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To reduce classical economics to the status of a "special" case under the Keynesian "general" theory, was to stake out his claim on what he undoubtedly regarded as the highest conceivable level; it probably has no parallel in economic literature. Private business investment-the spending of business firms-is directed towards the acquisition of plant and equipment (including repairs) and to the building up of inventories of raw materials, goods in process, and finished goods. Of course, when inventories are allowed to run down, this part of private investment is negative. Since private business investment is undertaken by firms generally seeking to maximize their profits it follows that the amount of their expenditures will depend in some way upon profit considerations. A firm will embark upon an investment project when it expects that course of action to be profitable; otherwise, it will not undertake the project. It will, to put this concretely, order an extension to its plant, or arrange to have its equipment repaired, order new equipment, or build up its stocks of raw materials when it expects to earn more by doing any of these things than it would earn by doing nothing.

The article focuses on the problem of currency stabilization in post-World War II scenario. It is noted that the period after the war led to the emergence of major financial crisis worldwide. Therefore, the need to establish a proper financial institution was felt. It is suggested that the countries whose economies were badly affected should have adopted a formalized plan for their economic development to overcome the international financial problems. It is argued that the gold standard should be modified. It is suggested that the amount of official exchange balances should be increased to correct the unequal distribution of gold and to give more margin for corrective action to countries which are internally disturbing deficits in their international balance.

The article focuses on the development of fiscal policy for monetary policy and the banking system. Fiscal policy could perhaps be regarded from the beginning as a substitute for central bank policy. The analysis of income-creating expenditures has been the chief preoccupation of fiscal theory. Since the first World War, revolutionary changes have occurred in American banking. The greatest change which has occurred in banking since the Reserve System was established has been in the growth of bank investments. This growth began in the first World War when the banks, with the aid of the new Reserve System, bought government securities for their own account and made loans to finance purchases by the public. As bank investments have increased, long-term interest rates have shown increased sensitivity to changes in bank reserves, and the emphasis in monetary theory has shifted to the need for controlling the long-term rates, as more effective for the control of investment, income, and employment than control merely of the short-term rates.

The article examines the economic consequences of deficit financing in the U.S. The budget deficit problem was the automatic result of the 1929 depression. As the national income decline by half from 1929 to 1932, the federal revenue likewise declined by one, while expenditures remain unchanged. Majority of government officials undoubtedly favored deficit spending as a deliberate policy for recovery before any such policy publicly emerged. In the early part of the administration of Franklin D. Roosevelt, there was little evidence that public spending was to be a major policy of recovery.

In discussing the adequacy of different international monetary mechanisms under varying circumstances, it seems desirable to begin with some analysis of the logical extremes. The extremes are fixed exchanges maintained by transfer of means of payment between the national monetary systems and flexible exchanges without international transfer of money. The gold standard would be an example of the first type of mechanism and the paper standard of the second, provided that both were entirely automatic. In these extreme cases there would be no money management, externally or internally. The object of both systems is to achieve and maintain equilibrium of external-internal trade. For this purpose both systems provide a balancing or compensatory mechanism by which economic change sets in motion forces of correction which restore equilibrium of external-internal trade. The gold standard system works through variation of internal prices and incomes relative to export-import prices, and the paper standard system through variation of the prices of exports and imports.

This article presents information on the Banking Act of 1935. Title II of the Banking Act of 1935 is the part which consists of the new amendments to the Federal Reserve Act. The violence of feeling was, quite out of proportion to the actual content of the proposed legislation. There was a disposition on both sides to regard the bill as more revolutionary than it really was. On the one hand, some of the more enthusiastic believers in quantitative monetary control as a means of achieving economic stability were inclined to regard this legislation as marking a complete break with the past behavior and the past philosophy of the reserve system. On the other hand, the critics were inclined to read into it fears that arose not so much from its actual content as from their own hostility to previous new deal legislation and experimentation, particularly in the monetary sphere.

Since 1914 the world has had two breakdowns of the international gold standard. The cause of the first was a general rise of prices, and of the second a general fall. That such worldwide movements of prices can occur under the gold standard is the principal indictment to be made against it. They destroy the fundamental assumption underlying that standard and by so doing undermine the standard itself. The gold standard concept of monetary stability is something more than fixes it of exchanges secured through defining currencies as fixed weights of gold. This in itself is merely a device; its justification, if it has any, is founding the assumption of stability of gold. Stated in terms of prices, what the gold standard assumes is stability of the entire composite of prices of which national price levels are the individual items. Whenever this condition is seriously violated, the old familiar conception of offsetting and counter-balancing price changes in particular countries, mutually correcting each other through gold flow, must be abandoned.

