Category: Money and Banking

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Business Cycles Exam Questions Harvard Money and Banking

Harvard. Money, Banking, and Crises. Description, Enrollment, and Year-end Exam. Day, 1911-1912

I don’t know why the department of economics felt a need to merge two semester courses into a single two semester sequence,  but in 1911-12 Edmund Ezra Day’s two distinct courses were joined into a single sequence covering money, banking and crises. Maybe it was really a desire to reduce three semester courses (1) money (2) banking and foreign exchange (3) and commercial crises into two semesters.

The mid-year exam for the first term of the two-semester course on money, banking, and crises was not found with the other exams of the 1911-12 academic year in the Harvard archives. One has to make do with what one’s got.

Professor Edmund Ezra Day’s biographical timeline was posted earlier.

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Banking, Foreign Exchange and Crises pre-1911/12

Links to earlier course material for Banking, Foreign Exchange, and Crises from Harvard, 1902-03 through 1910-11.

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Meet the Course Teaching Assistant

Thomas York (1883–1941)

Dec. 22, 1883 — Born, Mount Carmel, Pennsylvania, son of Walenty (“Valentine”) and Anna York, Polish immigrants.

1900 — Graduates Mount Carmel High School.

1903 — Enters Phillips Exeter Academy in preparation for Harvard; matriculates at Harvard College, 1903.

1903–06 — In residence at Harvard College.

1907 — Receives A.B., summa cum laude, with the Class of 1907 (having completed the course in three years).

1907–1910 (c.) — Teaches Latin and Greek at the Morristown School, a boys’ boarding school in Morristown, N.J.

1910 — Returns to Harvard, entering the Graduate School to study economics.

1911 — Receives A.M.

1911–1913 — Serves as Assistant in Economics, Harvard University, under Professor  Day, including work on Economics 8 (Money, Banking and Crises).

1913 (c.) — Leaves Harvard without pursuing the Ph.D.; joins the staff of the Wall Street Journal.

Sept. 4, 1918 — Marries Isabel Smith of Mount Carmel, in New York City (Mount Carmel Item, Sept. 6, 1918).

Sept. 12, 1918 — WWI draft registration; listed as reporter, Wall Street Journal; residence 609 West 127th Street, New York, with wife Isabel.

1920 — Publishes Foreign Exchange: Theory and Practice.

1920 (c.) — Leaves the Wall Street Journal after seven years on its staff (having risen to Foreign Exchange Editor); joins the Ronald Press Company, New York, publishers of business and financial books.

1920–1922 — Prepares an enlarged edition of his foreign-exchange book.

1923 — Publishes International Exchange, Normal and Abnormal; favorably reviewed in the New York Times (Apr. 8, 1923) and celebrated in his hometown paper, the Mount Carmel Item (Apr. 9, 1923).

1920–1941 — Serves twenty years on the editorial board of the Ronald Press Company, supervising numerous finance and business titles; contributes to financial periodicals and lectures at financial conventions; frequently consulted by banking and brokerage houses.

(undated, pre-1941) — Works on an unpublished manuscript on banking, accounting, and corporation law, left incomplete at his death.

Jan. 12, 1941 — Dies suddenly of a heart attack at his home, 5 West 65th Street, New York City, age 57.

Jan. 13–14, 1941 — Death reported in the Mount Carmel Item and the New York Times.

(after 1941) — Widow Isabel Smith York donates his unpublished manuscript to Baker Library Special Collections and Archives, Harvard Business School.

Sources: Harvard College Class of 1907, Secretary’s First, Second, Fourth, and Fifth (Quindecennial) Reports; Cambridge, Mass. city directories (1912–13); Mount Carmel Item (Sept. 6, 1918; Apr. 9, 1923; Jan. 13, 1941); New York Times (Apr. 8, 1923; Jan. 14, 1941); WWI draft registration card (Sept. 12, 1918); Baker Library Special Collections and Archives, Harvard Business School, finding aid (bak01111).

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THOMAS YORK [as of 1922]

BORN at Mt. Carmel, Pa., Dec. 22, 1883.
SON OF: Walter, Anna York.
PREPARED AT: Phillips Exeter Academy, Exeter, N.H.
YEARS IN COLLEGE: 1903-06.
DEGREES: A.B. 1907, Α.Μ. 1911.
MARRIED: Isabel Smith, September 1918, Mt. Carmel, Pa.
OCCUPATION: Publisher.
ADDRESS: c/o Ronald Press Co., 20 Vesey St., New York, N.Y.

                  I HAVE been engaged in sundry occupations since leaving College. For three years I taught Latin and Greek at the Morristown School, a private institution for boys at Morristown, N.J. The classics, however, offered little opportunity for my rising ambition, and I, therefore, decided to turn to matters of more up-to-date interest. So in the fourth year of graduation I came back to Harvard to enter the Graduate School, and there I spent three diligent years delving into the dismal science, otherwise known as economics. I still had teaching in view, but at the close of my graduate course I definitely abandoned the idea. I hasten to add, lest there be some misunderstanding, that I am not the possessor of the Ph.D. A constitutional dislike of the grind that is the condition precedent of obtaining that degree turned me away from pursuit of it.

                  Having accumulated a modicum of knowledge about banking and finance during my Graduate School days, I decided to try my fortune in financial journalism. So I am next found on the staff of the Wall Street Journal. Here I had a varied experience, marketwise and otherwise. I made valiant attempts during my first years in the Street to find the proverbial pot of gold. Not meeting with success I turned to less distracted, though more laborious, pursuits, visible evidence of which is furnished by a book on foreign exchange. Not satisfied with this maiden effort at authorship, I undertook to get out an enlarged edition of the book, and this has engaged my spare time for the last two years. I have in the meantime also been contributing to some financial periodicals.

                  I left the Wall Street Journal two years ago, after serving seven years on its staff. Since then I have been associated with the Ronald Press Company, 20 Vesey Street, New York, publishers of business and financial books.

                  In September of 1918 I joined the ranks of the benedicts. My wife was Miss Isabel Smith of my home town, Mt. Carmel, Pa.

Source: Secretary’s Fifth Report. Harvard College Class of 1907 (June, 1922), pp. 596-597.

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Course Description
1911-12

[Economics] 8. Money, Banking, and Crises. Mon., Wed., Fri., at 1.30. Dr. Day.

This course aims to analyze the principal problems of money and credit. An examination is first made of the more important existing monetary systems. This is followed by a careful review of the more instructive chapters in the monetary history of England, Germany, France, the United States, Austria, British India, Mexico, and the Philippines.

The nature, origin, and early growth of commercial banking are considered. A thorough investigation of present banking practice in England, France, Germany, and Canada is followed by a study of banking history and present banking problems in the United States. In this connection foreign exchange and the money markets of London, Paris, Berlin, and New York are examined.

Finally attention is turned to those problems of money and credit which appear most prominently in connection with economic crises. Though emphasis is thrown upon the financial aspects of the trade cycle, the investigation covers the more fundamental factors causing commercial and industrial fluctuations.

Short papers upon assigned topics will be required of all students. The course is open to those only who have passed in Economics 1.

Source: Division of History, Government, and Economics: 1911-12 (1st ed.). Official Register of Harvard University, Vol. VIII, No. 23 (June 15, 1911), p. 64.

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Course Enrollment
1911-12

Economics 8. Dr. E. E. Day, assisted by Mr. York. — Money, Banking, and Commercial Crises.

Total 120: 7 Graduates, 16 Seniors, 70 Juniors, 22 Sophomores, 4 Freshmen, 1 Others.

Source: Harvard University. Report of the President of Harvard College, 1911-1912, p. 64.

