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Exam Questions Harvard Suggested Reading Syllabus

Harvard. Undergraduate course on Money, Banking, and Crises, 1940-41

 

This course was one of the staples of the Harvard undergraduate economics experience. In this year that was to mark the official entry of the United States into the Second World War, we have complete course outlines, assigned readings and exam questions.

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Course Material from the Other Years

1937-38
1938-39 (Paper topics)
1941-42

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Course Description

Economics 41. Money, Banking, and Commercial Crises. Mon., Wed., and (at the pleasure of the instructors) Fri., at 2. Professor Williams and Associate Professor Harris.

The course will be conducted by means of lectures and discussions and (in the second half-year) a thesis based on work in the library. Certain subjects, such as monetary and banking history of the United States, will be covered almost wholly by assigned reading.

Source: Harvard University, Division of History, Government, and Economics. Announcement for 1940-41. Official Register of Harvard University, Vol. XXVII, No. 51 (August 15, 1940), p. 56.

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Course Enrollment

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

Total 107: 3 Graduates, 18 Seniors, 58 Juniors, 27 Sophomores, 1 Other.

Source:  Harvard University. Report of the President of Harvard College and Reports of Departments for 1940-41,p. 58.

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Economics 41
[First semester]
1940-41

  1. The nature and function 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.
  2. Creation of Deposits
    1. Phillips, Bank Credit, Ch. 3., pp. 32-77.
    2. Currie, Supply and Control of Money, Chs. 5, 6, 7, pp. pp. 46-83.
  3. Note Issue
    1. Dunbar, op. cit., Ch. 5, pp. 50-81.
    2. Currie, op. cit., Ch. 10, pp. 110-115.
  4. Commercial Loan Theory
    1. Robertson, Money, Ch. 5, pp. 92-117.
    2. Currie, op.  cit., Ch. 4, pp. 34-46.
  5. U.S. Banking history
    1. White, op. cit., Chs. 18-23, pp. 387-529.
  6. The Federal Reserve System
    1. Dunbar, op. cit., Ch. 6, pp. 81-139.
    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. Burgess, Federal Reserve Banks and the Money Market, pp. 1-327.
    5. Currie, op. cit., Chs. 8, 9, pp. 83-110.
  7. Recent Banking Changes
    1. White, op. cit., Chs. 29-30, pp. 670-738.
    2. Moulton, Financial Organization and the Economic System, Ch. 5 [or 6?].
  8. Foreign Banking Systems
    1. Dunbar, op. cit., pp. 139-235, Chs. 8, 9, 10.

Source: Harvard University Archives. HUC 8522.2.1. Box 2, Folder “Syllabi, course outlines and reading lists in Economics, 1940-41”.

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Reading Period
Jan. 6-15, 1941
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. HUC 8522.2.1. Box 10, Folder “Syllabi, course outlines and reading lists in Economics, 1940-41”.

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1940-41
HARVARD UNIVERSITY
ECONOMICS 41

MONEY, BANKING, AND COMMERCIAL CRISES

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

Part I

Answer questions 1 and 5 and one other.

  1. Supply and Use of Member Bank Reserve Funds.
    (Figures are net change for year, in millions of dollars.)
Bills discounted -4
Bills bought -1
U.S. government securities -305
Industrial advances -3
Other reserve bank credit +81
Monetary gold stock +4,310
Treasury currency +119
Money in circulation +1,154
Treasury cash and deposits -369
Non-member bank deposits and other Fed. Res. accounts +1,067
Member bank reserve balances ?
  1. State briefly how the above statement of supply and use of member bank reserves funds is derived.
  2. What is the meaning of each of the above items?
  3. Describe the process by which each of the items influences the volume of member bank reserve funds.
  4. By use of a balance sheet, calculate and explain the change in member bank reserve funds for the period in question.
  5. What does the statement suggest with respect to the condition of the money market, member bank policy, and Federal Reserve policy?
  6. To what year or years do you think the statement given might apply?
  1. Discuss the significance of the more important weapons of control of the central bank.
  2. What are the important factors determining the volume of bank deposits:
    1. When a ready market for loans exists and banks are always loaned up?
    2. When banks have excess reserves?
  3. Discuss the 100 per cent reserve plan:
    1. In its relation to the “commercial loan theory” controversy.
    2. In its relation to fluctuations in the volume of deposits.
  4. Reading period. Answer one of the following:
    1. Keynes or Hawtrey: From Keynes’ or Hawtrey’s analysis, would you say that English or American central banking practice provides the more effective monetary control? Support your opinion by reference to your reading.
    2. Hardy: Basing your opinion on Hardy’s discussion, would you say that the credit policies pursued by the Federal Reserve System from 1928 to 1931 were the best possible under the circumstances?
    3. Sprague: Do you find in Sprague’s analysis of crises under the National Banking System reasons for the abandonment of that system in favor of the Federal Reserve System in 1913?

 

Part II

Answer TWO questions.

  1. Discuss the problems of reserves of member banks and of reserve banks in the United States.
  2. Compare the American banking system as it existed under the first and second Bank of the United States with the National Banking System or with the present system. Which system do you think was better adapted to the problems with which it had to deal?
  3. In view of the large excess reserves in existence at the present time, and of other factors in the existing situation, would you favor a return to the currency provisions of the National Banking Act, and extension of similar reserve provisions to bank deposits?
  4. Outline the main revisions of the Federal Reserve Act from 1931 to 1936.
  5. What revisions of the existing banking law seem most essential in view of present and impending economic conditions?
  6. Describe the experiences of the Federal Reserve System in 1914-1921, or in 1922-1929.

