Author: Irwin Collier

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Exam Questions Industrial Organization Princeton

Princeton. General PhD Exams in Industrial Organisation, 1975-1979

In William Baumol’s papers in Duke University’s Economists’ Papers Archive I came upon a cache of six Ph.D. exams for the field of industrial organization at Princeton from the late 1970s. This is definitely a collection worth the effort of transcribing and presenting in a single post.

_______________________________

PRINCETON UNIVERSITY
Department of Economics

General Examination
for the Degree of Doctor of Philosophy
Industrial Organization

Time: 3 Hours

October 1975

Start a new paper or book for each question.

You are required to answer the question in Part A and then must choose two questions from Part B (except that you cannot choose both questions 1 and 2 in Part B). The questions could easily be the subjects of long books. Instead, please try to summarize the arguments as concisely and yet as thoroughly as time allows.

PART A. One hour

The Justice Department, in relation to its investigation of merger activity, has hired you as a special consultant to determine the nature and extent of economies of scale in industry X. The industry is composed of 60 firms of various sizes. Write a summary of your report which includes:

  1. a discussion of the sources of economies (and diseconomies) of scale generally;
  2. a discussion of the various methods of measuring scale economies, including their strengths and weaknesses;
  3. which method you would choose, and why.

PART B. Two hours

Answer two of the following (except that if you choose either question 1 or 2, you must choose your other question from 3 or 4; you cannot choose both 1 and 2).

  1. The Federal Trade Commission has recently filed an antitrust suit against the four major American breakfast cereal manufacturers. A major part of the case argues that the high advertising rates in this industry are responsible for the high concentration in this industry and for the high profits in this industry. This has been viewed as a landmark case.
    1. Sketch briefly the economic and legal arguments that each side will make.
    2. Indicate how you think the courts will rule on this and what precedents they will use.
  2. The testing of the market structure-profitability hypothesis has generated a great deal of controversy in the journal literature. Write an essay describing that controversy and sorting out the arguments and the points that are at contention.
  3. Schumpeter has argued that high concentration in industries is beneficial because it makes more rapid the page of technological progress in those industries. This would argue for a lax antitrust policy. On the other hand, others have argued that innovation is best encouraged by direct government subsidy (or production) and that a strict antitrust policy is necessary to ensure static efficiencies.
    Write an essay discussing the arguments that each side would offer, and indicate which set of arguments you find more convincing and why.
  4. Economists are nearly unanimous in their contention that the railroad Industry has been strangled by federal regulation. Yet there appears to be no end in sight.
    1. What are the characteristics of rail transportation that appear inevitably both to draw government into the arena and yet commit it to failure?
    2. Do you think public policy should lead in the direction of nationalization, of more enlightened regulation, or of less government control? Why?

_______________________________

PRINCETON UNIVERSITY
Department of Economics

General Examination
for the Degree of Doctor of Philosophy
Industrial Organization

Time: 3 Hours

May 1976

Do not write your name on any of your examination papers, but identify them with a Code Number which you will have obtained from Mrs. Coleman.

Start a new paper or book for each question so that the examinations can be assembled by question rather than by candidate. Be sure that your Code Number appears on each sheet or book.

Part A. (One hour) Answer all eight (8) questions. Comment on the validity of each statement.

  1. U. S. v. American Tobacco (1946) represented a new and significant direction for antitrust policy that has had long-lasting effects.
  2. Since advertising constitutes an important barrier to entry, a tax on advertising would improve the competitive functioning of markets.
  3. The Robinson-Patman Act constitutes an important antitrust safeguard to competitive markets.
  4. Hypotheses concerning invention and innovation can be satisfactorily tested by using data on research and development expenses.
  5. Competition is more vigorous if there are four firms of equal size than if there are four firms of unequal size.
  6. Reciprocity always indicates the exercise of monopoly power.
  7. Queues of customers outside doctors’ offices indicate a lack of competition.
  8. Capital markets tend to require a lower rate of interest from larger firms. This is only a pecuniary economy and can not be used as evidence against anti-trust efforts to break up large firms.

Part B. (Two hours) Answer three (3) of the following questions.

  1. A judge asks for your expert opinion with regard to a case in which the three major manufacturers of competing lines of washing machines are accused of engaging in violations of anti-trust law. Consider the following list of pricing practices. On pure economic grounds, which of them support the government’s case? What would be the legal significance of each?
    1. The manufacturers list identical prices for each type of machine. When price changes are made, in most cases one particular firm initiates the change and the other two follow within a week.
    2. Large purchasers are given quantity discounts.
    3. In a recessionary period, the major manufacturers temporarily reduce their prices 25% below their historical average cost. During this time several minor firms go bankrupt.
    4. In a recessionary period, the major manufacturers maintain their prices at pre-recessionary levels and experience a sharp decline in sales.
    5. The manufacturers have all taken advantage of resale price maintenance, where state law has permitted it.
  2. How do you think the domestic airlines would change their fare structures and service quality if government regulation in these areas was eliminated? Support your answer.
  3. “Oligopoly theory is in such poor shape that it is unlikely ever to serve as a reliable guide to policy.” Comment.
  4. “A concentration ratio is a deceptively simple number. In fact, once one begins looking closer, it becomes nearly impossible to determine satisfactorily the level of concentration in an industry. Consequently, antitrust policy simply does not have a good foundation.” Comment.
  5. “There is no satisfactory solution to the problem of regulating a natural monopoly.” Discuss.

