Documents from F. Taylor Ostrander: Volume 23 Part 2

The paper published below was prepared by Taylor Ostrander for Frank Knight’s course, Economic Theory, Economics 301, during the Fall 1933 quarter.

Published below are the course reading list and student notes taken by F. Taylor Ostrander in Frank H. Knight’s course, Current Tendencies, Economics 303, at the University of Chicago during Winter term of the 1933–1934 academic year. The reading list is surprisingly casual and uneven in detail among items. The notes are assumed, as usual in these volumes, to be a reasonably accurate summary account of what Knight said.

I am indebted to Anthony Waterman for identifying the largely illegible phrase cuius regio, eius religio, found near the end of Ostrander’s notes. Waterman writes, in explanation, apropos of Martin Luther: Lit. ‘whatever of the king, so of the religion’: it means that L. thought (being the Erastian he was), that the religion of a country should be that of its sovereign prince. Note: (a), the assumption, almost universal at that time, that there can be only ONE church in any Christian nation; and (b) the assumption, standard until the Scottish Enlightenment I should think (though people like Locke begin to chip away at it) that – as Louis XIV put it with admirable economy, ‘l’etat c’est moi’ (Waterman to Samuels, December 12, 2002).

F. Taylor Ostrander had two courses from Henry C. Simons, Economics 201, Price Theory in a Competitive Economy and the Effects of Monopoly, and Economics 360, Public Finance. Ostrander’s and one other set of annotations of the Syllabus from Economics 201 and his notes from Economics 360 are presented below.

I am indebted to Joyce Christie Trebing for translating Hiett’s shorthand.

pp. 13–15: The pricing of productive services exercise through class discussion questions is absent in Hiett.

This is the second set of lecture notes from courses in public finance published in an archival volume in this series. Volume 19-C (2001) was entirely devoted to notes from lectures by E. R. A. Seligman at Columbia University. Two differences mark Seligman’s lectures and the lectures by Henry C. Simons at Chicago, as reported below. Seligman seems to have been lecturing primarily to students in tax administration, hence he presented very little economic theory; whereas Simons was lecturing to graduate students in economics, and presented relatively more theory. Seligman did not refrain from some passing of judgment but his lectures were largely descriptive and non-judgmental; whereas Simons has no hesitation in presenting his own normative approach on various issues. These issues tended strongly to focus on inequality, tax justice, and progressivity.

F. Taylor Ostrander had three courses from Melchior Palyi at the University of Chicago during the 1933–1934 academic year: Economics 332 on monetary theory; 333 on business cycle theory; and 334 on the European banking system. Fellow students included Albert G. Hart, later a leading monetary economist, and Rose Director, sister of Aaron Director and later wife of Milton Friedman.

Ostrander’s notes reveal Palyi’s course to have had, in effect, four parts, the first two being principal ones. The first part is a review and interpretation of selected aspects of monetary theory, especially the Banking versus Currency Schools of monetary policy. The second part is an interpretation of recent European history, centering on the rise to power of Adolph Hitler. The third deals with Hayek, apparently through a report by another student, Albert G. Hart. The fourth deals with Keynes, apparently through a (second) report by Rose Director. These are taken up in the same sequence in this introduction.

In his opening methodological lecture, Palyi contrasts correlation, first with statistical analysis, and second with causal analysis and explanation. The students are cautioned that the “Correlation method creates the presumption of an accurateness which it does not in reality possess” and that “Business cycle theories are

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That Melchior Palyi taught a course at the University of Chicago on the European banking system is unsurprising, given his background provided in the biographical sketch presented above.