Mid-Year. 1941.

 

Source: Duke University. David M. Rubenstein Rare Book & Manuscript Library. Economists’ Papers Archives. Wolfgang F. Stolper Papers, Box 22.

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ECONOMICS 41
Second Semester
1940-41

Outline of Lectures and Readings

Part I. International Aspects of Money (4 weeks)

Lecture

  1. Types of Monetary Standards
  2. Theory of the Gold Standard
  3. The Gold Standard in Practice.
  4. What is to Be Done about Gold?
  5. The Case for Variable exchanges.
  6. Prices under Variable Exchanges.
  7. Stabilisation Funds and Free Exchanges.
  8. Control of Exchanges.

Assignment:
Gayer, Monetary Policy and Economic Stabilisation, pp. 1-180.

Part II. Money in Relation to Prices and the Rate of Interest (4 weeks)

Lecture

  1. Definition of the Price Level.
  2. The Fisherian Approach.
  3. Velocity and Hoarding.
  4. Cambridge Approaches.
  5. Money and Forced Savings.
  6. Money and the Rate of Interest.
  7. Money and the Rate of Interest (cont.).
  8. The Significance of the Rate of Interest.

Assignment:
Chandler, Introduction to Monetary Theory, pp. 1-147.
Fisher, Purchasing Power of Money, pp. 8-73.
Keynes*, Treatise on Money, Vol. I, Chs. 2-5, 7, 14.
Mises*, Theory of Money and Credit, Part II, Ch. II.
Robertson, Money, chs. 1-3, 6-8.
Schumpeter*, Business Cycles, pp. 449-483.
Wicksell, Interest and Prices, Chs. 5-6, 7-9.

*Important but not assigned.

Part III. Money and the Economic System (4 weeks – 7 lectures)

Lecture

  1. Monetary and Non-Monetary Aspects of Economic Fluctuations.
  2. Objectives and Limitations of Monetary Control.
  3. Supplementary Instruments—Fiscal Policy.
  4. Supplementary Instruments—Fiscal Policy (cont.).
  5. Supplementary Policies—Wage, Price Policies, etc.
  6. The Monetary System under a War or Defense Economy.
  7. Various Proposals to Improve the Monetary System.

Assignment:
Chandler, Introduction to Monetary Theory, pp. 148-205.
Hayek, Profits, Interest and Investment, pp. 1-71.
Hawtrey*, Trade Depression and the Way Out.
Macfie*, Theories of the Trade Cycle, Chs. III-V.
Robbins, The Great Depression, Chs. I, II, III, VII, VIII.
Robertson, Essays on Monetary Theory, pp. 39-67, 98-113, 122-153.
Robinson, Introduction to the Theory of Employment.
Roll*, About Money, pp. 103-248.
Schumpeter, Business Cycles, pp. 109-23.

*Important but not assigned.

 

Reading Period. 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. Wicksell, Interest and Prices, and Keynes, Treatise, I, Chs. 2-5, 7, 14.
  7. Haberler, Prosperity and Depression (1939 ed.), Part I.
  8. Myers, Monetary Proposals for Social Reform.
  9. Wood, English Theories of Central Banking Control.
  10. Paper Pound of 1797-1821 (Cannan edition), and Heckscher, Sweden in the World War, Part III.

 

Source: Harvard University Archives. HUC 8522.2.1. Box 2, Folder “Syllabi, course outlines and reading lists in Economics, 1940-41”.

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1940-41
HARVARD UNIVERSITY
ECONOMICS 41

Answer ONE question in each part

Part I

  1. Outline and evaluate alternative solutions of the American gold problem.
  2. What are the relative merits of
    1. An international gold standard?
    2. Free exchanges?
    3. Managed currencies?

Part II

  1. Analyse the factors determining velocity of circulation of money.
  2. What are the main determinants of the general price level according to Fisher, Wicksell, Robertson, and Keynes? Are their approaches incompatible with one another? Which seems to you more valid or useful?

Part III

  1. Do you think the distinction between “monetary” and “non-monetary” theories of the trade cycle is justified, or useful? Illustrate from the literature.
  2. Apply the theories of Keynes or Robbins, or Robertson to the American Economy in one of the following periods:
    1. 1920’s
    2. 1930’s
    3. 1940’s
  3. Are we facing inflation? How can inflation be prevented or controlled?

Part IV (Reading Period)

  1. Show how the material you have covered in your reading period assignment can be applied to current economic problems.

Part V (First Semester)

  1. Discuss the 100% Reserve Plan in relation to the monetary theory of the trade cycle.
  2. Can you suggest any revisions of the Federal Reserve System which would simplify the problems of defense finance?
  3. Assuming borrowing to be a necessary part of our defense finance, analyse in detail the relative merits of borrowing from Federal Reserve Banks, member banks, the general public, and from abroad, at various stages in the defense program.

Final. 1941.

Source: Harvard University Archives. Harvard University Final Examinations 1853-2001. Box 14. Papers Printed for Final Examinations: History, History of Religions…, Economics, … , Military Science, Naval Science, May, 1947.

Image Source:  John Henry Williams and Seymour Edwin Harris in Harvard Album 1939.