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ECONOMICS 8
Year-end Final Examination
1911-12

  1. Give (in not more than 100 words, using tabular form if you wish) the history of the silver dollar in the United States. What is its present position? Is it a source of weakness in our monetary system? If so, why? If not, why not?
  2. Describe the monetary experience of India from 1893 to 1901. What were the immediate and ultimate standards of value in India in (1) 1895, (2) 1899, (3) 1901?
  3. Compare the bank note issues of Germany and Canada with reference to (1) elasticity; (2) limitations upon the aggregate circulation; (3) ultimate security. Which system seems to you preferable for the United States? Why?
  4. Define discount market. Describe the English discount market. How has the absence of such a market affected banking in the United States? What provisions of the Aldrich Bill are designed to establish a discount market in this country?
  5. To what degree does the rate of discount vary in different parts of (1) Canada, (2) the United States? How in each case is the absence of perfect uniformity to be accounted for? If the Aldrich Plan were adopted, could the Reserve Association probably control the rate of discount in the United States? If so, how? If not, why not?
  6. Describe briefly the following phenomena in the crisis of 1907: (a) currency premium; (b) hoarding; (c) the domestic exchanges; (d) substitutes for cash.
  7. State concisely the theory of crises advanced by Professor Fisher in “The Purchasing Power of Money.” Discuss the theory critically.
  8. Indicate fully the significance of the following “indices” in an analysis of general business conditions:

(1) Value of the corn crop;
(2) Railway net earnings;
(3) Business failures;
(4) Gold exports.

In each case explain why the “index” has or has not significance.

Source: Harvard University Archives. Harvard University — Examination papers, 1873-1915. Box 6. Bound volume, Examination Papers, 1912. Harvard University Examinations. Papers Set For Examinations in History, History of Science, Government, Economics […], pp. 54-55.

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Exams from earlier years

1902/03-1907/08. Commercial Crises and Trade Cycles (A.P. Andrew)
1906/07. Banking and Foreign Exchange (A.P. Andrew)
1907/08. Banking and Foreign Exchange (A.P. Andrew)
1908/09. Commercial Crises and Trade Cycles (Wesley Clair Mitchell)
1908/09. Banking and Foreign Exchange (W.C. Mitchell)
1909/10. Commercial Crises and Trade Cycles [Not offered].
1909/10. Banking and Foreign Exchange (O.M.W. Sprague)
1910/11. Commercial Crises and Cycles of Trade (E.E. Day)
1910/11. Banking and Foreign Exchange (E.E. Day)

Source: Edmund Ezra Day (colorized by Economics in the Rear-view Mirror) in the Harvard Class Album 1915.

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Exam Questions Harvard Monetary economics Money and Banking

Harvard. Money. Course description, enrollment, final examination. Huse, 1910-1911

Before Abram Piatt Andrew began teaching a course on money, literally at the turn of the 20th century, the subject of money was treated jointly with national debt. That was how Charles F. Dunbar approached the subject. Charles Phillips Huse was the third instructor to fill the gap left by A. Piatt Andrew. In the following year “money” would merge with “banking and commercial crises”.

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Previous money course materials

1900-01(Abram Piatt Andrew’s money exam)
1901-02 (Abram Piatt Andrew’s money exam) Reading list for money 1901-02.
1902-03 (Abram Piatt Andrew’s money exam)
1903-04 (Abram Piatt Andrew’s money exam)
1904-05 (Abram Piatt Andrew’s money exam)
1905-06 (Abram Piatt Andrew’s money exam)
1906-07 (Abram Piatt Andrew’s money exam)
1907-08 (Abram Piatt Andrew’s money exam)
1908-09 (Wesley Clair Mitchell’s money exam)
1909-10 (Davis Rich Dewey’s money exam)

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Course Description
1910-11

8a 1hf. Money. — A general survey of currency legislation, experience, and theory in recent times. Half-course (first half-year). Mon., Wed., and (at the pleasure of the instructor) Fri., at 1.30. Dr. [Charles Phillips] Huse.

This course aims to show how the existing monetary systems of the principal countries have come to be, and to analyze the more important currency problems. It begins with a brief history of the precious metals, which is connected, in so far as possible, with the history of prices and the development of monetary theory. The history of coinage legislation in England and Europe and the United States is traced, and leads to a consideration of various aspects of the bimetallic controversy. At convenient points, the experiences of various countries with paper money are reviewed and the influence of such issues upon wages, prices, and trade examined. Attention is also given to the non-monetary means of payment and the questions of monetary theory arising from their use. Among other subjects treated are the several methods of measuring exchange value, the explanation of price movements, the relations between prices and the rate of interest, the effects of appreciation and depreciation, the criteria of an ideal standard, and the reasons for divergences in the value of money as between different countries.

Course 8a is open to those only who have taken Course 1. 

Source: History and Political Science, Comprising the Departments of History and Government, and Economics, 1910-11. Published in the Official Register of Harvard University. Vol. VI,I No. 23 (June 21, 1910), pp. 57-58.

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Course Enrollment
1910-11

Economics 8a 1hf. Dr. [Charles Phillips] Huse. — Money. A general survey of currency legislation, experience, and theory in recent times.

Total 108: 2 Graduates, 30 Seniors, 50 Juniors, 18 Sophomores, 2 Freshmen, 6 Others.

Source: Harvard University. Report of the President of Harvard College, 1910-1911, p. 49.

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ECONOMICS 8a
Mid-year Examination, 1910-11

  1. Explain briefly: (1) bills of credit; (2) assignats; (3) fractional currency; (4) rupee; (5) “conant”; (6) balboa; (7) guinea.
  2. Trace briefly the changes in the output of gold and silver since 1492. Give the important changes in the market ratio.
  3. Trace the monetary history of the United States from 1792 to 1860. Briefly rewrite this history on the assumption that the United States had adopted the French mint ratio.
  4. Write a brief history of the American trade dollar, stating the circumstances which led to its issue and withdrawal.
  5. Compare the Bland-Allison and Sherman Acts as to their legal provisions and actual results.
  6. Suppose the United States should permit the free coinage of our present silver dollar. What would be the probable effect of this law upon (1) debtors; (2) the value of the dime; (3) the value of the silver certificate; (4) the value of the gold certificate; (5) the value of the greenback; (6) the gold price of silver; (7) prices in Holland; (8) prices in the Dutch East Indies?
  7. The monetary laws of a certain country permit the free coinage of a gold dollar containing 25 grains of pure gold, and of a silver dollar containing 700 grains of pure silver. Subsidiary silver is coined on government account at a ratio of 15 to 1. The necessities of war have, however, led to the issue of irredeemable legal tender paper. Assuming that the market ratio is 30 to 1, state what coins you would find in circulation (1) before the war; (2) when the paper dollar was worth 75 cents in gold; (3) when it was worth 60 cents in gold; (4) when it was worth 45 cents in gold. Devise a scheme for making the paper dollar and the gold dollar circulate at a parity. (Show the method by which your answers were obtained.)
  8. A certain Asiatic country permits at present the free coinage of a dollar containing 348.3 grains of pure silver. How much is this dollar worth in money of the United States, assuming the present price of silver to be 54 cents an ounce? Without changing the weight or fineness of the dollar, tell how you would give this country a monetary system that would prevent fluctuations in the gold value of its coins and insure an adequate supply of money, even though the market ratio should become 30 to 1. (Give exact figures.)

Source: Harvard University Archives. Harvard University, Mid-year Examinations, 1852-1943. Box 8, Bound vol. Examination Papers, Mid-Years, 1910-11.

Image Source:  “Money Talks” from the cover of Puck, Vol LX, No. 1541 (September 12, 1906). Library of Congress Prints and Photographs Division Washington, D.C.  “William Randolph Hearst sitting with two large, animated, money bags resting on his lap, with arms and legs, and showing two large coins as heads; on the floor next to Hearst is a box labeled ‘WRH Ventriloquist’.”

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Exam Questions Harvard Money and Banking

Harvard. Description, enrollment and final exam for Banking and Banking Systems. Sprague, 1909-1910

Assistant professor of banking and finance, Oliver Mitchell Wentworth Sprague, was assisted by George Randolph Grua when he taught the second semester in the two term sequence in money and banking at Harvard in 1909-10. The course description says “The work is both historical and comparative in its methods,” unlike the bulk of contemporary money and banking courses that are locked into the here and now.

