Attached as Title III to the Agricultural Adjustment Act of May 12, 1933, the Thomas Amendment became the "third horse" in the New Deal's farm relief bill. Drafted by Oklahoma Sen. Elmer (John William Elmer) Thomas, the amendment blended populist easy-money views with the theories of the New Economics. Alarmed that the Great Depression had dangerously deflated prices, Thomas could see "no other way of helping the farmer save through cheapening the dollar." No unbridled inflationist, however, Thomas wanted a stabilized "honest dollar," one that would be fair to debtor and creditor alike.
On April 18, 1933, Thomas, leader of an expanding cadre of inflationists, received Pres. Franklin Delano Roosevelt's permission to attach an omnibus monetary amendment to the pending farm relief bill. The amendment granted the president broad discretionary powers over monetary policy. It stated that whenever the president desired currency expansion, he first must authorize the 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.
On April 24, 1933, Thomas defended his amendment in a three-hour address punctuated with displays of farm commodities that were receiving low market prices. "Silver" senators amended the measure to give the president additional discretionary powers to remonetize silver and raised the amount of silver acceptable in payment of war debts to $200 million dollars. The Thomas Amendment passed the Senate, sixty-four to twenty-one, on April 28 and became law on May 12, 1933.
The Thomas Amendment was used sparingly. The treasury received limited amounts of silver in payment of war debts from World War I. Armed with the amendment, Roosevelt ratified the Pittman London Silver Amendment on December 21, 1933, ordering United States mints to buy the entire domestic production of newly mined silver at 64.5 cents 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 stubbornly climb. Possibly the most significant expansion brought on by the Thomas Amendment may have been the growth of governmental power over monetary policy. In Thomas's opinion, the head must move the feet, and federal monetary management must accompany any successful effort to restore prosperity.
BIBLIOGRAPHY: David Webb, "The Thomas Amendment: A Rural Oklahoma Response to the Great Depression," in Rural Oklahoma, ed. Donald E. Green (Oklahoma City: Oklahoma Historical Society, 1977). David Dean Webb, "Farmers, Professors and Money: Agriculture and the Battle for Managed Money, 1920-41" (Ph.D. diss., University of Oklahoma, 1978).
David D. Webb
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