_______________________________

PRINCETON UNIVERSITY
Department of Economics

General Examination
for the Degree of Doctor of Philosophy
Industrial Organization

Time: 3 Hours

October 1976

Do not write your name on any of your examination papers, but identify them a Code Number which you have obtained from Mrs. Coleman.

Start a new paper or book for each question so that the examination can be assembled by question rather than by candidate. Be sure that your Code Number appears on each sheet or book.

Answer Parts I, II and III.

Part I: Write for roughly 15 minutes each on THREE of the following five questions:

  1. Suppose that you had access to data concerning a number of firms which had been subject to take-over attempts via tender offers, some successful and some unsuccessful. The data includes accounting profits, stock market prices, and dividends paid over a number of years both prior to and subsequent to the take-over attempt. How would you use this data to reach conclusions concerning the efficiency of the market for corporate control and the extent of X-inefficiency in the economy?
  2. Comment on the validity of the following remark:
    “Wasteful self-cancelling advertising can not exist unless consumers act irrationally, because rational consumers will always prefer to buy a less intensively advertised good at a lower price.”
  3. Suppose that you believe advertising expenditures should be treated as capital investments, in the same manner as investments in buildings and equipment, rather than as current expenses. Show precisely how this would affect your measure of a firm’s equity and its rate of return. How would such a change in accounting affect your interpretation of regression equations relating accounting profits to advertising/sales ratios?
  4. Fair trade laws should be re-enacted because they provide an irreplaceable means by which manufacturers can ensure that their goods receive sufficient promotion at the retail level. Comment.
  5. “It is an absurdity to believe that reciprocal dealing by oligopoly firms is anything more than a device for strengthening already rigid price structures.”
    Comment on the validity of this statement.

Part II: Write for roughly 45 minutes on the following question:

  1. Some economists hold that the amount of concentration in an industry, measured by, say, the Herfindahl index, bears a very tenuous relation with the degree of monopoly power, in the sense of ability to control market price and quantity. Furthermore, they claim, even if there were such a relationship it would not necessarily imply that a policy of industrial deconcentration is advisable. What arguments can be used to support this point of view? What weaknesses do they have?

Part III: Answer questions 7 and EITHER question 8 OR question 9. You should spend no more than a half hour on question 7.

  1. There is a durable good, say, a milling machine, which company X alone manufactures at constant costs. This milling wears out in precisely ten years, but is as good as new until it wears out. It cannot be repaired or in any other way made to last more than ten years and its life does not depend on rate of use. Company X contemplates either (a) selling machines outright, in which case there will be a competitive second hand market or (b) retaining ownership in the machines and renting them out.

(i) Show how to determine the ultimate optimum long-run position for company X in both cases (i.e., neglect the initial stage of building up its market) and show that its optimum output is the same in the two cases. Assume perfect capital markets, perfect foresight on its part and its customers’ part, etc.

(ii) Change the preceding case by supposing that the life of milling machines can be prolonged by spending money repairing them, and assume that the repair services can be obtained competitively. Prove that the company’s optimum output would now be different in cases (a) and (b) and indicate in which case, and why, the net rental value would be lower.

  1. The Cable Report to the President, prepared by the Office of Telecommunication Policy, supports a recommendation requiring separation of ownership (or control) between cable television installations and television program sources with the following language: (By “cable system operator,” the OTP means the owner of a local cable facility. That owner is assumed to sell access to the systems to “channel users” who in turn are the owners and/or originators of programs. The “cable system operator” may also charge local viewers for access to the system.)

“If the cable system operator were to have such an interest in a channel user he would have an economic incentive to favor the user in which he had a financial interest. Simply requiring the system operator to treat all channel users on a non-discriminatory basis would not be adequate to prevent anti-competitive behavior. The cable operator could, for example, charge artificially high, but still ‘non-discriminatory’ rates to users of his channels and use the excess profits …  to subsidize his programming affiliate. This cross-subsidization would place the other channel users at a severe competitive disadvantage. Moreover, requiring ‘arms length’ transactions between companies in the same corporate structure and prohibiting cross-subsidization present severe enforcement problems. Such problems typically lead federal or state enforcement agencies to impose rate-of-return, public utility-type regulation to control cross-subsidization and other anti-competitive abuses.”

Elsewhere in its report, the OTP recommends that “rate-of-return regulation of the rates which cable operators charge cable users should not be imposed by any level of government unless there is a clearly defined need for it,” and notes that “the need for such regulation may never arise, since the power of the operator to charge excessive rates for channel leasing would be held in check by the presence of competition from broadcast stations, telephone companies and new technologies.”