Until 1924 Germany was on a paper standard. Reparation payments under London settlement did indeed cause the mark to depredate, to a value finally of one billionth of a dollar, but exports did not exceed imports. In 1924 came the Dawes Plan. It adopted for the first time as a rule of procedure the principle of capacity to pay. It passed no judgment on capacity, and was less concerned with immediate than with ultimate capacity. It sought chiefly to establish the conditions which would develop and test capacity. This was indeed a great advance, it put the problem in a new and hopeful setting. The Dawes Plan set up the necessary condition to test capacity to pay. The gold standard was restored, and protected by transfer clauses conditioning reparation payments upon its maintenance. The budget was to be balanced, and for the first time reparation payments were budgeted. The plan sought to adjust the tax burden by gradual stages to German capacity, and it relied on a preliminary foreign loan to ease the transfer process.

This article presents information about books related to money, prices, credit and banking. The book "Banking and Credit. A Textbook for Colleges and Schools of Business Administration," by Davis R. Dewey and Martin J. Shugrue is designed primarily to enable business men to understand their relations with banks and bankers. As the only comprehensive history that has appeared of Chilean money and banking, Guillermo Subercaseaux in his book "El Sistema Monetario i la Organizacion Bancaria de Chile" supplies a real need in economic literature. Of considerable interest to economists of every hue is Subercaseauxs attitude towards the "pure theorist" and his ascription, with some asperity, of the eventual appearance of inconvertible paper in Chile to the undermining of the practical good sense and conservatism of the earlier statesmen by the introduction from Europe. The later portions of the book deal with the attempt to resume the gold standard in 1895 and its breakdown in 1898 and the numerous subsequent monetary laws and proposals for reform.

The sixty-eighth annual business meeting of the American Economic Association was called to order in the hotel Commodore, New York. at 5:10 p.m. by president John P. Black. The minutes of the business meeting of December 30, 1954, were approved, actions of the 1955 executive committee ratified, and the reports of the officers and committees accepted. All minutes and reports are published in the "Proceedings." High lights of the year's activities were described by secretary-treasurer James Washington Bell, who also presented an account of the financial operations, investment holdings, and the present condition of the Association's finances. He called attention to the narrow balance between operating income and expenses and indicated the identity of the profit taken on sale of securities and the amount of the year's surplus income. Despite increased expenses, it still appears possible to maintain a balanced budget with $6.00 dues. The managing editor of the journal "American Economic Review," Bernard F. Haley, reviewed the operations of the Review office and the work of the editorial board. This report is presented in full in the "Proceedings."

A great change appears to be under way in the relation of industrial production and trade to foods and raw materials. For perhaps three-quarters of a century, the problem had been whether the industrial countries could absorb the food and raw materials which they had been instrumental in developing in other countries, on terms of trade tolerable to the latter. Now the imbalance appears to be swinging the other way. Owing partly to the expansion of industrial output in Europe under the Marshall Plan and even more to the U.S. absorption of raw materials, in the consumer durable goods industries as well as in the capital goods industries, there is a general world problem of availability of supplies. Again, this problem has been much accentuated by the rearmament program. But it was becoming apparent even before Korea. World industrial production since 1938 has grown by some 50 per cent, while the output of food and raw materials has at most increased by 10 per cent. Some experts have estimated that, apart from the U.S., the world's food production is now lower than before the war. If few items are taken out, such as petroleum and aluminum, this may well be true also of the raw materials.

The article presents some issues related to international trade and policy. Equilibrium analysis introduces a bias toward calling maladjustments short run. A movement of capital and labor from one industry to another frequently requires a protraded period of time. Assuming full employment a high degree of internal adjustability to external changes, constant costs and given amounts of resources in the trading countries, it follows that changes in demand among trading countries for each other's goods could have only mild results. There are limits of productivity and real income beyond which international trade adjustment through the play of internal forces cannot, in the general interest, be accepted. A war effects the long run and short run economic development. Western Great Britain created the modern world and was in turn remade by it. The internal mobility on which traditional theory is based was itself a product of external trade, including pre-eminently the external movement of capital, labor, and entrepreneurship to produce the goods which comprised the trade. The over-all result has been a changed conception of how world trade stability must be achieved. Instead of adjustment through internal change, there has developed the view that external stability must depend on maintenance of internal stability at full employment in the leading countries, and particularly in the United States.

