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All Rights Reserved

Published June 1916

Composed and Printed By
The University of Chicago Press

Chicago, Illinois, U.S.A.


This volume is the result of four years of experimentation in the teaching of an introductory course in Money and Banking. It is not a book of collateral readings or materials in the ordinary sense, but is designed to serve the purpose of a text and at the same time to give the student a breadth of view, a contact with reality, a stimulus to independent thinking, and a training in judgment and discrimination which are not afforded by the formal textbook. In a word, an attempt has been made to combine in one volume the virtues of both the text and collateral readings, and as far as possible to eliminate their defects.

To this end there has been selected a large number of comparatively short arguments, expressions of opinion, and points of view, supplemented by source materials, charts, tables, etc., which, while covering the principles of money and banking as adequately as the ordinary text, avoid the dogmatic tendencies inherent in the textbook method and retain the suggestiveness of collateral readings without their usual bulkiness and admixture of irrelevant material. These numerous selections have, it is believed, been welded into an organic whole, and unity of treatment has been secured, not only by careful arrangement, but by means of general introductory statements prefaced to each chapter or division. As a further aid to the orderly unfolding and development of the subject the volume is accompanied by a series of questions and problems based upon the readings and published separately under the title: “Exercises and Questions in Money and Banking.” During the four years of experimentation with the subject, a large proportion of the selections in this volume have, in mimeographed form, been repeatedly tested by classroom use. The exercises and questions have been developed with the readings and also tried out in class, with the result that after each trial there has been a very considerable revision, not only of the questions, but of the arrangement and organization of the readings as well. Moreover, these revisions have usually been made immediately following the class sessions from day to day, while the improvements suggested by the classroom discussions were fresh in mind.

The volume was originally intended to be used in a collateral capacity with a formal textbook; but as the number and variety of selections increased, the need for the text appeared to grow less and less, until in my own teaching I now prefer to use the volume independently of a textbook. Much of the material in Part II has also been used in mimeographed form by an instructor in another institution with a similar result; in the first semester it was used with a text, while in the second semester the text was discarded. This experience has led me to believe that the book may find its greatest use in an independent rather than a collateral capacity. The main purpose of a preface, I take it, is to reveal the point of view of an author, or perhaps, more accurately speaking, to disclose his hobby. My own “view” just at present is that if it comes to a choice between a volume of this sort and a formal textbook as the basis of a course in Money and Banking the advantage lies with the book of selected materials. If the reader will bear with me I should like to present the reasons for my faith. If the purpose of education is merely to supply students with predigested information, then the text is eminently satisfactory. A student may, however, commit to memory the principles laid down in the text, recite them in class, and write them down in examinations, and still be not very much the wiser. For the usual text does not in itself provoke thought and discussion to any great extent or lead to careful analysis on the part of the student: these desiderata come only through a challenge to the intelligence; and this challenge is best made by means of the presentation, not only of conclusions, but of the materials necessary to the formulation of conclusions. To reach a full understanding of the principles of economics it would seem to be necessary that the student should evolve, with the guidance and aid of the instructor, his own conclusions and principles. This does not imply an inductive method in the sense that the beginning student is to digest the vast data and raw material bearing on a subject like Money and Banking and reach his conclusions after a tedious process of analysis and synthesis. On the contrary, the readings in this volume contain rather less of raw material and rather more of conclusions and matured opinions of authorities in the field, together with the conflicting views of various groups or classes in society. The method may be called inductive only in so far as the student's own conclusions are made to result from an analysis and weighing of conflicting views, opinions, and arguments. This must, of course, be coupled with much deductive reasoning, and it is doubtless best to refer to it simply as the discussion method without raising the time-honored controversy over induction and deduction. The presentation of varying points of view and of the philosophies of different social groups, together with conflicting opinions and conclusions of experts in the field, appears to me indispensable to a genuine appreciation of the subject. A very serious problem in the complex life of modern times lies in the specialized or group points of view that prevail with reference to so many of our economic questions and the inability to rise above the narrowing influence of one's special interest. The formal textbook seldom has a place for the presentation of such conflicting points of view; and where it does, they are given at second hand, usually in condensed summary form and almost whollydivorced from any manifestation of the spirit and feelings of the groups or times that held such views. For example, in a chapter on the silver movement in the United States the text-writer usually summarizes the causes of the agitation, shows why the “Crime of 1873” was not a real crime, enumerates the main provisions of the legislative acts passed by the silver people, shows the results of such legislation in the troublous times of the early nineties, and concludes that the restoration of bimetallism at the ratio of 16 to I would have been unfortunate—a dull, uninteresting account of a movement that roused the passions of millions of people for a generation. It is impossible to give the college student of today who viewed from his nursery window the torchlight processions of 1896 any real conception of the nature of the silver movement or any genuine appreciation of the important social and economic lessons it taught without reproducing something of the spirit of the times, without showing by means of their own burning language and arguments the motives, impulses, and passions that influenced the men of that generation. v.Again, the assembling of material from a large number of authors gives to a volume a richness of content that a single writer cannot hope to furnish. No individual author, however matured in training and thought, can possibly write on the entire field of a subject like Money and Banking with the precision or authority that he can on particular topics to which he has given years of special study. For a book of readings, however, one may draw on the writings of a hundred students of the question. Often a comparatively short selection will

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