Gibson offers a proposal for partial reform of the present system of deposit insurance in the United States.

A. The responsibility for insurance should be divided between FDIC and the Federal Reserve. “Normal” bank failures should be handled by FDIC and “depression” failures by the Federal Reserve.

B. Insurance should be extended to all deposits regardless of size and should not be limited to those of $20,000 or less.

Litzenberger's and Rao'ps (L-R) econometric estimate of the cost of capital is in some ways ingenious as well as interesting. The methodology of the estimating procedure is that of the two-stage least squares (2SLS) instrumental variable (IV) approach which was previously used by Miller and Modigliani in their 1966 study. The product differentiation of the L-R study emanates primarily, though not exclusively, from the fact that the valuation equation is derived from capital market line theory. This feature results in the indirect econometric estimates being “useful” for deriving insights into cost of capital variations cum interfirm differences in operating risk. Ergo, Litzenberger's and Rao's empiricism is in no way dependent upon the homogenous risk class concept of Miller and Modigliani.

By focusing attention on managers' concept of risk and the methods they use to measure risk, this paper attempts to lessen the disparity between current theory and practice by suggesting a method that will make IRR and NPV more generally applicable. We attempt to do this through a methodology that combines some PERT assumptions with traditionally accepted academic techniques and those used by practicing business managers to provide a probability distribution of the cumulative net present value (CPV). From these data we develop a probability distribution of the discounted payback period.

Before I comment in detail on the paper presented by Professors Pettit and Westerfield, I will attempt to place their effort in perspective. Although I will not review the literature comprehensively, I will highlight some recent developments in the capital asset pricing literature.

Many people from various professions have long been interested in determining what factors influence common stock prices and the rate of return (or cost of equity capital) which investors expect to obtain from an investment in common stock. The response to this interest has been numerous articles, both theoretical and empirical. A problem of many recent empirical studies is the attempt to explain a complex situation with an oversimplified model which does not explain well interactions among the factors that affect share prices. The present paper does not claim to resolve all the issues that exist but it does attempt to broaden the perspective by developing a more comprehensive theoretical model.

My purpose in this paper is to outline a new approach to the theory of the balance of payments and of balance-of-payments adjustment (including devaluation and revaluation) that has been emerging in recent years from several sources. Concretely, this new approach is found in the change in policy orientation adopted by the British government under pressure from the International Monetary Fund after the devaluation of 1967 failed to produce the expected improvement in the British balance of payments. The theoretical basis for the new orientation can be traced back to the work of the Dutch economist J. J. Koopmans. The new approach is also evident in the theoretical work of my colleagues at the University of Chicago, and R. A. Mundell and his students, although it is only fair to note that economists elsewhere have been working along similar lines. The essence of this new approach is to put at the forefront of analysis the monetary rather than the relative price aspects of international adjustment.

Professor Engerman constructs estimates of relevant data in order to test the assertion that profits from the slave trade provided the capital which financed the Industrial Revolution in England.

Professor Braeman evaluates historians' current assessment of Franklin D. Roosevelt and the New Deal, finding a new consensus emerging among scholars of that important era in American history.