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Previous course materials for
Money and Banking 

1900-01(Meyer and Sprague)
1901-02 (Andrew, Sprague, Meyer)
1902-03 (Andrew’s money exam, Sprague’s banking exam)
1903-04 (Andrew and Sprague)
1904-05 (Andrew’s money exam, Sprague’s banking exam)
1905-06 (Andrew’s money and banking exams)
1906-07 (Andrew’s money and banking exams)
1907-08 (Andrew’s money and banking exams)
1908-09 (Wesley Clair Mitchell’s money and banking exams)
1909-10 (Davis Rich Dewey’s money exam)

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Course Description
1909-10

8b 2hf. Banking and the History of the leading Banking Systems. Half-course (second half-year). Mon., Wed., Fri., at 1.30. Asst. Professor Sprague, assisted by Mr. Grua.

In Course 8b, after a summary view of early forms of banking in Italy, Amsterdam, and Hamburg, a more detailed account is given of the development, to the middle of the nineteenth century, of the system of banking in which notes were the principal form of credit and the chief subject of discussion and legislation. The rise and growth of the modern system of banking by discount and deposit is then described. The work is both historical and comparative in its methods. The banking development, legislation, and present practice of various countries, including England, France, Germany, Scotland, and Canada, are reviewed and contrasted. Particular attention is given to banking history and experience in this country: the two United States banks; the more important features of banking in the separate states before 1860; the beginnings, growth, operation, and proposed modification of the national banking system; and credit institutions outside that system, such as state banks and trust companies.

The course of the money markets of London, Paris, Berlin, and New York will be followed during a series of months, and the various factors, such as stock exchange dealings, and international exchange payments, which bring about fluctuations in the demand for loans, and the rate of discount upon them will be considered. In conclusion the relations of banks to commercial crises will be analyzed, the crises of 1857 and 1893 being taken for detailed study.

Written work, in the preparation of short papers on assigned topics, and a regular course of prescribed reading will be required of all students.

The course is open to those who have taken Economics 1.

Source: Official Register of Harvard University, Vol. VI, No. 29 (23 July 1909). History and Political Science Comprising the Departments of History and Government, and Economics, 1909-10, p. 58.

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Course Enrollment
1909-10

Economics 8b 2hf. Asst. Professor Sprague, assisted by Mr. Grua. — Banking and Foreign Exchange.

Total 96: 3 Graduates, 20 Seniors, 49 Juniors, 17 Sophomores, 2 Freshmen, 5 Others.

Source: Harvard University. Report of the President of Harvard College, 1909-1910, p. 44.

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ECONOMICS 8b
Year-end Examination, 1909-10

Answer nine questions.
  1. Give a short account of the London gold market.
  2. By what means and to what extent was the Second Bank of the United States able to control the expansion of credit by the other banks of the country?
  3. The bond secured notes issued by the national banks have not been a serious element of positive weakness in the working of our credit machinery. Explain.
  4. In what ways would savings departments with segregated deposits strengthen the national banks?
  5. If a central bank is established in the United States it is of the greatest importance that clearing house settlements should be made by means of transfers on its books. Explain.
  6. Give an account of the circumstances which led to the adoption of the device of the clearing house loan certificate.
  7. Consider the working of the Canadian banking system with reference to the borrower.
  8. Give a short account of the banking situation in the United States in 1860, outside of New England and New York.
  9. Criticise the banking proposals of the Indianapolis Monetary Commission.
  10. Is it possible to equalize rates for loans throughout the country by means of a central bank?
  11. Consider the policy of Secretary Shaw with reference to gold imports.

Source: Harvard University Archives. Harvard University, Examination Papers, 1873-1915. Box 9, Bound vol. Examination Papers 1910-11; Papers Set for Final Examinations in History, Government, Economics,…,Music in Harvard College (June, 1910), p. 45.

Image Source: O.M.W. Sprague from Harvard Class Album, 1915.

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Exam Questions Harvard M.I.T. Money and Banking

Harvard. Course description, enrollment, final exam for Money course. Davis Rich Dewey, 1909-10

Davis Rich Dewey was a visiting lecturer in economics at Harvard in 1909-10 from M.I.T. who taught the Money course. His assistant was a recent Harvard graduate who continued on to become a lawyer who practiced law, among other things, in Maine.

Description, enrollment and final examination for Dewey’s money course are posted below.

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Teaching Assistant
George Randolph Grua

1883. Born 6 November 1883 in Green Valley, South Dakota.
1909. A.B. Harvard.
1912. LL.B. Harvard.
1913-76. Among his activities in Livermore Falls, Maine: lawyer; insurance salesman; operated an apple orchard and apiary.
1939, 1941, 1943. Representative to the Maine Legislature.
1953. Appointed Judge at the Livermore Falls Municipal Court.
1976. Died 22 July in Livermore Falls, Maine.

Source: Obituary in The Lewiston Daily Sun, July 23, 1976. Also “Who’s Who: George R. Grua, Attorney” in The Lewiston Daily Sun, June 25, 1953.

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Previous course materials for
Money and Banking 

1900-01(Meyer and Sprague)
1901-02 (Andrew, Sprague, Meyer)
1902-03 (Andrew’s money exam, Sprague’s banking exam)
1903-04 (Andrew and Sprague)
1904-05 (Andrew’s money exam, Sprague’s banking exam)
1905-06 (Andrew’s money and banking exams)
1906-07 (Andrew’s money and banking exams)
1907-08 (Andrew’s money and banking exams)
1908-09 (Wesley Clair Mitchell’s money and banking exams)

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Course Description
1909-10

8a 1hf. Money. — A general survey of currency legislation, experience, and theory in recent times. Half-course (first half-year). Tu., Th., and (at the pleasure of the instructor) Sat., at 9. Professor [Davis Rich] Dewey (Massachusetts Institute of Technology), assisted by Mr. [George Randolph] Grua.

The course begins with a brief history of the precious metals, which is connected, in so far as possible, with the history of prices and the development of monetary theory. The evolution of currency legislation in England and Europe and the United States is traced, involving a consideration of various aspects of the bimetallic controversy, and a study of the experiences of several countries with paper money. Attention is also given to the non-monetary means of payment and the questions of monetary theory arising from their use. Among other subjects treated are the several methods of measuring exchange value, the explanation of price movements, the relations between prices and the rate of interest, the effects of appreciation and depreciation, the criteria of an ideal standard, and the reasons for divergences in the value of money as between different countries.

Course 8a is open to those only who have taken Course 1.

Source: Official Register of Harvard University, Vol. VI, No. 29 (23 July 1909). History and Political Science Comprising the Departments of History and Government, and Economics, 1909-10, pp. 57-58.

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Course Enrollment
1909-10

Economics 8a 1hf. Professor [Davis Rich] Dewey (Massachusetts Institute of Technology) assisted by Mr. [George Randolph] Grua. — Money. A general survey of currency legislation, experience, and theory in recent times.

Total 56: 4 Graduates, 15 Seniors, 29 Juniors, 4 Sophomores, 1 Freshman, 3 Others.

Source: Harvard University. Report of the President of Harvard College, 1909-1910, p. 44.

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ECONOMICS 8a
Mid-year Examination, 1909-10

  1. State the various functions of money. Mention the different kinds of money in the monetary system of the United States, and describe the special functions performed by each kind.
  2. Describe the characteristics of inconvertible paper money. How are prices affected by its issue? Is such money ever worth its face value?
  3. Summarize the history of the debasement of the coinage in England, noting in particular:—
    1. The ways in which it was debased.
    2. Reasons for debasement.
    3. Recoinage of William III.
  4. Does an increased production of gold have any effect upon the rate of interest? Discuss.
  5. Explain the statement: The quantity theory is simply an application of the general principle that value is determined by demand and supply.
  6. Discuss the changes in prices due to causes connected with
    1. Commodities.
    2. Money.
  7. What influences affected the value of greenbacks during the Civil War period?
  8. Contrast the motives for the issue of government notes and of bank notes.
  9. Sketch the history of bimetallism in the United States.
  10. What was the Latin Union? State the results of its operation.

Source: Harvard University Archives. Harvard University, Examination Papers, 1873-1915. Box 9, Bound vol. Examination Papers 1910-11; Papers Set for Final Examinations in History, Government, Economics,…,Music in Harvard College (June, 1910), p. 44.

