Syllabus - Fall 2005
Honors 103 – The Almighty Dollar
INSTRUCTOR:
OFFICE:
E-MAIL:
PHONE:
OFFICE HOURS:
Wayne Carroll
Schneider 471
carrolwd
836-3388
12:00 - 1:00 MWF, 11:00 – 12:00 TuTh, and other times when I’m in the
office.
This course will survey the history of the U.S. dollar and its role in the nation’s life. Along the
way we’ll take advantage of opportunities to discuss a number of important issues, including
monetary policy, inflation, the political economy of government policy, several critical historical
episodes, and basic economic concepts like supply and demand.
Lectures - Since most of the material in this course will be presented in the lectures and
discussions, it is essential that you attend class regularly. If you miss a class, you should obtain
that day's notes from someone else, and then ask me about any remaining questions you have.
Your grade will depend in part on your contributions to class discussions, so poor attendance can
have undesirable consequences.
Readings - The text for this course is History of the American Economy (tenth edition) by Walton
and Rockoff. This text will be used selectively: it will describe the setting for the historical
episodes we will study, and we will more closely read a few chapters on financial and monetary
history. You’re also required to purchase a classic writing guide, The Elements of Style by
Strunk and White. Finally, we will also read several journal articles, most of which will be
available through the library’s JSTOR connection.
Grading - Your grade in this course will be based on your performance on one midterm exam, a
comprehensive final exam, a short research paper, and several shorter assignments. Your grade
also will depend on the quality of your contributions to class discussions. Each of the two exams
and the short research paper will carry an equal weight in your grade, and all the shorter
assignments together probably will count about as much as one exam. Tentative dates for the
exams are:
First exam
Final exam
12 October
19 December at 8:00 a.m.
Makeup exams - You may take a makeup exam only if you contact me before the regularly
scheduled exam is given. Makeup exams will be harder than the regularly scheduled exams.
Short assignments cannot be made up for credit after they are discussed in class. If they have not
been discussed in class, they can be made up only within one week of the date they were
assigned.
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A Couple of Good General Sources – If you wish to explore tangential topics or are looking for ideas for
your research paper, here are a couple of good sources of ideas and references:

EH.Net Encyclopedia of Economic and Business History, available online at
http://eh.net/encyclopedia/

Syllabus for a higher-level course taught by a leading expert in the field, Prof. Michael Bordo
at Rutgers University: http://economics.rutgers.edu/ugradprogram/Fall2003Syl/344Bordo.pdf
Relationship of this course to the goals of the University’s Baccalaureate program – The
following are the goals of UWEC’s undergraduate program.
The baccalaureate experience shall develop for students an:

understanding of a liberal education.

appreciation of the University as a learning community.

ability to inquire, think, analyze.

ability to write, read, speak, listen.

understanding of numerical data.

historical consciousness.

international and intercultural experience.

understanding of science and the scientific methods.

appreciation of the arts.

understanding of values.

