Today’s artifacts come from the roaring ’20s. Besides his courses in economic theory, Allyn A. Young taught a year long course at Harvard, “Money, Banking and Commercial Crises”. Before presenting enrollment figures and the exams for Young’s Economics 3, I have assembled a chronology that identifies the course instructors over the entire period 1911-1946. Links are provided to the related artifacts that have been transcribed here at Economics in the Rear-view Mirror.
The chronology is followed by Young’s course description for 1924-25. Presumably there was a mid-year exam for the course, but these were not included in the printed collection of final course examinations. It is possible that the questions have been limited to the second-semester’s course content. This is something that definitely deserves checking.
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Chronology of the Harvard economics course
“Money, Banking and Commercial Crises”
This two semester course was the product of merging the one semester course “Commercial Crises and Cycles of Trade” (Economics 12) with the two semester sequence “Money” and “Banking and Foreign Exchange” (Economics 8a and 8b, respectively).
The new course “Money, Banking, and Commercial Crises” (Economics 8, then 3, and later 41) was a staple of economics course offerings for the next 35 years.
Economics 8
1911-12 taught by E.E. Day
Economics 3
1912-13, 1913-14 taught by E.E. Day.
Money, Banking, and Commercial Crises (1914-15) taught by Benjamin M. Anderson.
1915-16 taught by Norman John Silberling
Money, Banking, and Commercial Crises (1917-18) taught by Benjamin M. Anderson.
1918-19, 1919-20 taught by A. E. Monroe.
1920-21 through 1926-27 taught by Allyn A. Young. Year-end exams transcribed below.
1927-28 through 1931-32 taught by John H. Williams
1932-33 taught by John H. Williams, Joseph Schumpeter and Lauchlin Currie.
1933-34 [course title: Money, Banking, and Cycles] Seymour Harris
1934-35, 1935-36 taught by John H. Williams and Seymour Harris
Economics 41
1936-37 taught by John H. Williams and Seymour Harris
Money, Banking, and Commercial Crises (1937-38) John H. Williams and Richard V. Gilbert.
1938-39 to 1941-42 taught by John H. Williams and Seymour Harris
1942-43, 1943-44 taught by Alvin Hansen and John H. Williams
1944-45 first semester taught by Schumpeter, second semester by Hansen and Williams
1945-46 Economics 41 morphed back into a two semester course “Money and Banking” taught by John H. Williams with a new one term course “Business Cycles” taught by Alvin Hansen.
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Course Description, 1924-25
[Economics] 3. Money, Banking, and Commercial Crises. Mon., Wed., Fri., at 2. Professor Young.
In this course money and credit will be studied with special reference to the part they play in the present economic system. The principal problems of public policy with respect to the control of money and banking will be discussed. Foreign exchange, organized speculation in its relation to the money market, and the characteristic phenomena of commercial crises will be considered in some detail. The course will be conducted by means of lectures, discussions, frequent short reports or exercises on assigned topics, and (in the second half-year) a thesis based on work in the library. Certain subjects, such as the monetary and banking history of the United States, will be covered almost wholly by assigned reading, tested by written papers.
Source: Division of History, Government and Economics 1924-25 published in Official Register of Harvard University, Vol. 21, No. 22 (April 30, 1924), p. 67.
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Enrollment, 1920-21
[Economics] 3. Professor Young —Money, Banking, and Commercial Crises.
Total 148: 6 Graduates, 34 Seniors, 67 Juniors, 26 Sophomores, 3 Freshmen, 30 Others.
Source: Harvard University. Report of the President of Harvard College 1920-21, p. 19.
Year-end examination, 1920-21
HARVARD UNIVERSITY
ECONOMICS 3
- What is a dollar?
- In what manner and why were bank reserves inelastic under the national banking system? What were the consequences?
- Discuss the relation of overproduction to crises, distinguishing carefully different types of overproduction.
- Outline the sequence of events in a typical business cycle.
- Define: federal reserve bank note, gold-exchange standard, “value of money.”
- In what different ways may federal reserve notes be issued?
- Explain and discuss the “equation of exchange.”
- Describe and explain the dominating position the London money market held before the war.
Source: Harvard University Archives. Examination Papers 1921 (HUC 7000.28, No. 63), Papers Set for Final Examinations [in] History, Church History,…,Economics,…, Fine Arts, Music. June, 1921, p. 56.
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Course announcement, 1921-22
[Economics] 3. Money, Banking, and Commercial Crises
Mon., Wed., Fri., at 1.30. Professor Young.
Source: Harvard University, Announcement of the Courses of Instruction Offered by the Faculty of Arts and Sciences for the Academic Year, 1921-22 (Third Edition),p. 109.
Year-end examination, 1921-22
HARVARD UNIVERSITY
ECONOMICS 3
- Draw up a statement showing the condition of a national bank. Explain the meaning of the various items.
- Under what conditions is a large surplus an indication of a bank’s strength? How may it be an indication of weakness?
- To what classes of persons are rising prices advantageous? To what classes are they disadvantageous?
- Define: gold exchange standard, banker’s acceptance, finance bill, bimetallism, index number.
