secondary forms of money. Simons advocated the separation of deposit and transaction windows and the institutional separation of banks as "lender-investors" and banks as depository agencies. The primary benefit would be to enable lending and investing institutions to focus on the provision of "long term capital in equity form" (233). Banks could be "free to provide such funds out of their own capital". Short-term interest-based commercial loans would be phased out, since one of the "unfortunate effects of modern banking," as Simons viewed it, was that it had "facilitated and encouraged the use of short-term financing in business generally". Money supply Simons believed the price level needed to be more flexible to accommodate fluctuations in output and employment. To this end, he advocated a minimum of short-term borrowing, and a maximum of government control over the circulation of money. This would result in an economy with a greater tolerance of disturbances and the prevention of "accumulated maladjustments" all coming to bear at once on the economy. In sum, for Simons, a financial system in which the movement of the price level was in many ways beholden to the creation and liquidation of short-term securities is problematic and threatens instability. Notes References Kasper, Sherryl. The Revival of Laissez-Faire in American Macroeconomic Theory: A Case Study of Its Pioneers (2002), ch 3 Mauldin, John, peter. "Thoughts on the Continuing Crisis." Frontline Weekly Newsletter. 21 March 2008. Oakeshott, Michael. The Political Economy of Freedom, in: Cambridge Journal, Volume II, 1949; now in: Michael Oakeshott, Rationalism in Politics and Other Essays (1962), Indianapolis, Liberty Fund, 1991 (New and expanded edition), pp. 384–406. Simons, Henry C. "Economic Policy for a Free Society." University of Chicago Press, Chicago, IL. (1948), pp. 165–248 Stein, Herbert. “Simons, Henry Calvert," The New Palgrave: A Dictionary of Economics (1987), v. 4, pp. 332–35 External links The Forgotten Henry Simons – Florida State University College Guide to the Henry C. Simons Papers 1925-1972 at the University of Chicago Special Collections Research Center 1899 births 1946 deaths People from Virden, Illinois Economists from Illinois University of Chicago faculty Columbia University alumni 20th-century American economists Chicago School economists