understanding of human behavior and human institutions.
Keep these goals in mind during the semester. We will try to address them whenever possible
during the course.
Any student who has a disability and is in need of classroom accommodation should contact the
instructor and the Services for Students with Disabilities Office in Old Library 2136 at the
beginning of the semester.
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Tentative Schedule of Topics and Readings
1. Introduction (2 days)
2. Money: an introduction (3 weeks)
a. Quick survey of forms of money through history
b. Money and monetary policy today
c. Why is there money? The double coincidence of wants
d. Basic monetary economics: money and inflation
e. The quantity theory and the equation of exchange
Required Readings:
Jevons, William Stanley, Money and the Mechanism of Exchange, “Chapter I: Barter.” New
York: D. Appleton and Company (1898). (HG221.J5 1898; excerpts to be distributed in
class)
Additional Sources:
Paul Einzig, Primitive Money. Pergammon Press: Oxford. 1966. (HG 235.E35 1966)
Glyn Davies, A History of Money. University of Wales Press: Cardiff. 1994. (HG 231.D38
1994)
Richard Sylla, “Monetary Innovation in America,” The Journal of Economic History, Vol.
42, No. 1 (1982): 21-30. (JSTOR)
Donald McCloskey, “Does the Past Have Useful Economics?” Journal of Economic
Literature, Vol. 14, No. 2 (June 1976): 434-461. (JSTOR)
3. Colonial money (2 weeks)
a. Definition of “money” in the colonial period
b. Determinants of the value of a commodity money: supply and demand
c. Does the quantity theory explain the colonial monetary experience?
Required Readings:
Walton and Rockoff, chapter 4
“Money the Sinews of Trade,” 1731, in Andrew McFarland Davis, ed., Colonial Currency
Reprints, 1682-1751, available on microfiche in the series Library of American Civilization
(to be distributed in class).
Theodore Thayer, “The Land-Bank System in the American Colonies,” The Journal of
Economic History, Vol. 13, No. 2 (Spring 1953): 145-159. (JSTOR)
Bruce Smith, “American Colonial Monetary Regimes: The Failure of the Quantity Theory
and Some Evidence in Favour of an Alternate View,” The Canadian Journal of Economics,
Vol. 18, No. 3 (Aug. 1985): 531-565. (JSTOR)
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Philip Alexander Bruce, Economic History of Virginia in the Seventeenth Century, “Chapter
XIX,” 495-521 (to be distributed in class).
Other Sources:
Robert E. Wright, “Origins of Commercial Banking in the United States, 1781-1830.”
Available online at http://www.eh.net/encyclopedia/wright.banking.commercial.origins.php
Michener, Ron, “Money in the American Colonies.” Available online at
http://www.eh.net/encyclopedia/michener.american.colonies.money.php
Flynn, David T., “Credit in the Colonial American Economy.” Available online at
http://eh.net/encyclopedia/?article=flynn.colonialcredit
Bruce Smith, “Some colonial Evidence on Two Theories of Money: Maryland and the
Carolinas,” The Journal of Political Economy, Vol. 93, No. 6 (Dec. 1985): 1178-1211.
(JSTOR)
Elmus Wicker, “Colonial Monetary Standards Contrasted: Evidence from the Seven Years’
War,” The Journal of Economic History, Vol. 45, No. 4 (Dec. 1985): 869-884. (JSTOR)
Benjamin Franklin, “A Modest Enquiry into the Nature and Necessity of a Paper-Currency,”
(1729), available online at: http://etext.lib.virginia.edu/users/brock/webdoc6.html
Bennett McCallum, “Money and Prices in Colonial America: A New Test of Competing
Theories,” The Journal of Political Economy, Vol. 100, No. 1 (Feb. 1992): 143-161.
(JSTOR)
McCusker, John J., Money and Exchange in Europe and America, 1600-1775: A Handbook.
Chapel Hill: University of North Carolina Press. (1978) (HG219 .M3)
4. Models of money (2 weeks)
a. Central questions: Why do people hold money? How much do they choose to hold?
b. Criteria for a good model
c. Examples of models
d. Overlapping generations models
e. Money and social security as alternative “social contrivances”
Required Readings:
Wallace, Neil, “Why the Fed Should Consider Holding M0 Constant,” Federal Reserve of
Minneapolis Quarterly Review Volume 1, No. 1 (Summer 1977). Available online at