Image Source: Portrait of Professor of Economics and Statistics Davis R. Dewey in M.I.T. Technique 1910, published April 1909, p. 14.

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Exam Questions Money and Banking UCLA

UCLA. PhD Qualifying Exam, Money. May 1980

This post adds a fourth Ph.D. qualifying exam for the field of monetary economics at UCLA found in the papers of Robert W. Clower at the Economists’ Papers Archive at Duke University. 

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UCLA Qualifying Exams, Money
Previously posted

May 1971
May 1973
May 1974

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Ph.D. Qualifying Examination
Four Hours

MONEY

Spring Quarter 1980
May 19, 1980

INSTRUCTIONS: Answer all of the following eight questions. Be as specific and concise as possible. There is plenty of writing time to answer all of the questions satisfactorily, so try to spend some time thinking about each question before beginning to write an answer to it. Irrelevant material presented, however correct it may be, will be penalized.

  1. —
    1. Outline a proof of Patinkin’s proposition that real balances are indeterminate under a classical dichotomy between real and monetary sectors.
    2. Why is the proof inappropriate in a classical money economy, one with competitive banking and convertibility of paper money into a real commodity?
  2. —
    1. What special problem(s) does a limited horizon create for an inconvertible paper money system in which the money supplier is not committed to retire the issue?
    2. If we assume an unlimited horizon (a positive probability that the economy will last forever) do some problems still remain? If so, could governmental suppliers of money avoid such problems? Could a private money supplier?
  3. —
    1. What is the statically optimal rate of inflation in a competitive economy with a noninterest-bearing fiat money?
    2. Would you recommend adoption of this rate of inflation as a long-run policy guideline for the U.S. economy? Explain.
  4. In the standard Walrasian model of General Equilibrium an efficient allocation of resources is achieved without the use of any device called “money.” Yet the introduction and use of money is usually presumed to generate economic gains. How would you resolve this apparent conflict? Be specific in defining what you think “money” is and in identifying possible sources of economic gains.
  5. On the basis of arguments by Mickey Mouse and other leading economists, Congress in 1980 terminated all open-market operations by the Federal Reserve System and declared fine tuning through the use of monetary policy to be the moral equivalent of aggravated assault. Discuss the probable implications of this action for
    1. The rate of inflation
    2. Rates of interest
    3. Unemployment
    4. Government expenditure during the decade of the 1980’s.
  6. A few years ago an economist wrote a letter to the Wall Street Journal complaining that much discussion of how to control inflation was based on a neo-quantity theory that emphasized “the quantity of money” but ignored “the quality of credit.” The Federal Reserve System was established, he noted, to regulate commercial bank assets, but current discussion (and policy) concentrated on the liability side of the commercial bank balance sheet and entirely ignored the asset side. The economist maintained that if, for example, commercial banks were forced to limit their lending activity to short-term, self-liquidating business loans, as initially contemplated in the Federal Reserve Act of 1913, inflation would quickly be controlled. Evaluate this argument.
  7. When bank credit cards were initially spreading through the U.S., many people argued that their use would contribute to inflation because retailers would pass on — through higher prices — the charges that they had to pay to banks for credit sales. Some people argued, however, that prices would fall because the use of credit cards would reduce overall transactions costs. Yet others argued that prices might rise or fall, depending upon the precise effects of the use of such cards upon sales volumes and upon the velocity of money. Critically assess each of these arguments.
  8. It is customary for economic theorists to distinguish in their work between “barter” and “monetary” economies, and also between “value theory” and “monetary theory.”
    1. On what basis are these distinctions made (give specific references to the literature if you can)?
    2. Do you believe the distinctions are useful? If so, explain why; if not, explain why not.

Source: Duke University. Economists’ Papers Archive. David M. Rubenstein Rare Book & Manuscript Library. Robert W. Clower papers, Box 4, Folder “Monetary Economics PhD exams. Reading list, exams UCLA 1971-1988”.

 

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Exam Questions Money and Banking UCLA

UCLA. PhD Qualifying Exam, Money. May 1974

This post adds a third Ph.D. qualifying exam for the field of monetary economics at UCLA found in the papers of Robert W. Clower at the Economists’ Papers Archive at Duke University. 

In other news, the U.S. House Committee on the Judiciary was between its first (May 9) and second (July 24) days of hearings regarding the impeachment of Richard Nixon.

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UCLA Qualifying Exams, Money
Previously posted

May 1971
May 1973

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Spring Quarter 1974
May 24, 1974

Ph.D. Qualifying Examination
MONEY

Four Hours

INSTRUCTIONS: Answer all of the following eight questions. Be as specific and rigorous as possible. There is plenty of writing time to answer all of the questions satisfactorily so try to spend a sufficient amount of time thinking before beginning to write. Irrelevant material presented, however correct, will be penalized.

  1. State whether each of the following statements Is true, false, or uncertain and then briefly explain your answer. Your grade depends entirely upon your explanation.
    1. In countries which undergo frequent, large changes in the rate of monetary growth, changes in the rate of monetary growth have little impact on real income compared to the effect those changes would have had had monetary growth been more stable.
    2. No great error is introduced into the analysis of aggregate demand by assuming that the real income elasticity of the demand for money is unity for short-term fluctuations.
    3. Lags in the adjustment of the rate of inflation to changes in the rate of growth of the money supply imply a cyclical adjustment of the rate of inflation.
    4. If governments do not intervene, floating exchange rates imply a zero balance of payments deficit on the liquidity basis.
    5. A lag in adjustment of the rate at which banks pay interest on demand deposits implies a larger short-run than long-run effect on aggregate demand from equal changes in government spending and borrowing.
    6. If all wage contracts had escalator clauses (i.e., were tied to the price level), inflation would be self-perpetuating.
  2. According to a well-known principles textbook: “The general price level usually rises when GNP is high relative to the physical productive capacity of the economy; similarly, prices generally decline when GNP is low relative to capacity, as during the 1930’s.” In fact, wholesale prices in the U.S. declined almost 50% between 1869 and 1890 although output was generally high relative to capacity during most of this period; and wholesale prices rose nearly 50% between 1932 and 1938 although unemployment during these years ranged between 17% and 25% of the labor force.
    Suppose a diligent student in a class you are teaching confronts you with the quotation and the facts above, How would you answer?
  3. An economist recently wrote a letter to the Wall Street Journal complaining that much discussion of how to control Inflation has been based on a neo-quantity theory which emphasizes the “quantity of money” while ignoring the “quality of credit.” Central banks (he noted) have been established to regulate commercial bank assets, but current discussion and policy concentrates on the liability side of the commercial bank balance sheet and entirely ignores the asset side. He maintained that if, for example, commercial banks were forced to limit their lending activity to short-term, self-liquidating business loans, inflation would quickly be controlled. What do you think of this argument? Explain in detail.
  4. “Only real magnitudes appear as arguments in individual utility functions; accordingly, the rate of inflation of money prices (a strictly nominal phenomenon) is of no welfare significance for individuals or for society at large.” Discuss critically.
  5. A recent Wall Street Journal article noted the rapid rise both in the level of short-term interest rates and in the rate of growth of money that has occurred over the past few months. The reporter explained this phenomenon by asserting that individuals in the money market took the increase in the rate of growth of money as an indication that the Fed would later have to tighten up and therefore bid up interest rates in anticipation of this. Carefully evaluate this explanation and, if you disagree with it, present an alternative explanation.
  1. The recent rise in short-term interest rates has led to much talk about financial disintermediation.
    1. Describe this process of “disintermediation.”
    2. What is the effect of “disintermediation” on the rate of growth of money?
    3. What are the socially harmful effects of such “disintermediation?”
    4. What changes in financial institutional arrangements would you suggest to prevent such “disintermediation” from occurring?
  2. The Panamanian monetary unity is the same as that of the United States, and the circulating medium consists of U.S. coins and paper dollars. The Panamanian government cannot issue currency (it does mint coins, but this can be neglected from this problem), nor does Panama have a central bank. What monetary and fiscal tools would be available to the Panamanian Minister of Economics? What contracyclical policies are possible under what conditions?
  3. There has been much discussion recently of the effects of international conditions on domestic inflation. Discuss the effects of each of the following foreign factors on the U.S. inflation rate, making explicit any assumptions you are using in your analysis.
    1. a world-wide boom
    2. a Russian wheat failure
    3. an Arab oil boycott

Source: Duke University. Economists‘ Papers Archive. David M. Rubenstein Rare Book & Manuscript Library. Robert W. Clower papers, Box 4, Folder “Monetary Economics PhD exams. Reading list, exams UCLA 1971-1988”.

