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Syllabus Fall 2006

Honors 103 – The Almighty Dollar

INSTRUCTOR:Wayne Carroll

OFFICE:Schneider 471

E-MAIL:carrolwd

PHONE:8363388

OFFICE HOURS:10:00 – 11:00 MWF, 11:00 – 12:00 TuTh, and other times when I’m in the office.

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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 attendancecan 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 exam13 October

Final exam19 December at1:00 p.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.

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
  • Syllabus for a higher-level course taught by a leading expert in the field, Prof. Michael Bordo at RutgersUniversity:

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 theServices for Students with Disabilities Office in Old Library 2136 at the beginning of the semester.
Tentative Schedule of Topicsand Readings

  1. Introduction (2 days)
  1. Money: an introduction (2 weeks)
  2. Quick survey of forms of money through history
  3. Money and monetary policy today
  4. Why is there money? The double coincidence of wants
  5. Basic monetary economics: money and inflation
  6. 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)

  1. Colonial money (3 weeks)
  2. Definition of “money” in the colonial period
  3. Determinants of the value of a commodity money: supply and demand
  4. 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)

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

Michener, Ron, “Money in the American Colonies.” Available online at

Flynn, David T., “Credit in the Colonial American Economy.” Available online at

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:

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)

  1. Monetary Foundations of the NewRepublic (2 weeks)
  2. Money in the Revolutionary War
  3. The great debate: Hamilton vs. Jefferson
  4. First Bank of the United States and Second Bank of the United States: economic and political issues

Required Readings:

Walton and Rockoff, chapter 12

Other sources:

Arthur Rolnick, Bruce Smith, and Warren Weber, “In Order to Form a More Perfect Monetary Union,” Federal Reserve of MinneapolisQuarterly Review Volume 17, No. 4 (Fall 1993).Available online at

  1. Models of money (1 week)
  2. Central questions: Why do people hold money? How much do they choose to hold?
  3. Criteria for a good model
  4. Examples of models
  5. Overlapping generations models
  6. Money and social security as alternative “social contrivances”

Required Readings:

Wallace, Neil, “Why the Fed Should Consider Holding M0 Constant,”Federal Reserve of MinneapolisQuarterly Review Volume 1, No. 1 (Summer 1977). Available online at

Other sources:

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)

  1. A closer look at the welfare effects of inflation (1 week)
  1. The Free Banking Era and Wildcat Banking (1 week)

Required Readings:

Arthur Rolnick and Warren Weber, "Free Banking, WildcatBanking, and Shinplasters," Federal Reserve of MinneapolisQuarterly Review 6 (Fall 1982): 10-19.Available online at

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 MinneapolisQuarterly Review, vol. 16, no. 2 (Spring 1992).Available online at

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 MinneapolisQuarterly Review, vol. 12, no. 2 (Spring 1988).Available online at

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)

  1. Money in the Civil War (2 weeks)
  2. Union: greenbacks, inflation, and Resumption
  3. Confederacy: wartime finance and inflation
  4. The National Bank Act and the origins of the dual banking system

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)

  1. 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)

  1. Bank Panics and the Federal Reserve System (1 week)
  2. The Panic of 1893
  3. The Panic of 1907
  4. The Creation of the Federal Reserve System

Required Readings:

Federal Reserve Bank of Boston, “Panic of 1907,” available at:

Moen, Jon. "Panic of 1907". EH.Net Encyclopedia, edited by Robert Whaples. August 15, 2001. Available online at