- What do you take to have been the causes of the fall of prices between 1874 and 1896?
- Why were “surplus reserves” under the national banking system normally exceedingly small?
- State and explain the Ricardian theory of gold movements. Are the recent movements of gold from Europe to the United States explainable by the Ricardian principle?
- What relation was there between the Bank Act of 1844 and the controversies of the restriction period?
- If the weight of the gold dollar were reduced by half would prices be doubled? Explain your reasoning.
- “The bulk of the acceptance business arising out of the foreign trade of the entire world has for many years been conducted in London.” Explain what this statement means and why it is true.
Final. 1922
Source: Harvard University Archives. Examination Papers 1922 (HUC 7000.28, No. 64), Papers Set for Final Examinations[in] History, Church History,…,Economics,…, Social Ethics, Education. June, 1922.
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Enrollment, 1922-23
[Economics] 3. Professor Young—Money, Banking, and Commercial Crises.
Total 129: 6 Graduates, 33 Seniors, 75 Juniors, 11 Sophomores, 1 Freshman, 3 Others.
Source: Harvard University. Report of the President of Harvard College 1922-23, p. 92.
Year-end examination, 1922-23
HARVARD UNIVERSITY
ECONOMICS 3
- Define: money of account, standard of deferred payments, inflation, gold-exchange standard, discounting.
- Give an account of the life-history of a typical commercial long bill of exchange, as used in international trade.
- Discuss the nature and significance of the par of exchange between two countries when one has a gold standard and the other has (a) a gold standard, (b) a silver standard, (c) inconvertible paper.
- Is New York City likely to become the center of the world’s foreign exchange markets? Discuss.
- In what ways are federal reserve notes and clearing-house loan certificates alike? In what ways are they unlike?
- Professor W. C. Mitchell holds that prosperity breeds a crisis because of (a) the gradual increase in the costs of doing business, and (b) the accumulating tension of the investment and money markets. Explain and discuss.
- Was the federal reserve system responsible for the rise of prices between 1917 and 1920 and for the subsequent drop? Discuss.
- In what ways do the federal reserve banks effect (a) regional and (b) national clearings?
- On what grounds is it generally held that a larger use of bank acceptances in this country is desirable?
Final. 1923.
Source: Harvard University Archives. Examination Papers 1923 (HUC 7000.28, No. 65), Papers Printed for Final Examinations [in] History, History of Religions,…,Economics,…, Social Ethics, Anthropology. June, 1923.
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Enrollment, 1923-24
[Economics] 3. Professor Young—Money, Banking, and Commercial Crises.
Total 119: 2 Graduates, 25 Seniors, 81 Juniors, 5 Sophomores, 1 Freshman, 5 Others.
Source: Harvard University. Report of the President of Harvard College 1923-24, p. 106.
Year-end examination, 1923-24
HARVARD UNIVERSITY
ECONOMICS 3
Answer nine questions.
- Explain the first and either the second or the third of these theories of the business cycle: (1) the “banking theory”; (2) Hobson’s theory of over-saving; (3) Fisher’s theory of the lagging adjustment of interest.
- “It thus appears that the Bank of England’s official rate is often through long periods a mere empty symbol, leaving no actual relation to the real price of money in London; and only becomes effective, and a factor in the monetary position when…” When?
- Draw up a statement showing the principal items which enter into the balance of payments.
- What conditions must be fulfilled if New York is to become the center of the world’s foreign exchange markets?
- State and discuss the doctrine of purchasing-power parity.
- Discuss the open-market operations of the federal reserve banks, with special reference to (a) the provisions of the law, (b) the purposes of such operations, (c) their relation to possible changes in prevalent types of commercial paper.
- Why did national bank notes constitute an inelastic currency? in just what manner do federal reserve notes constitute an elastic currency?
- Discuss the effect of organized speculation on prices, taking account of the fact that different types of price variations cover different periods of time.
- G. Moulton lists as “fallacies,” (1) the notion that a nation’s capacity to pay a foreign debt (such as reparations) is measured by the excess of its annual production over its annual consumption, and (2) the notion that a country can pay such a debt by selling securities to other countries. Do you agree? Explain.
- “In the main, banks do not lend their deposits, but rather, by their own extensions of credit, create the deposits.” Explain.
Final. 1924.
Source: Harvard University Archives. Examination Papers 1924 (HUC 7000.28, No. 66), Papers Printed for Final Examinations [in] History, History of Religions,…, Economics,…, Psychology, Social Ethics. June, 1924.
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Enrollment, 1924-25
[Economics] 3. Professor Young—Money, Banking, and Commercial Crises.
Total 111: 1 Graduate, 22 Seniors, 72 Juniors, 12 Sophomores, 1 Freshman, 3 Others.
Source: Harvard University. Report of the President of Harvard College 1924-25, p. 75.
Year-end examination, 1924-25
HARVARD UNIVERSITY
ECONOMICS 3
Answer eight questions.
- Some writers hold that business cycles are caused by the expansion and contraction of bank credit. Why and how, in their view, does bank credit expand and contract?
- “A country can pay a foreign debt only by exporting more than it imports.” Explain and discuss critically.
