ON-Lion Letter
"Legislation calling for the establishment of a Centennial Monetary Commission 'to examine the United States monetary policy, evaluate alternative monetary regimes, and recommend a course for monetary policy going forward,' was introduced in both the House and the Senate in July 2015, with the essential provisions of the bill passing the House in November," begins a late-June paper from the Center for Monetary and Financial Alternatives (CMFA) at the Cato Institute in Washington, D.C.  "The plan draws inspiration from the National Monetary Commission convened over a century ago, in response to the Panic of 1907."

"New York's Bank:  The National Monetary Commission and the Founding of the Fed," "reviews the earlier Monetary Commission's origins, organization, and shortcomings, in order to suggest how a new commission might improve upon it," continues its author, George Selgin.  "In contrast to more conventional, celebratory accounts of the Fed's establishment, it finds that, instead of serving as a means for achieving desirable reforms, the National Monetary Commission served as a façade behind which its chair, Sen. Nelson Aldrich (R-RI), pursued a personal monetary reform agenda heavily influenced by major New York bankers."

Selgin is a senior fellow at Cato and directs its CMFA, which is substantially supported by The Lynde and Harry Bradley Foundation in Milwaukee.  He is a professor emeritus of economics at the University of Georgia.

"The resulting 'Aldrich Plan' sought to preserve New York banks' dominant position in the financial system, even though doing so meant setting aside alternative reform proposals that sought to address the root cause of crises, including plans that would have introduced nationwide branch banking while removing Civil War–era limitations on banks' ability to issue circulating banknotes," according to Selgin.  "Although the Aldrich Plan itself failed, many of its features, including those catering to the interests of the big New York banks, made their way into the later Federal Reserve Act.

"Not surprisingly, that Act proved more effective in preserving New York's financial hegemony than in securing financial stability," he finds.  "If the Centennial Monetary Commission is to prove more successful than its predecessor in serving as a means for achieving financial stability, it must be a genuine, bipartisan commission, with open proceedings, and free of the taint of special-interest influence, which today means not only the influence of Wall Street, but also that of the Federal Reserve establishment itself."
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