Harvard. Readings and Exams for undergraduate money, banking, and crises. Harris and Williams, 1941-42

 

A staple of the undergraduate economics program at Harvard throughout the first half of the 20th century covered both money/banking and commercial crises. For this academic year that included the entry of the United States into World War II, I have only been able to locate the first semester course outline and the final exam for both semesters. If I ever come across the course outline for the second semester, I will be sure to post it!

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Course Material from
Other Years

1937-38
1938-39 (Paper topics)
1940-41

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Course enrollment

Economics 41. Professor Williams and Associate Professor Harris. — Money, Banking, and Commercial Crises.

Total 81: 18 Seniors, 50 Juniors, 11 Sophomores, 1 School of Public Administration, 1 Other

Source: Harvard University. Report of the President of Harvard College, 1941-42, p. 63.

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1941-42
Readings in Economics 41 (First Term)

1. Introductory Survey
   1. “The Federal Reserve System—Its Purposes and Functions”
      (Published by Board of Governors of the Federal Reserve System; a good brief statement of our deposit banking and Federal Reserve mechanism.)
2. Nature and Functions of Banking
   1. Dunbar, “Theory and History of Banking”, Chs. 1,2,3,4, pp. 1-60.
   2. White, “Money and Banking”, Ch. 16, pp. 349-372.
3. Note Issue
   1. Currie. “Supply and Control of Money”, Ch. 10, pp. 110-115.
   2. Longstreet, “Currency System of United States”, in Banking Studies by Members of the Staff, Board of Governors of the Federal Reserve System, pp. 65-83.
4. Creation of Deposits
   1. Phillips, “Bank Credit”, Ch. 3., pp. 32-77.
   2. Currie, op. cit., Chs. 6, pp. 65-68.
5. Commercial Loan Theory
   1. Robertson, “Money”, Ch. 5, pp. 92-117.
   2. Currie, op.  cit., Ch. 4, pp. 34-46.
6. Central Banking; Federal Reserve System
   1. “Banking Studies”, pp. 1-476.
   2. Federal Reserve Bulletin, July 1935: “Supply and Use of Member Bank Reserve Funds,” pp. 419-428.
   3. Langum, “The Statement of Supply and Use of Member Bank Reserve Funds,” Review of Economic Statistics, August, 1939, pp. 110-115.
   4. Williams, “The Banking Act of 1935”, American Economic Review Supplement, March 19366, pp. 95-105.
7. Some Current Problems of Reserve Organization
   Excess reserves; 100 per cent reserves; special reserves against inter-bank deposits; “ceiling plan”, et cetera; branch banking
8. International Monetary Organization and Policy; The “Gold Problem”
   1. Graham and Whittlesey, “Golden Avalanche”.
   2. Hansen, “Gold in a Warring World”, Yale Review, June, 1940, pp. 668-686.
   3. Williams, “The Adequacy of Existing Currency Mechanisms Under Varying Circumstances”. American Economic Review Supplement, March, 1937, pp. 151-168.

Source: Harvard University Archives. Syllabi, course outlines and reading lists in Economics, 1895-2003. Box 3, Folder “Economics, 1941-42”.

Reading Period
Jan. 5-14, 1942
Economics 41

Read one of the following:

1. Hardy, Federal Reserve Policy.
2. Hawtrey, Art of Central Banking, pp. 116-303.
3. Keynes, Treatise on Money, Vol. II, Book VII.
4. Sprague, Crises under the National Banking System.

Source: Harvard University Archives. Syllabi, course outlines and reading lists in Economics, 1895-2003. Box 3, Folder “Economics, 1941-42”.

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1941-42
HARVARD UNIVERSITY
ECONOMICS 41
Money, Banking and Commercial Crises
Mid-Year Examination

Please put the day and hour of your section meeting on the cover of your first blue book.

Part I
(Answer all three questions.)

1. Supply and Use of Member Bank Reserve Funds.

(millions of dollars)
	Nov. 19—	Nov. 19—
Bills discounted	2,762	1,228
Bills bought	276	79
U.S. Government securities	320	208
Other Reserve bank credit	109	29
Monetary gold stock	2,586	3,308
Treasury and National bank currency,	1,711	1,835
Money in circulation	5,375	4,386
Treasury cash and deposits with the Federal Reserve banks	236	260
Non-member deposits	27	28
Other Federal Reserve accounts	344	350
Member bank reserve balances	1,782	?