www.minneapolisfed.org/research/qr/qr112.pdf.
Samuelson, Paul A. “An Exact Consumption-Loan Model of Interest with or without the
Social Contrivance of Money,” Journal of Political Economy, Vol. 66, No. 6. (Dec., 1958),
pp. 467-482. (JSTOR)
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5. A closer look at the welfare effects of inflation (1 week)
6. Antebellum money and banking (2 weeks)
a. Money in the Revolutionary War
b. Hamiltonian contribution: money in the new republic
c. First Bank of the United States and Second Bank of the United States: economic and
political issues
d. The Free Banking Era and Wildcat Banking
Required Readings:
Walton and Rockoff, chapter 12
Arthur Rolnick, Bruce Smith, and Warren Weber, “In Order to Form a More Perfect
Monetary Union,” Federal Reserve of Minneapolis Quarterly Review Volume 17, No. 4 (Fall
1993). Available online at http://www.minneapolisfed.org/research/QR/QR1741.pdf.
Arthur Rolnick and Warren Weber, "Free Banking, Wildcat Banking, and Shinplasters,"
Federal Reserve of Minneapolis Quarterly Review 6 (Fall 1982): 10-19. Available online at
http://www.minneapolisfed.org/research/QR/QR632.pdf.
Other sources:
Temin, Peter, “The Economic Consequences of the Bank War,” The Journal of Political
Economy, Vol. 76, No. 2 (Mar.-Apr. 1968): 257-274. (JSTOR)
Champ, Bruce, Neil Wallace, and Warren Weber, “Resolving the National Bank Note
Paradox,” Federal Reserve Bank of Minneapolis Quarterly Review, vol. 16, no. 2 (Spring
1992). Available online at www.minneapolisfed.org/research/qr/qr1622.pdf.
Haxan, Iftekhar and Gerald P. Dwyer, Jr., “Bank Runs in the Free Banking Period,” Journal
of Money, Credit and Banking, Vol. 26, No. 2 (May 1994): 271-288. (JSTOR)
Rolnick, Arthur and Warren Weber, “Explaining the Demand for Free Bank Notes,” Federal
Reserve Bank of Minneapolis Quarterly Review, vol. 12, no. 2 (Spring 1988). Available
online at www.minneapolisfed.org/research/qr/qr1222.pdf.
Engerman, Stanley, “a Note on the Economic Consequences of the Second Bank of the
United States,” The Journal of Political Economy, Vol. 78, No. 4, Part 1 (Jul.-Aug. 1970):
725-728. (JSTOR)
7. Money in the Civil War (2 weeks)
a. Union: greenbacks, inflation, and Resumption
b. Confederacy: wartime finance and inflation
c. The National Bank Act and the origins of the dual banking system
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Required Readings:
Walton and Rockoff, chapter 19
McCandless Jr., George, “Money, Expectations, and the U.S. Civil War,” The American
Economic Review, Vol. 86, No. 3 (June 1996): 661-671. (JSTOR)
Hammond, Bray, “The North’s Empty Purse, 1861-1862,” The American Historical Review,
Vol. 67, No. 1 (Oct. 1961): 1-18. (JSTOR)
Other sources:
John Wilson Million, “The Debate on the National Bank Act of 1863,” The Journal of
Political Economy, Vol. 2, No. 2 (March 1984): 251-280. (JSTOR)
Wesley Mitchell, “The Circulating Medium During the Civil War,” The Journal of Political
Economy, Vol. 10, No. 4 (Sep. 1902): 537-574. (JSTOR)
9. Bimetallism (2 week)
a. Ante-bellum bimetallism
b. The Crime of 1873
c. William Jennings Bryan and the Wizard of Oz
Required Readings:
Arthur Rolnick, and Warren Weber, “Gresham’s Law or Gresham’s Fallacy?” Journal of
Political Economy, vol. 94, no. 1, pp. 185-199. (February 1986). (JSTOR)
Milton Friedman, “The Crime of 1873,” The Journal of Political Economy, Vol. 98, No. 6
(Dec. 1990): 1159-1178. (JSTOR)
Rockoff, Hugh, “The ‘Wizard of Oz’ as a Monetary Allegory,” Journal of Political Economy,
vol. 98, no. 4, pp. 739-760 (August 1990). (JSTOR)
Recommended Readings:
Milton Friedman (Fall 1990), "Bimetallism Revisited," Journal of Economic Perspectives,
vol. 4, no. 4, pp. 85-104. (JSTOR)
10. Bank Panics and the Federal Reserve System (1 week)
a. The Panic of 1893
b. The Panic of 1907
c. The Creation of the Federal Reserve System
Required Readings:
Federal Reserve Bank of Boston, “Panic of 1907,” available at:
www.bos.frb.org/education/pdf/panicof1.pdf
Moen, Jon. "Panic of 1907". EH.Net Encyclopedia, edited by Robert Whaples. August 15,
2001. Available online at http://eh.net/encyclopedia/?article=moen.panic.1907