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Chicago Economists Exam Questions

Chicago. Money and Banking Ph.D. qualifying exam, 1933

A. G. Hart’s education and career covered the big three economics departments of his day (Harvard, Chicago and Columbia). For my research on the history of economics education his papers constitute a particularly rich vein of material. In today’s posting I have transcribed the questions for his “qualifying examination” in money-and-finance at the University of Chicago. Bracketed checkmarks indicate the questions Hart chose to answer (the checkmarks are presumably his). In his memo of February 1985 (Columbia University, A. G. Hart papers: Box 60, Folder “Sec I Notes on teaching materials, Learning”) Hart wrote that his files include “answers to ‘qualifying examinations’ in microeconomics, money-and-finance, and economics history” to which he added the following footnote: “I was allowed to write these [qualifying] exams with aid of a typewriter, so that I was able to keep a legible copy. I ducked the qualifying exam in statistics (in which for that date I was very well trained) because I disapproved of the focus of previous exams upon minor technicalities—hence I exploited the loophole which made ‘financial organization’ a separate field even though in principle the ‘theory’ exam included monetary economics.” I must have missed his typed examination answers (or they were lost or misfiled). Perhaps someone else will locate them and post a comment here some day…

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THE FINANCIAL SYSTEM AND FINANCIAL ADMINISTRATION

Written Examination for the Ph. D. Degree
[University of Chicago]
Autumn Quarter, 1933

 

Time: 4 hours.

 

Write on 7 questions, including the first two in Part I and any two in Part II.

Part I

  1. [✓] Assume a large deposit of new gold in a member bank in the United States. Show the precise manner in which this deposit would result in an expansion of the circulating medium, and the approximate extent of such expansion. Develop in terms of the following topics: (a) a single bank; (b) the banking system; (c) drain of cash into circulation.
  2. [✓] Discuss the respective merits and limitations of the following as alternative methods of contributing to sustained recovery from the current depression: (a) the program of construction of public works financed by sale of bonds to banks; (b) federal unemployment benefits financed by sale of bonds to banks; (c) open market purchase of bonds by the Federal Reserve banks.
  3. To what extent have weaknesses in our banking system been responsible for the bank failures of the last 13 years[?] Have these weaknesses been remedied by recent legislation? If not, what changes would you recommend?
  4. [✓] “A world that was striving to maintain the currency system with the wider ambit than its banking system, its tariff system, and its wage system, witnessed the smash of them all – and blamed it on gold. Now that the full extent of the chaos is realized[,] one might wonder why the whole mechanism did not break down sooner in view of the well-nigh universal refusal to observe the rules of the game (gold standard).” What is the significance of the author’s first sentence? How would you state the “rules of the game”?
  5. [✓] Discuss the theoretical short-comings involved in a policy on the part of our federal government of progressively bidding up the dollar price of gold in foreign markets.
  6. Do the following experiences with paper money throw any light on the possible outcome of the present monetary and fiscal situation in the United States? The assignats, the period of the restriction in England, the Greenback Era, the post-world-war experiences in Europe.
  7. [✓] State and evaluate the argument that “maldistribution” of income is the cause of recurrent business depressions.

 

Part II

 

  1. [✓] It is alleged that the investment market has “dried up” because investors and bankers are uncertain of the future value of the dollar and because of the paralysis of investment banking caused by the “securities law.” Do you consider the allegations sound? Why or why not?
  2. [✓] What industries would be likely to profit most from a return to the 1926 price level? What industries least? Defend your answer. Be careful to state any important assumptions. Classify industries as you please.
  3. Assume you are treasurer of an automobile manufacturing corporation having a $5,000,000 bond maturity on January 1, 1934. What factors would you consider in planning to meet this maturity and why would you consider each of them?

 

Source: Columbia University Libraries, Manuscript Collections. Albert Gailord Hart Collection. Box 60; Folder “Sec 2 Ec 230 1933 Chicago Money (Summer course)”.

Image Source:  Social Science Research Building (Entrance, North 3). University of Chicago Photographic Archive, apf2-07466, Special Collections Research Center, University of Chicago Library.