Thomas Amendment
Attached as Title III to the Act, the Thomas Amendment became the "third horse" in the New Deal's farm relief bill. Drafted by Senator Elmer Thomas of Oklahoma, the amendment blended populist easy-money views with the theories of the new economics. Thomas wanted a stabilized “honest dollar”; one that would be fair to debtor and creditor.
The Amendment said that whenever the President desired currency expansion, he must first authorize the Federal Open Market Committee of the Federal Reserve to purchase up to $3 billion of federal obligations. Should open market operations prove insufficient the President had several options. He could have the U.S. Treasury issue up to $3 billion in greenbacks, reduce the gold content of the dollar by as much as 50 percent, or accept 100 million dollars in silver at a price not to exceed fifty cents per ounce in payment of World War I debts owed by European nations.
The Thomas Amendment was used sparingly. The treasury received limited amounts of silver in payment for war debts from World War I. Armed with the Amendment, Roosevelt ratified the Pittman London Silver Amendment on December 21, 1933, ordering the United States mints to buy the entire domestic production of newly mined silver at 64.5¢ per ounce. Roosevelt’s most dramatic use of the Thomas amendment came on January 31, 1934, when he decreased the gold content of the dollar to 40.94 percent. However, wholesale prices still continued to climb. Possibly the most significant expansion brought on by the Thomas Amendment may have been the growth of governmental power over monetary policy.
The impact of this amendment was to reduce the amount of silver that was being held by private citizens (presumably as a hedge against inflation or collapse of the financial system) and increase the amount of circulating currency.
Read more about this topic: Agricultural Adjustment Act
Famous quotes containing the words thomas and/or amendment:
“The hand that signed the treaty bred a fever,
And famine grew, and locusts came;
Great is the hand that holds dominion over
Man by a scribbled name.”
—Dylan Thomas (1914–1953)
“Every family should extend First Amendment rights to all its members, but this freedom is particularly essential for our kids. Children must be able to say what they think, openly express their feelings, and ask for what they want and need if they are ever able to develop an integrated sense of self. They must be able to think their own thoughts, even if they differ from ours. They need to have the opportunity to ask us questions when they don’t understand what we mean.”
—Stephanie Martson (20th century)