Image Source: UCLA Daily Bruin at archive.org.

Categories
Exam Questions Fields Money and Banking UCLA

UCLA. PhD Money Qualifying Examinations. Klein, Thompson, Clower, Darby. 1973

While material for the Harvard economics department has and will dominate the flow of content at Economics in the Rear-view Mirror, I will try to post items from other colleges and economics, if for no other reason than to get a change of scenery. So in this post we head out to UCLA to see what Ph.D. candidates who selected Money as a subject for a comprehensive examination were asked. The exam is transcribed from a personal copy of Robert Clower found in this papers. So from UCLA to Duke to you via Berlin.

Note the examination committee for May 1973 has been identified, one might presume that most if not all members also were involved in the October 1973 examination transcribed below.

Previously posted:

May 1971 Field Exam 

______________________________

Meet the members of the Ph.D. Comprehensive Field Exam for Money
(UCLA, Spring, 1973)

Chairman, Benjamin Klein (b. 1943. Ph.D. University of Chicago)

Earl Thompson (b. 1938; d. 2010. Ph.D. Harvard University, 1961)

Michael Darby (b. 1945. Ph.D. University of Chicago, 1970)

Robert W. Clower (b. 1926; d. 2011.  D.Litt. Oxford University 1978)

For much, much more:  The Essential UCLA School of Economics by David R. Henderson and Steven Globerman.

______________________________

Memo on Comprehensive Field Exams
in the UCLA Economics Department

April 5, 1973

TO: Economics Department Faculty
FROM: The Graduate Committee and the Acting Chairman
SUBJECT: Comprehensive Field Examinations

Some faculty members have indicated to members of the Graduate Committee uncertainty about their roles and responsibilities in the examination process. The following notes may serve to lessen those uncertainties.

Each of the eleven areas designated as “fields” by the Department has a committee charged with the responsibility for composing the examination and measuring the accomplishments of our students. While the duties involved with conducting these examinations are onerous, the exams have played a central part in the graduate curriculum and are, therefore, worthy of considerable effort.

Typically, the person named chairman of the field solicits questions for the examination from all the other members of the committee. In some cases, his solicitation may go beyond the committee to other department members as well. Usually, he then composes the examination and, before submitting it to the graduate secretary to be typed, circulates a draft copy among the committee members to seek their consensus about balance and format. In particular, it is not intended that the chairman have unilateral authority with respect to the exam’s content.

After the examination has been administered to the students, the results are evaluated. All committees, to our knowledge, have at least two members read every answer. In fields in which the number of students is small, all members read all the answers.

Finally, in order to grade the examination, most committees schedule a meeting at which some consensus about grades is forged. At such meetings, a member who has strong feelings about the qualities (or lack thereof) of any given question or examination may convince the other members. For most committees this procedure has proven more useful than that of simply handing the chairman a score sheet before any dialogue about the results has occurred.

Clearly, modes of behavior with respect to the conduct of the examinations will vary among the field committees. However, to the extent that committees can standardize their actions along the lines indicated above, student and faculty uncertainty about the examinations will diminish, with an accordingly greater emphasis on more substantive matters.

______________________________

Comprehensive Field Examinations for the M.A. and Ph.D. degrees — May 1973

Field Committees:

Economic Theory. Hirshleifer (chairman), Thompson, Clower, Demetz, Leijonhufvud

Urban and Regional Economics. Hirsch (chairman), Ellickson, Chen

Public Finance. Somers (chairman), Chen, Lindsay, Vandermeulen

Government and Industry (industrial organization). Demetz (chairman), Peltzman, Hilton, Klein

Mathematical Economics. Thompson (chairman), Britto, Clower

Econometrics. Dhrymes (chairman), Ellickson, McCall

Money. Klein (chairman), Thompson, Clower, Darby

International Economics. Baird (chairman), Chu, Rugg

Economic Development. Herrick (chairman), Britto, Wolf

Labor Economics. Herrick (chairman), Lindsay, Hilton

Economic Institutions (economic history). Murphy (chairman), Shetler, Leijonhufvud

______________________________

Ph.D. Money Qualifying Examination
October 15, 1973

Four Hours

Answer six of the following seven questions. Be as specific and rigorous as possible.

There is plenty of writing time to answer all of the questions satisfactorily so try to spend a sufficient amount of time thinking before beginning to write. Irrelevant material presented, however correct, will be penalized.

1. In his 1942 article on “Say’s Law: A Restatement and Criticism,” O. Lange defines “Walras’ Law” by the identity

\sum_{i=1}^{i=N} p_{i}X_{i}\equiv 0,

where Xi denotes the sum of all individual excess demands for the ith conmodity (“collective excess demand”), and Pi denotes the price (expressed in units of the Nth commodity) of the ith commodity. In the same article, Lange defines “Say’s Law” by the identity

\sum_{i=1}^{i=N-1} p_{i}X_{i}\equiv 0,

where pi and Xi are defined precisely as before. Calling the Nth commodity “money,” Lange then asserts that if collective excess demands in an economic system A simultaneously satisfy both Walras’ Law and Say’s Law, then:

    1. Money prices are indeterminate;
    2. Individuals will never desire to change their money balances;
    3. Money is merely a worthless medium of exchange and standard of value in economy A.
    4. The economic system A is “equivalent to a barter economy.”

Critically evaluate each of the assertions a) through d).

2. a) The rapid rise in short-term interest rates during the first half of 1973 produced what is commonly called commercial bank “disintermediation” and thereby differential movements in the rates of growth of M1 compared to M2.

Clearly describe this process and how it affects the two definitions of the money supply. In such circumstances, is the rate of growth of M1 or of M2 a better indicator of monetary policy? Can you suggest a superior monetary aggregate to use as an indicator?

b) During the past year the rate of growth of money has deviated at times substantially from the rate of growth of the base or high-powered money (i.e., there has been a change in the money multiplier) due to large changes by the Treasury in the amount of demand deposits they hold at commercial banks. This led one observer to ask whether it was the Treasury or the Federal Reserve who was making monetary policy.

Clearly describe how changes in government demand deposits affect the money supply. How can the Federal Reserve offset such changes? If the Treasury decided to become a “monetary authority” and tried to control the money supply in this way, how would they fare in competition with the Fed if the two authorities adopted different money supply goals?

3. An Englishman holidaying on a small Mediterranean island paid all his expenses with checks on his English bank. The inhabitants were so impressed by his gentlemanly bearing that instead of cashing his checks, they used them thereafter as money. Who paid for the Englishman’s holiday?

Answer this question in terms of (a) fixed exchange rates and (b) floating exchange rates. Explain how different macroeconomic views of the world affect the answers.

4. There has been much discussion about the exogeneity or endogeneity of the money supply. Explain the different meanings of these terms for policy analysis and for statistical estimation and how these differences have been a source of confusion.

5. Discuss the following proposition: The rate of unemployment is affected primarily by deviations of the actual rate of change of money or government spending from their expected rates of change, and not by the rate of change or level of money or government spending.

Does this proposition have any implications about the relative and absolute possibilities of the persistent use of fiscal or monetary policy to achieve a low rate of unemployment?

Cite any empirical evidence with which you are familiar for or against the proposition (e.g., consider the Andersen & Jordan weights on the effects of changes in government spending on changes in nominal income).

6. The Federal Reserve recently adopted a rule change where required reserves instead of being calculated on the basis of current deposits is now based on commercial bank deposits two weeks earlier (which are obviously given at the time of the calculation).