1. 1. For each of the above items, give the meaning, indicate the manner in which it influences the volume of member bank reserve balances, and state in figures what its actual effect was on these balances in the period covered by the example.
   2. Calculate what member bank reserve balances were at the later date and explain in words their change from the earlier.
   3. To what years do you think the statement might apply?
   4. What can you deduce from these figures about monetary changes and central bank policy during this period?
2. What is meant by the difference between “compensated” and “uncompensated” deposits or withdrawals, and how do their effects differ? Describe briefly all the types of “uncompensated” payments.
3. Reading period. Answer one of the following:
   1. Hardy: Give a résumé of the problem of “qualitative” vs. “quantitative” credit control by the Federal Reserve. What was its meaning and importance?
   2. Sprague: “Somewhere in the banking system of a country there should be a reserve of lending power.” Discuss with relation to any one of the crises prior to 1914.
   3. Hawtrey or Keynes: Contrast the more significant differences between the working of the Federal Reserve System and the Bank of England. Assess their importance in practice.
   4. Keynes: Can the banking system control the rate of investment?

Part II
Answer any TWO questions.

4. Discuss: “The cost of acquiring [gold] imposes a heavy burden; the purchase constitutes a subsidy to producers; the chief benefit goes to foreigners.” Do you regard this as a correct analysis of the cost of our huge gold imports during the last eight years?
5. What, in your view, are the chief merits and defects of the 100% reserve plan?
6. Discuss the significance of “liquidity” for the operation of the commercial banking system.
7. Discuss: “Whereas the lack of a banking crisis in 1920 or 1929 led us to believe the Federal Reserve System a satisfactory cure for the evils of the national banking system, the bank holiday in 1933 proved that this is not the case.”
8. Would you agree that the function of the central bank is to enable the banking system “to accommodate the needs of trade”?
9. What limitations are placed on domestic monetary policy by external considerations?

 

Source: Harvard University Archives. Harvard University Mid-term Examinations, 1852-1943, Box 15. Papers Printed for Mid-Year Examinations [in] History, History of Religions, …, Economics, …,Military Science, Naval Science. January-February, 1942.

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Reading Period.
May 4-23, 1942

Economics 41. Read one of the following:

1. Keynes, General Theory of Employment, Chs. 1-19, omit appendices.
2. Hawtrey, Capital and Employment, all but Chs. 8, 9, 11.
3. Hawtrey, Art of Central Banking, Chs. 1, 2, 4, 8.
4. Durbin, The Problem of Credit Policy.
5. Hansen, Full Recovery or Stagnation.
6. K. Wicksell, Interest and Prices, and Keynes, Treatise, I, Chs. 2-5, 7, 14.
7. G. Haberler, Prosperity and Depression (1939 ed.), Part I.
8. E. Wood, English Theories of Central Banking Control.
9. Paper Pound of 1797-1821 (Cannan edition), and
10. Heckscher, Sweden in the World War, Part III.

Source: Harvard University Archives. Syllabi, course outlines and reading lists in Economics, 1895-2003. Box 3, Folder “Economics, 1941-42”.

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1941-42
HARVARD UNIVERSITY
ECONOMICS 41
Final Examination

Answer five questions, one in Part I, the question in Part II, and three in Part III.

Part I
(Take one hour. Answer one question only.)

1. “The gold standard limits the discretion and fetters the independent action of the Government or Central Bank of any country which has bound itself to the international gold standard. It may not be the ideal system, but it maintains a certain standard of efficiency and avoids violent disturbances and gross aberrations of policy.” Discuss this point and assess its importance in the advantages and disadvantages of the gold standard.
2. Can the banking system control the price level?
3. “The question now arises whether the magnitude of this velocity of circulation can be regarded as determined by independent factors; or whether, rather as is sometimes maintained, it is not merely the resultant, given the quantity of goods exchanged and of available money, of the particular level of commodity prices, themselves determined by quite different ” What does Wicksell say about this? If you disagree on any points give your reasons.

Part II
(Answer one question.)

4. Write an essay on some one topic discussed in the book you took as the reading period assignment. Do notwrite a summary of the book.

Part III
(Answer any three questions.)

5. What is the relation of the gold standard and the quantity theory of money? Discuss the relationship as a factor contributing towards the breakdown of the gold standard? Mention briefly some other factors contributing towards the collapse of the gold standard.
6. What kind of foreign exchange policy would you advocate for the U.S. after the war? Support your recommendations.
7. “The real cause of a rise in prices is to be looked for, not in the expansion of the amount of money as such but in the provision by the Bank of easier credit, which is itself the cause of the expansion.”
8. What is the nature of the relations between the quantity of money and interest and prices?
9. “The problem of war finance is simple. If the government wishes to avoid inflation, it must not allow any increase in the quantity of money.” Do you agree?
10. Is Chandler a Keynesian?

Source: Harvard University Archives. Harvard University Final Examinations, 1853-2001, Box 6, Papers Printed for Final Examinations [in] History, History of Religions, …, Economics, …,Military Science, Naval Science. June, 1942.

Image Source: John H. Williams (left) and Seymour Harris (right) from Harvard Class Album 1939.