Oliver Mitchell Wentworth Sprague was an outstanding economist in the generation that has all but rendered its service and has passed on. His area of special competence was that of finance; and his life-span encompassed a revolution in that field. His training took place when the problem of bimetallism was dominating men's minds; he witnessed, and participated in the evolution of central banking, and in the scientific study of cyclical movements of business; and, before his death, he saw the advent of fiscal policy as the uppermost focus of attention in his subject. A full-scale biography of Sprague would be a reflection of a rapidly changing discipline. Sprague was born in Somerville, Massachusetts, on April 22, 1873, to William Wallace and Miriam Sprague. He prepared for college at St. Johnsbury Academy, in Vermont, and graduated from Harvard summa cum laude in 1894, being also elected a member of Phi Beta Kappa. He took graduate work at Harvard, and received the Ph.D. degree in 1897. Oddly enough in view of his subsequent career, he took his degree in political science, and the subject of his dissertation was "The English Woolen Industry in the Seventeenth and Eighteenth Centuries." The thesis was prepared under William Ashley, the eminent English economic historian, then teaching at Harvard.

Presents a correction to the article in the memoir of professor 0.M.W. Sprague that was previously published in the March 1954 issue of the journal "American Economic Review."

The article presents the author's comments on the research paper "International Monetary Fund," by professor John H. Williams published in the October 1944 issue of the Foreign Affairs. In his paper Williams says that it has now been recognized that the International Monetary Fund (IMF) not finance relief and reconstruction needs, or assist in the liquidation of war balances. It is also provided that members can elect to maintain exchange controls under special arrangements for the transition period. Williams wonders, therefore, what the functions of the IMF in the transition period are. The author says that even though relief, reconstruction, and development needs are not to be met by the IMF, the temporary difficulties intended to be met by the IMF will occur as frequently and be as serious in the transition period as at any other time. Temporary balance of payments difficulties are bound to arise in the course of adjustments to wartime shifts in production, transportation, and markets. For this reason there is need immediately after the World War not only for an international agreement to stabilize exchange rates and to provide for the orderly removal of exchange controls, but also for a fund of credits to help countries that do not elect to maintain controls and countries that are seeking to eliminate controls as rapidly as possible.

Lists names that have been added to the membership of the American Economic Association, between February 1, 1919, and June 1, 1919.

The article presents information related to the American Economic Association. John H. Williams of Harvard University has been appointed the chairman of the American Economic Association for the year 1953. Some members of the association who have retired from their profession include Julius B. Bearnson, professor of economics, University of Utah, Salt Lake City, Utah; Orval Bennett, professor of business and government at Washington University, St. Louis; Pembroke H. Brown, professor of economics, University of Illinois; and E. C. Stone, professor at University of Pittsburgh. A visual economic laboratory has been established at Columbia University in November 1951. The laboratory had been financed for a year by a grant from the Alfred P. Sloan Foundation, and trustees of the Foundation have made an additional grant to cover the budget of the laboratory until November 1953. The Social Science Research Council has announced a new program of stipends and fellowships designed to identify and assist able students at an early stage of their education.

This article presents developments related to economic societies and economists in the U.S. The annual meeting of the American Economic Association will be held in Boston, Massachusetts, on December 27-29, 1951. Arrangements this year are again being made on an independent rather then a joint basis, in accordance with the plan adopted in December, 1949. Alfred C. Neal, vice president of the Federal Reserve Bank of Boston, has been appointed chairman of the local arrangements committee. The president of the association, John H. Williams is responsible for the program and would appreciate suggestions of topics and speakers. Gardner Ackley, of the University of Michigan, is serving a economic adviser to the administrator of the Economic Stabilization Agency. Karl M. Arndt has been granted extended leave from the University of Nebraska to continue as a member of the staff of the Council of Economic Advisers to the President. Thomas Balogh will be visiting professor in the summer session of the University of Minnesota.

This article discusses research paper by professor John H. Williams related to economics, published in the March 1936 issue of the journal "The American Economic Review." In connection with professor Williams' paper, a question can be raised about his comments on the composition of the Open Market Committee. One can agree with professor Williams that all the instruments of credit control, including discount rates, open-ma!rket operations, changes in reserve requirements, changes in margin requirements, and changes in interest rates on deposits, should be concentrated in one authority. But if all these powers are to be concentrated in one authority, the question arises whether a committee consisting of seven members of The U.S. Federal Reserve Board and five representatives of the banks is the best authority to which to entrust all these powers. There is one more question in mind whether it is proper to entrust all the important policy matters to a committee which only meets periodically. It seems that in order to discharge its functions adequately the body that has the responsibility for credit policy should be in continuous session, giving its entire time to such problems. This question will have to be settled some day. In the meantime, it may be that as a practical matter of operation it will work out satisfactorily under the existing law. If it does not, then the law will ultimately be modified.