This rule change has produced a situation where the Fed can no longer affect, in any given week, the total reserves of the banking system and where the major short-run effective policy tool of the Fed is how much it “forces” commercial banks to borrow from them each week — a very crude instrument by which to control the money supply.

Do you agree or disagree? Explain carefully.

Source: Economists’ Papers Archive, David M. Rubenstein Rare Book & Manuscript Library, Duke University. Robert W. Clower Papers, Box 4, Folder “Monetary Economics, PhD exams, Reading list, exams UCLA 1971-1988”.

Image Sources: Benjamin Klein, Earl Thompson, Robert Clower, Michael Darby.

Categories
Exam Questions Money and Banking UCLA

UCLA. Monetary Economics, PhD qualifying exam. 1971

Having just spent nearly a month travelling along the East Coast of the U.S., it is great to get back to posting new content. On this trip I was able to get in three fine days of work in the Economists’ Papers Archive at Duke. While there I found much useful material for Economics in the Rear-view Mirror in the Robert W. Clower papers. A copy of his UCLA obituary can still be found at the Wayback Machine internet archive.

In 1971 Clower joined the UCLA economics department so it is unclear whether he actually contributed to the Ph.D. preliminary examination in monetary economics transcribed below 

_______________________

Ph.D. Qualifying Examination
Four Hours

May, 1971

Monetary Economics

Answer five of the following seven questions.

  1. [On the concept of money]
    1. “Contemporary monetary theory analytically treats money as merely another commodity.” State if (and why) you agree or disagree with this proposition.
    2. Money is sometimes distinguished from commodities by the following assertions. Briefly discuss the meaning of each assertion and whether you agree or disagree with it.
      1. Money has no “intrinsic value”; it cannot be enjoyed directly, but must first be converted into something else.
      2. Money is used but is not used up.
      3. Money buys goods and goods do not buy money.
      4. Money has superior liquidity than other goods.
      5. The value of money is fixed in terms of the unit of account.
      6. Money is traded directly for every commodity and vice versa, while commodities are not traded for one another.
    3. Discuss the limitations placed on research in monetary theory if money is considered merely as a commodity.
  2. Many writers have asserted in the press that the recent international currency “crisis” points up the unique role of the dollar in present international monetary arrangements. Discuss the international role of the dollar with reference to each of the following statements taken discussions of the crisis.
    1. Over the past couple of years the U.S. has been exporting an unwanted inflation to the countries of Europe, especially Germany.
    2. The immediate cause of the crisis was the presence of interest rates in the U.S. which were too low relative to those in Europe and therefore initiated massive capital flows from the U.S. to Europe.
    3. The massive accumulation by foreigners of dollars underlined the fact that the dollar has become de facto inconvertible into gold and was now little more than an unbacked IOU.
    4. The U.S. should be unconcerned with its balance of payments deficit. Under present arrangements any adjustments to international disequilibrium must be made by foreigners; and all the options available to foreign surplus countries, assuming moderately rational behavior on their part, should be acceptable to the U.S.
    5. The recent crisis points up the inherent instability of current international monetary arrangements. The increase in foreign short-term claims upon U.S. gold reserves and the revaluation of currencies in terms of the dollar will undermine the employment of the dollar as the banking currency of the world and speed the development of a unified European currency.
    6. The recent crisis has strengthened the world monetary system by bringing closer the day when the dollar-gold fixed exchange rate standard is replaced by a system of floating exchange rates.
  3. Discuss the following three propositions. (State whether they are true or false and explain why) .
    1. Legal reserve requirements are unnecessary to place a finite limit on the quantity of commercial bank deposits if the deposits are convertible into the government supplied dominant money.
    2. Elimination of the convertibility requirement would lead to an unlimited expansion of deposits.
    3. There is no limit on the extent to which the government can expand the supply of dominant money.
  4. An economist recently wrote a letter to the Wall Street Journal complaining that much discussion of how to control inflation has been based on a neo-quantity theory which emphasizes “the quantity of money” while ignoring “the quality of credit”. The Federal Reserve was established, he noted, to regulate commercial bank assets while current discussion (and policy) concentrates on the liability side of the commercial bank balance sheet and entirely ignores the asset side. He maintained that if, for example, commercial banks were forced to limit their lending activity to short-term, self-liquidating business loans, inflation would quickly be controlled. Evaluate this argument.
  5. [Monetary vs. fiscal policy.]
    1. It is sometimes argued that fiscal policy should be used to maintain domestic full employment while monetary policy should be used to maintain balance of payments equilibrium. Present this argument and clearly state the assumptions upon which it is based.
    2. Summarize and evaluate the existing empirical evidence on the effectiveness of monetary versus fiscal policy as a stabilization device
  6. [Inflation]
    1. Inflation is often considered to be a tax. In what sense is this correct? What is the magnitude of the tax? Who pays and who collects the tax?
    2. What are the effects of inflation on real resource allocation.
      [In (a) and (b) make sure you distinguish between anticipated and unanticipated inflation.]
  7. [The Gibson Paradox]
    1. What is the Gibson Paradox?
    2. Why is it considered to be a paradox?
    3. What theoretical explanations have been advanced to explain the phenomenon?
    4. What is the existing state of the evidence concerning these explanations?

Source: Duke University. David M. Rubenstein Rare Book & Manuscript Library, Economists’ Papers Archive. Robert W.Clower Papers, Box 4, Folder: “Monetary Economics PhD exams, Reading List, Exams. UCLA, 1971-1988”.

Image Source: Screen shot from Abba—Money, Money, Money karaoke video.

Categories
Curriculum Economics Programs International Economics LSE Money and Banking Suggested Reading Syllabus

LSE. Courses in Banking and Currency. Descriptions and Readings. Gregory and Tappan, 1924-25

From time to time during my wanderings through internet archives I stumble upon material that is ideal content for Economics in the Rear-view Mirror and that is worth the effort of digitization. Some old published Calendars of the London School of  Economics and Political Science can be accessed online and they provide much in the way of thick course descriptions and suggested readings.

This post is limited to the course offerings under the heading “Banking and Currency” that covers both domestic and international aspects of banking and money markets. In the academic year 1924-25 this field was covered by then Reader in Commerce, T. E. Gregory, and Assistant in Economics, Marjorie Tappan.

Almost all the readings listed for the courses have been successfully linked to on-line copies.

Other fields will be added in the near future, so do check back with Economics in the Rear-view Mirror!

___________________________

London School of Economics
and Political Science
Calendar for Thirtieth Session 1924-25

*  *  *  *  *  *  *  *  *  *  *

Who, what, and when

The Banking and Currency Instructors:

T. E. Gregory, D.Sc. (Econ.) London; Sir Ernest Cassel Reader in Commerce in the University of London.

Marjorie Tappan, B.A. Assistant in Economics.

The Degrees:

Bachelor of Science in Economics (B.Sc.Econ.)
Bachelor of Commerce (B.Com.)
Bachelor of Laws (LL.B.)
Bachelor of Arts (B.A.)
Higher Degrees, such as M.A., Ph.D., M.Sc. (Econ.), LL. M., LL.D., D.Sc. (Econ.), or D. Lit.

The Terms:

Michaelmas term (October 6 to December 12, 1924), Lent term (January 12 to March 20, 1925) and Summer term (April 27 to June 26, 1925) Terms
M.T., L.T. and S.T., respectively

___________________________

BANKING AND CURRENCY.

       The letter Y indicates that the course is a preparation for an Intermediate Examination, Z for a Final Pass Examination, and A for a Final Honours Examination. 

       The sign ¶ indicates a course beginning at 5.30 p.m. or later.

10. — Y. —Elements of Currency, Banking and International Exchange, a course of fourteen lectures by Miss Tappan, on Tuesdays, at 11 a.m., in the Lent and Summer Terms, beginning L.T. 17th February, S.T. 28th April.

[For B.Sc. (Econ.) Intermediate, B.Com. Intermediate (S.T. only) and B.A. Final Honours in Geography.]

Fee: —£1 15s.

¶ For evening students the same course of lectures will be given on Mondays, at 6 p.m., beginning 16th February.

Fee: — £1 3s. 4d.

Syllabus.