- What was the major defect of the old national banking system?
- Define: rediscount, trust company, par collections, gold standard, purchasing power parity.
- “The Bank of England has power to exert a decisive influence over the magnitude of the gold movements to and from England.”—Furniss.
- What are the distinguishing characteristics (economic or legal, not physical characteristics) of the following types of money: silver dollars, United States notes, national bank notes, federal reserve notes?
- What are the prerequisites to the stabilizing of a depreciated paper currency?
- In what measure was the federal reserve system responsible for the rapid rise of prices in 1919 and 1920 and for the subsequent collapse?
- The federal reserve banks hold nearly $3,000,000,000 in gold, amounting to about 75 per cent of their liability on account of deposits and note issues combined, and constituting a large idle investment. Under what conditions would a considerable part of this gold be exported to other countries?
Final. 1925.
Source: Harvard University Archives. Examination Papers 1925 (HUC 7000.28, No. 67), Papers Printed for Final Examinations [in] History of Science, History, …, Economics,…, Anthropology, Military Science. June, 1925.
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Enrollment, 1925-26
[Economics] 3. Professor Young—Money, Banking, and Commercial Crises.
Total 110: 31 Seniors, 64 Juniors, 8 Sophomores, 1 Freshman, 6 Others.
Source: Harvard University. Report of the President of Harvard College 1925-26, p. 77.
Year-end examination, 1925-26
HARVARD UNIVERSITY
ECONOMICS 3
Answer eight questions.
- Define deposits, discount, monetary standard, bimetallism.
- Formulate the “quantity theory” in any way that you prefer, and discuss it critically.
- A Brazilian firm draws a 90-day bill upon a London banker on account of a shipment of coffee to Boston.
(1) Why should the London bill be preferred to a bill upon New York or Boston?
(2) What is done with the bill after it reaches London?
(3) How is the bill finally settled?
- Some writers hold that when a government issues inconvertible paper money it obtains what is virtually a “forced loan.” Others hold that such an issue is more like taxation. What is your opinion, and why?
- Give an account of one of the following:
The socialist theory of crises.
Hobson’s theory of over-saving.
The “banking theory” of crises.
- Explain briefly the meaning of any two of the following phrases:
Par-collections controversy.
Open market policy.
Gold settlement fund.
Rediscounting
- Compare the Bank of England and either the Bank of France or the Reichsbank with respect to
(a) restrictions on note issue;
(b) discount policy.
- Was the federal reserve system responsible for the inflation of 1919-20 and the ensuing collapse? Explain.
- Just why, in your opinion, did the mark (or the franc, or the greenback) depreciate?
Final. 1926.
Source: Harvard University Archives. Examination Papers 1926 (HUC 7000.28, No. 68), Papers Printed for Final Examinations [in] History, History of Religions, …, Economics,…, Social Ethics, Military Science. June, 1926.
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Enrollment, 1926-27
[Economics] 3. Professor Young and Mr. Marget.—Money, Banking, and Commercial Crises.
Total 125: 2 Graduates, 27 Seniors, 74 Juniors, 14 Sophomores, 2 Freshmen, 6 Others.
Source: Harvard University. Report of the President of Harvard College 1926-27, p. 74.
Year-end examination, 1926-27
HARVARD UNIVERSITY
ECONOMICS 3
Answer eight questions.
- Explain and discuss critically some form of the “banking” or “credit” theory of business cycles.
- “If prices are rising” Hawtrey observes, “the mere holding of commodities in stock yields an additional profit over and above the usual dealer’s percentage on the turn-over. If traders are to be deterred from borrowing money to buy commodities, the rate of discount must be high enough to offset the additional profit. But, it may be asked, how is this possible when prices are rising at the rate of 30 per cent per annum?” Hawtrey’s answer? Your own?
- Discuss critically either (a) Fisher’s proposals for stabilizing the price level, or (b) proposals for attaining the same end by controlling the supply of bank credit.
- Select two of the following and discuss their significance as “causes” of the depreciation of inconvertible paper money: (1) excessive quantity; (2) ultimate redemption uncertain; (3) unbalanced budget; (4) adverse balance of foreign payments; (5) speculation.
- Define: rediscounts, purchasing-power parity, invisible exports, monetary standard, par collections.
- Compare the note-issue system of the Bank of England (as established by the Act of 1844) with the note-issue system of the federal reserve banks, with particular reference to (a) separation of “banking” and “issue” departments, and (b) the type of assets by which the notes are “covered.”
- In what way or ways do purchases and sales of government securities in the New York money market by the federal reserve banks affect the state of that market?
- If you were Dictator of France, and took account of considerations of justice as well as of expediency, would you plan to stabilize the franc at its present (gold) value? Or would you plan for a gradual recovery of its pre-war value? Why?
- Discuss the relation of international gold movements to changes of (a) relative price levels, (b) relative discount rates.
Final. 1927.
Source: Harvard University Archives. Examination Papers 1927 (HUC 7000.28, No. 69), Papers Printed for Final Examinations [in] History, History of Religions, …, Economics,…, Social Ethics, Military Science. June, 1927.
Image Source: Allyn Young in Harvard Classbook 1925.