Banking and Monetary Studies

PREFACE

In planning this volume, two objectives were formulated: First,

to provide a suitably permanent means of commemorating the centennial year of a notable landmark in our financial history, the National Currency Act of 1863, and second, to present a collection of essays that would represent the interests, thinking, and methodology of monetary economists today.

In order to achieve these objectives, approximately thirty economists were invited to submit their recent work in the field of banking and money. Of these, twenty-five were able to commit themselves to the project.

Each essayist was given wide latitude, not only in the choice of subject, but also in the choice of methodology. The editor's sole injunction was a quite impossible one: to prepare the essay to satisfy the composite interests of intelligent laymen, university students, and professional economists. As professional economists for the most part, the essayists may be pardoned for the bias toward the professional reader that the volume reveals. In spite of this, however, a large majority of the essays should appeal to the nonprofessional reader as well.

Certain potential hazards associated with the liberties granted to the authors were recognized. Chief among the latter was the possibility that both excessive duplication and unfortunate omission of important material would result. While this hazard was not completely avoided in fact, the amount of duplication is surprisingly small and the gaps are rather narrow. The reader who might wish for even better coverage is referred to the second objective of the volume, which placed a premium on freedom of resource allocation. Although the essays do not always fall into a scheme of neat classification, the reader may note that the following areas are treated as the volume progresses: banking and monetary history; monetary policy; banking structure, competition, and regulation; and banking operations. Monetary theory, while not appearing as a separate body of essays, is interspersed throughout the volume.

The views contained in this collection are those of the individual writers. Indicative of the spread of academic freedom beyond the walls of the university is the fact that at least two writers appear to hold views on specific issues that vary from those held by the sponsor of this volume.

I wish to acknowledge the efforts of Dr. Victor Abramson, Dr. Sherman Shapiro, Mr. Victor Bonomo, Miss Nancy Coyne, and Mrs. Yvonne Levy, all of the Office of the Comptroller of the Currency, which materially contributed to the preparation of the volume.

Washington, D.C.
June, 1963

DEANE CARSON

ABOUT THE AUTHORS

BRAY HAMMOND, now retired, formerly served with the Board of Governors of the Federal Reserve System. He received the Pulitzer Prize in History in 1958.

PHILLIP CAGAN is Professor of Economics at Brown University and a member of the staff of the National Bureau of Economic Research.

RAYMOND KENT is Professor of Finance and Business Economics at the University of Notre Dame.

ALLAN SPROUL, formerly President of the Federal Reserve Bank of New York and Vice Chairman of the Federal Open Market Committee, is now a director of Wells Fargo Bank, San Francisco.

GEORGE HORWICH is Professor of Economics at Purdue University. He was formerly associated with the National Bureau of Economic Research and The Brookings Institution.

HYMAN MINSKY is Associate Professor of Economics, The University of California at Berkeley.

DAVID MEISELMAN is Lecturer in Political Economy at The Johns Hopkins University, Senior Economist for the House Banking and Currency Committee, and a member of the staff of the National Bureau of Economic Research.

LAWRENCE S. RITTER, former Chief of the Domestic Research Division of the Federal Reserve Bank of New York, is now Chairman of the Department of Finance at the Graduate School of Business Administration, New York University.

J. M. CULBERTSON, formerly a member of the Research Division of the Federal Reserve Board, is now Professor of Economics and Commerce at the University of Wisconsin.

HARRY G. JOHNSON is Professor of Economics at the University of Chicago and Editor of the Journal of Political Economy. He was sometime Fellow, Kings College, Cambridge, and Professor of Economic Theory at Manchester University.

WILLIAM G. DEWALD, formerly an Associate Economist at the Federal Reserve Bank of Minneapolis, is now Assistant Professor of Economics at the University of Chicago.

MURRAY E. POLAKOFF is Professor of Finance at the Graduate School of Business Administration, New York University and a member of the faculty of the Graduate School of Savings Banking at Brown University.

NEIL H. JACOBY, sometime member of the President's Council of Economic Advisors, and U.S. Representative in the Economic and Social Council of the United Nations, is now Professor of Business Economics and Policy at the University of California at Los Angeles.

DAVID FAND, formerly on the staff of the Council for Economic Development, is now Professor of Economics at the State University of New York at Buffalo.

G. L. BACH is Maurice Falk Professor of Economics and Social Science in the Graduate School of Industrial Administration at the Carnegie Institute of Technology.

ROLAND I. ROBINSON is now Professor of Financial Administration and Economics at Michigan State University. He has also been Advisor to the Division of Research and Statistics, Board of Governors of the Federal Reserve System.

PAUL HORVITZ, now a member of the staff of the Department of Banking and Economic Research in the Office of the Comptroller of the Currency, was formerly on the research staff of the Federal Reserve Bank of Boston. CLIFTON KREPS, JR., is now Wachovia Professor of Banking, Graduate School of Business Administration, University of North Carolina; formerly he was Chief, Financial and Trade Statistics Division of the Federal Reserve Bank of New York.

RICHARD SELDEN is Professor of Economics at Cornell University and a member of the staff of the National Bureau of Economic Research. Bernard Shull is currently Senior Economist with the Department of Banking and Economic Research, Office of the Comptroller of the Currency. He was formerly Economist at the Federal Reserve Bank of Philadelphia and Lecturer in the Department of Economics at the University of Pennsylvania. LELAND J. PRITCHARD is Professor of Finance, Department of Economics, the University of Kansas and the current President of the Midwest Economic Association.

JACOB COHEN is Professor of Economics at Bowling Green State University. JAMES TOBIN, a former member of the President's Council of Economic Advisors, and 1955 winner of the John Bates Clark medal of the American Economic Association, is now Sterling Professor of Economics at Yale University.

DEANE CARSON, on leave from the Department of Economics at Brown University, is serving as Senior Economist in the Office of the Comptroller of the Currency.

IRA O. SCOTT, on leave from the Graduate School of Business, Columbia University, is Senior Economist with the House Banking and Currency Committee.