       PART I. — The principles governing the existence and distribution of international trade. Statistical problems in the measurement of international trade. The organization and operation of international markets. The balancing of international indebtedness. The Foreign Exchanges.

       PART II. — The functions of currency and the service of (a) money and (b) credit in their performance. The standard in a currency system and its relation to commodity prices. The elements of (1) The British Monetary System; (2) The British Banking System (a) pre-war; (b) at the present time. The influence of the Bank of England in the money and investment markets.

       BOOKS RECOMMENDED — PART I. — Marshall, Money, Credit and Commerce, Book III.; F. W. Taussig, Principles of Economics, Vol. I., Book IV.; Bastable, Theory of International Trade; Pigou, Protective and Preferential Import Duties; Higginson, Tariffs at Work; Hobson, C. K., The Export of Capital; Gregory, Foreign Exchange — before, during and after the War; Clare, A.B.C. of the Foreign Exchanges. The Official Statistics of British Trade.

                  PART II. — F. W. Taussig, Principles of Economics, Vol. I., Book III., Book IV., Ch. 32, 33; Hawtrey, Currency and Credit and Monetary Reconstruction, Chaps. I.-IV. and VI.; Kirkaldy, British Finance, 1914-1921; Cannan, Money and Economica, Jan., 1921, and Economic Journal, Dec., 1921; Robertson, Money; Layton, Introduction to the Study of Prices; Bagehot, Lombard Street, 1920 edition; Clare, A Money Market Primer; Duguid, The Stock Exchange.

*  *  *  *  *  *  *  *  *  *  *

11. — Z and A. — Principles of Currency and Banking, a course of twenty lectures by Miss Tappan, on Wednesdays, at 12 noon, in Michaelmas and Lent Terms, beginning M.T. 8th October, L.T. 14th January.

[For B.Sc. (Econ.) Final and B.Com. Final Part I.]

Fee:— For the Course, £2 10s.; Terminal, £1 10s.

For evening students the same course will be given on Tuesdays, at 7 p.m., beginning 7th October.

Fee:— For the Course, £1 13s. 4d.; Terminal, £1.

Syllabus.

       M.T. Metallic Currency. — The nature of money: recent discussions of the nature and adequate definition of money. The classification of monetary systems. The value of money: recent discussions of the problem. The return to sound money: deflation and devaluation. The social effects of rising and falling prices. Periodicity and anticipation in relation to monetary value.

       L.T. Banking and the Money Market. — The functions and economic significance of banking. The general structure and methods of banking. The cheque system and the nature of deposits. Banking in relation to the price level. The functions of Central Banks. The regulation of Note-issues, and the Bank Acts. Comparison with foreign systems. Recent developments in banking.

       BOOKS RECOMMENDED: — Cannan, Money in Relation to Rising and Falling Prices; Cannan, Bank Deposits (Economica No. 1.) and The Application of the Apparatus of Supply and Demand to Units of Currency (Ec. Journal, Dec. 1921); Hawtrey, Currency and Credit and Monetary Reconstruction; J. Bonar, Knapp’s Theory of Money (Ec. Journal, March, 1922); Cassel, Money and Foreign Exchange since 1914; Irving Fisher, The Purchasing Power of Money; L. von Mises, Theorie des Geldes und der Umlaufsmittel; Laughlin, The Principles of Money; Layton, Introduction to the Study of Prices; Foxwell, Papers on Current Finance; Lavington, The English Capital Market; Döring, Die Geld Theorien seit Knapp; Keynes, Monetary Reform.

*  *  *  *  *  *  *  *  *  *  *

12. — Z and — The Stock Exchange Speculative Markets, and Dealing, a course of six lectures by Dr. Gregory, on Tuesdays, at 11 a.m., in Summer Term, beginning 28th April.

[For B.Com., Group A, and B.Sc. (Econ.), Final — special subject.]

Fee:— 12s.

¶ For evening students the same course will be given on Tuesdays, at 7 p.m., beginning 28th April.

Fee:— 8.

Syllabus.

Markets, Valuation, and the Function of the Dealer. The Machinery of the Speculative Market. How far it requires organisation and regulation. The Stock Exchange as an example of the speculative market, and an indispensable adjunct of the banking system. Constitution of the London Stock Exchange. Methods of Dealing. The Settlement. Comparison with Foreign Markets. Promotion and Issue. The general causes affecting the value of securities.

       BOOKS RECOMMENDED. — Emery, Speculation on the Stock and Produce Exchanges of the U.S.A.; Emery, Ten Years’ Regulation of the Stock Exchange in Germany (Yale Review, May, 1908); Van Antwerp, New York Stock Exchange from Within; Lavington, The English Capital Market; Schwabe, Effect of War on Stock Exchange Transactions, 1915; Sayous, Les Bourses Allemandes de Valeurs et de Commerce; J. G. Smith, Organised Produce Markets; Reports on Cotton Exchange Methods, U.S. Commr. of Corporations 1908-14; various articles by Messrs. Emery, Stevens, Flux, Hooker, Chapman, Lexis, &c.; Burn, Stock Exchange Investments; Mead, Corporation Finance; Young, Plain Guide to Investment and Finance — 3rd Edition, 1919; Greenwood, Foreign Stock Exchange Practice and Company Laws; Reports of the U.S. [National] Monetary Commission.

*  *  *  *  *  *  *  *  *  *  *

13. — A. — The History of Currency and Banking, with special reference to England, a course sixteen lectures, by Dr. Gregory, on Thursdays, at 5 p.m., in Lent and Summer Terms, beginning L.T. 15th January, S.T. 30th April.

[For B.Sc. (Econ.), Final—special subject.]

Fee for the course: £2; L.T., £1 10s.; S.T., 15s.

Syllabus.

The monetary system in the Middle Ages. History of the English silver pound. The silver famine and the effects of the supplies from the American mines. The controversy on the export of bullion and the Act of 1663. The early goldsmith bankers and the rise of banking in England. The foundation and early history of the Banks of England, Scotland and Ireland. The recoinage of 1696. The guinea and its ratings. Sir Isaac Newton’s reports on the currency. The recoinage of 1774. The restrictions on the tender of silver, Lord Liverpool’s Report of 1805, and the adoption of the gold standard.     The different developments of banking in England, Scotland and Ireland during the eighteenth century. The commercial expansion after 1763. The restriction of cash payments. The Bullion Committee. Lord Stanhope’s Act. The resumption of cash payments, and the various currency proposals made in connection with it by Ricardo, Baring and Huskisson.

       The modifications of the privileges of the Bank of England, and the rise of the English joint stock banks. The Bank Acts of 1844 and 1845. Recent developments in Banking.

       Throughout the course the attention of students will be specially directed to the study of important documents and to the sources of historical information generally.

BOOKS RECOMMENDED. — Ruding, Annals of the Coinage (for reference); Dana Horton, The Silver Pound; Chalmers, Colonial Currencies (for reference); Lord Liverpool, Treatise on the Coins of the Realm; Andréadès, History of the Bank of England; Powell, The Evolution of the Money Market, 1385-1915; Bisschop, The London Money Market, 1640-1826; Ricardo, Currency Tracts in McCulloch’s edn. of the Works, also partly reprinted as Ricardo’s Economic Essays (Bell & Sons, 1923); Graham, The One-pound Note in the History of Banking in Great Britain; Cannan, The Paper Pound: 1797-1821; Tooke and Newmarch, History of Prices (for reference); Bankers’ Magazine (for reference); Various Parliamentary and other Reports: especially the Reports of 1810 and 1819; Royal Mint: Statutes, etc., relating to the Coinage of the British Empire; Reports of the U.S.[National] Monetary Commission (for reference).

*  *  *  *  *  *  *  *  *  *  *

14. — Z and A. — The Foreign Exchanges and International Banking, a course of five lectures by Dr. Gregory, on Thursdays, at 12 noon, in Summer Term, beginning 30th April.

[For B.Com., Group A, and B.Sc. (Econ.), Final—special subject.]

Fee:— 10s.

¶ For evening students the same course will be given on Thursdays, at 7 p.m., beginning 30th April.

Fee:— 6s. 8d.

