In 38 pages of testimony, he shocked the senators by not only precisely listing the failures of the economy, but laying out a five-point plan for fixing it.
He began, "In the mad confusion and fear brought about by our present disordered economy, we need bold and courageous leadership more than at any time in our history for the reason that our industrial revolution has made necessary a new economic philosophy, a new business point of view and a fundamental change in our social system."
He went on to say that "the operation of our money world … has failed to be our servant … and instead is our tyrant and master."
Eccles got right to the point: "We must correct the causes of the depression rather than deal with the effects of it!"
He proceeded to demonstrate that the key problem in the economy was the reduced "velocity" of money. The economy didn't have enough money circulating to raise the economy out of the doldrums.
Now on the edge of their seats, the senators were further jolted when Eccles began outlining his bold plan for mending the economy: First, unemployment relief by direct aid to the states and a program of federally financed public works projects to provide economic stimulus. Second, a bank deposit guarantee program. Third, agriculture subsidies and an allotment program. Fourth, a federally guaranteed farm mortgage program.
His final point was probably the most sensational for the time, as it would be even today: Cancel the World War I allies' war debt, close the gold desk of the Federal Reserve, provide for a more equitable distribution of wealth, enact a high income and inheritance tax, provide a national child labor law, minimum wage, unemployment insurance and old age pension laws. Establish a national economic planning board.
All this from a successful capitalist? A banker/industrialist? A Mormon? A Republican? Not many senators dozed through his testimony.
Eccles must have made his points, though, as several months later he was invited to join the Roosevelt administration as an assistant Treasury secretary. Within months, President Franklin Delano Roosevelt asked Eccles to become a governor of the Federal Reserve Board, to which he replied, "I would Not! … unless fundamental changes are made in the (Fed)."
With FDR's blessing, Eccles rewrote the 1935 Federal Reserve Act, created the Fed as we know it today, and became the first chairman of the reorganized Federal Reserve Board.
His New Deal policies were radical for the time. He was espousing Keynesian economics before Keynes. He was for a balanced budget, but it had to include a balanced economy.
To Eccles, this meant that you built surpluses during the good times to pay for deficit spending in the bad times.
What would today's Great Recession be without the policies put in place some 70 years ago by New Dealers like Marriner Eccles, including Social Security, unemployment insurance, the FDIC, Fed monetary policies, etc.?
We doubt we would be calling it a recession. More likely the Great Depression II.
Laraine Blackham teaches history, civics, and English at Woods Cross High School. Steve Blackham is a retired home builder and history buff.