Poland," Risks, MDPI, vol. 11(11), pages 1-26, November.
    20. Michael T. Belongia & Peter N. Ireland, 2016. "Money and Output: Friedman and Schwartz Revisited," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 48(6), pages 1223-1266, September.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:jmoncb:v:56:y:2024:i:6:p:1573-1594. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0022-2879 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.