Syllabus.

The concept of Foreign Exchange. Types of Bills of Exchange. Quotations and Markets. Bankers’ credits in relation to the Exchanges. The Discount Market and its relation to Finance Bills. Arbitrage. Forward purchases and sales of Bills. The regulation of Exchange rates by discount rate variations. The fundamental causes of Exchange movements, the purchasing power parity. The development of the theory of the Exchanges. The organisation of International Banking. Exchange in relation to trade. “Exchange dumping.”

BOOKS RECOMMENDED. — Whitaker, Foreign Exchange; O. Haupt, Arbitrages et Parités; Spalding, Foreign Exchange and Foreign Bills; Escher, Foreign Exchange Explained, Kemmerer, Modern Currency Reforms; Manual of Emergency Legislation (Financial Edition); Gregory, Foreign Exchange Before, During and After the War; Cassel, The World’s Monetary Problems (Constable & Co.); Cassel, Money and Exchange since 1914; J. M. Keynes, in the Manchester Guardian Reconstruction Numbers.

*  *  *  *  *  *  *  *  *  *  *

15. — Z and A. — Banking and Finance in the Principal Countries, a course of forty lectures by Miss Tappan (T.) and Dr. Gregory (L.T.), on Tuesdays, at 12 noon, and Wednesdays, at 11 a.m., beginning M.T. 7th October, L.T. 13th January.

[For B.Com., Group A, and B.Sc. (Econ.), Final — special subject.]

Fee: — Sessional, £5; Terminal, £3.

¶ For evening students the same course of lectures will be given on Tuesdays, at 8 p.m., and Wednesdays, at 7 p.m., beginning 7th October.

Fee: — Sessional, £3 6s. 8d.; Terminal, £2.

(a) The U.S.A., South America and the Near East, twenty lectures by Miss Tappan, in the Michaelmas Term.

(b) Europe, twenty lectures by Dr. Gregory, in the Lent Term.

Syllabus.

This course will describe the main features in the evolution of the Currency and Banking Organisation of the countries concerned; the present position and the main problems of current interest.

*  *  *  *  *  *  *  *  *  *  *

16.¶ — Z and A. — Banking in the British Dominions, a course of nine lectures by Dr. Gregory, on Thursdays, at 7 p.m., in the Lent Term, beginning 15th January.

[For B.Com., Group A, and B.Sc. (Econ.), Final—special subject.]

Fee: — 18s.

Syllabus.

The legal position and present economic organisation of Banking and Currency in Canada, South Africa, Australasia and India.

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17. — A. — Recent Monetary History and Monetary Controversies: an Introduction to the Monetary History of the Modern World, a course of six lectures by Dr. Gregory, on Wednesdays, at 5 p.m., in the Summer Term, beginning 29th April.

[For B.Com., Group A, and B.Sc. (Econ.), Final.]

Fee: —12s.

Syllabus.

The triumph of the gold standard in the last third of the 19th century. The re-opening of controversy; bimetallism, the gold exchange standard. The theoretical implications of the gold exchange standard. The revival of monetary mysticism. Knapp and his followers. The rise of prices and the suggested stabilisation of the value of money. Fisher’s Compensated Dollar. The spread of banking and the evolution of banking theory: was there a philosophy of Central Banking at all? The War and the ruin of the gold standard. Cassel’s theory of the Foreign Exchanges. The Monetary theories of the Brussels and Genoa Conferences Stabilisation and the Discount Rate.

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18.¶ — Banking Class, for students taking B.Com., Group A. or taking Banking as their special subject for the Final B.Sc, (Econ.), by Miss Tappan, in the Michaelmas Term on Tuesdays. at 3 p.m., beginning 14th October (day students); and Mondays, at 8 p.m., beginning 13th October (evening students). This class will be held by Dr. Gregory in the Lent and Summer Terms; on Tuesdays at 3 p.m., beginning 20th January (day students), and Thursdays at 6 p.m. beginning 22nd January (evening students).

N.B. — Reference should also be made to the following courses:—

No. 1. Accounts I.
No. 2. Accounts II.
No. 132. Mercantile Law (I.).
No. 135. Law of Banking.

Source: London School of Economics and Political Science, Calendar for Thirtieth Session 1924-25, pp. 72-75.

Image Source: Wikimedia commons. Portraits (from the 1930s?) of Theodore Emmanuel Gregory and Marjorie Tappan Hollond. Both images smoothed and colorized by Economics in the Rear-view Mirror.

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Exam Questions Johns Hopkins Macroeconomics Money and Banking

Johns Hopkins. Final exam for monetary economics. Poole, 1968

The artifact chosen for this post is the final examination for William Poole’s monetary economics course at Johns Hopkins University in 1968. Not all artifacts at Economics in the Rear-view Mirror are long.

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William Poole’s Career

William Poole became the eleventh president of the Federal Reserve Bank of St. Louis on March 23, 1998, and retired March 31, 2008.

Poole was born in Wilmington, Delaware. He received a bachelor’s degree from Swarthmore College in 1959 and a master’s degree and a doctorate in economics from the University of Chicago in 1963 and 1966, respectively. Before joining the St. Louis Fed, Poole was Herbert H. Goldberger Professor of Economics at Brown University. He served on the Brown faculty from 1974 to 1998 and the faculty of Johns Hopkins University from 1963 to 1969. Between these two university positions, he was senior economist at the Board of Governors of the Federal Reserve System. He was also a member of the Council of Economic Advisers in the first Reagan administration from 1982 to 1985.

Poole has published numerous papers in professional journals and engaged in a wide range of professional activities. He has published two books: Money and the Economy: A Monetarist View in 1978 and Principles of Economics in 1991 (coauthored with J. Vernon Henderson). During his ten years at the St. Louis Fed, he delivered over 150 speeches on a wide variety of economic and finance topics.

In 1980 and 1981, Poole was a visiting economist at the Reserve Bank of Australia; in 1991, he was the Bank Mees and Hope Visiting Professor of Economics at Erasmus University in Rotterdam. He has served on various advisory boards of the Federal Reserve Banks of Boston and New York and the Congressional Budget Office. He is a senior fellow at the Cato Institute, distinguished scholar in residence at the University of Delaware, senior economic adviser to Merk Investments, and a special adviser to Market News International.

Swarthmore honored Poole with a doctor of laws degree in 1989. He was inducted into the Johns Hopkins Society of Scholars in 2005 and presented with the Adam Smith Award by the National Association for Business Economics in 2006. In 2007, the Global Interdependence Center presented him its Frederick Heldring Award.

Source: https://web.archive.org/web/20240607041405/https://www.federalreservehistory.org/people/william-poole

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Other relevant posts

Reading list for monetary economics, 1964 (JHU)

Modigliani and Poole’s MIT reading list, 1977 (MIT)

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The Johns Hopkins University
Political Economy 662
— Monetary Theory

W. Poole

Final Exam — 2 hours
May 27, 1968

Answer three of the four questions below.

  1. In principle It would be possible to “automate” monetary policy by deriving an optimal decision rule. Explain how such a rule might actually be determined, and what the difficulties of such an approach to monetary policy might be.
  2. Discuss the theory and the cyclical behavior of the term structure of interest rates. Is an understanding of this behavior likely to be of any value to the policy-maker?
  3. “It has been argued that lags in the demand for money function may off-set lags in the expenditure sector, thus leading to a rapid response of income to monetary policy actions. But this result depends on large interest rate fluctuations and such fluctuations are inconsistent with both the notion of a speculative demand for money and with the Meiselman learning model of the term structure of interest rates.” Discuss.
  4. “In a one-sector neoclassical growth model, money will affect the growth path provided that the money is outside money and that zero interest is paid on money balances. Therefore, a sensible growth policy is to prohibit payment of interest on demand deposits and to increase the rate of growth of the money stock.” Discuss.

Source: Johns Hopkins University. The Eisenhower Library, Ferdinand Hamburger, Jr. Archives. Department of Political Economy, Series 6, Box 3. Folder: “Graduate Exams, 1933-1965”.

Image Source: William Poole at the Federal Reserve Centennial, 2014.