IT is a double honor to have been invited to deliver the Simons lecture on the occasion of the celebration of the centennial of the University of Chicago. Although at my age a century seems a rather short period, we all know that the University of Chicago has not suffered from the usual human limitations. It emerged from the ground fully grown. It had neither an infancy nor an adolescence and wasted no time in working its way to the top. It started at the top. Economics at the University of Chicago was no exception. The first head of the economics department, J. L. Laughlin, himself a redoubtable authority on money, set about recruiting a formidable faculty, including Thorstein Veblen. When I went as a student to the London School of Economics in 1929, some thirty-seven years after the formation of the University of Chicago, its economics department was recognized to be one of the most powerful in the world. Foremost in our minds at the time, mainly as a result of the teaching of Lionel Robbins, was Frank Knight. He was regarded at the London School of Economics as one of the greatest of economists and his book, Risk, Uncertainty, and Profit,' was closely studied by all serious students of economics there. Then there was Jacob Viner, an economic theorist of great ability and erudition, whose work put him in the top rank of economists. Another member of the faculty was Henry Schultz, one of the pioneers of econometrics, whose empirical work on the derivation of statistical demand schedules was regarded as a major contribution to economics. Finally there was Paul Douglas, a strange man who thought it more important and interesting to be a United States senator than a professor at the University of Chicago. His empirical work on wages and