Evaluate the economics and the consistency of this pair of recommendations.

  1. Following a decision several years ago to relocate the Newark airport terminal, American Motor Inns, Inc., acquired property facing the new location and proceeded to plan the construction of a Holiday Inn. American Motor Inns at the time was the largest franchisee of Holiday Inns, operating large number of these “motels” throughout the country. After howls of protest from the operator of the existing Holiday Inn at the old Newark airport (and from the operators of other nearby Holiday Inns) Holiday refused American the necessary added franchise. American responded by announcing its intention to build and operate the motel under a Ramada franchise. Holiday then threatened litigation: their existing contracts with American provided that no owner of a Holiday Inn franchise could operate an inn or similar facility under a competing franchise. American promptly sued Holiday for treble damages alleging violation of federal antitrust statutes.

(1) Assess the likely outcome of this litigation on the basis of your knowledge of the law and similar cases.

(2) Indicate and explain briefly your impression of the legality of the exclusive Holiday Inn franchise agreement.

(3) Prior to a final decision in this case, Holiday bought American thereby providing an automatic settlement. Would you argue that such an acquisition could itself be held in violation of the antitrust laws? Why?

(4) From the standpoint of resource allocation, evaluate the effects of:

(a) The Holiday Inn exclusive franchise;
(b) Holiday’s acquisition of American.

In your answers to (a) and (b), make whatever assumptions you feel to be necessary and appropriate regarding the structure or other aspects of this industry.

_______________________________

PRINCETON UNIVERSITY
Department of Economics

General Examination
for the Degree of Doctor of Philosophy
Industrial Organization

Time: 3 Hours

May 1977

Do not write your name on any of your examination papers, but identify them with a Code Number which you have obtained from Mrs. Coleman.

Start a new paper or book for each question so that the examination can be assembled by question rather than by candidate. Be sure that your Code Number appears on each sheet or book.

Answer Parts I, II, and III according to the instructions given in each

PART I. (45 minutes)

  1. Write for not more than five minutes on 6 of the following, indicating that you are familiar with the concept or expression and with its relevance to industrial organization:
    1. Satisficing
    2. Regulatory lag
    3. Limit pricing
    4. Per se rule
    5. Gibrat’s law
    6. Standard Industrial Classification
    7. Survivorship Method
    8. Cournot Equilibrium

PART II. Answer EITHER Question 2 OR Question 3
(45 minutes)

  1. Every recent proposal for antitrust reform has advocated either repeal or very substantial revision of the Robinson Patman Act. In contrast there are few economists who would argue that price discrimination, except under very special circumstances, is desirable.
    Are these two positions — one regarding the desirability of anti-price discrimination law, and the other the desirability of price discrimination itself — inconsistent? Explain carefully, making certain that you both define price discrimination and identify the major problems associated with Robinson Patman or alternative instruments of control.
  2. “Perhaps the major area for concern in the economics of American industry today is oligopoly, and oligopoly is precisely that form of organization with which the American antitrust laws cannot satisfactorily cope. Here, as so often elsewhere in that country, the law is written as though by the major corporations themselves.” Do you agree or disagree? Why?

PART III. Answer TWO of the following THREE Questions. (45 minutes each)

  1. “Advertising is not per se a market imperfection; it arises as a corrective response to other market imperfections, such as the public goods nature of information and the peculiarities of the television market. Banning advertising or regulating it significantly is thus inadvisable.”
    Write a broad, coherent essay on the economics of advertising in response to this statement.
  2. In recent Congressional hearings, most airlines have opposed the Civil Aeronautics Board recommendations that the airline industry be substantially deregulated. They have used the following arguments:
    1. We currently have the world’s “finest air transportation system” and “if it ain’t broke, don’t fix it.”
    2. “Airlines are already highly competitive.”
    3. “Deregulation will increase the number of competitors on major routes, reducing load factors and giving rise to wasteful duplication of resources.”
    4. Advocates of deregulation fail to consider network effects. For example, entrants may institute non-stop service from Buffalo to Los Angeles, thereby making unprofitable flights from Buffalo to Chicago, which are more efficient.
    5. Airlines cannot fine-tune capacity to meet demand, since there are a very small number of flights per day on most routes. It is thus unrealistic to expect large improvements in load factors to occur.
    6. Deregulation will hurt airlines’ financing prospects, according to experts in the financial industry.
    7. Airports’ financing of passenger terminals, through the issue of airport revenue bonds, will be undermined by deregulation, because they will no longer be able to get long-term commitments from airlines to use the terminals.

Do these arguments provide valid reasons for opposing deregulation? If not, how would you rebut them?

  1. Vertical integration, under different circumstances, may:
    1. Permit discriminatory pricing that would not be possible without integration.
    2. Be a competitive response to market imperfection.
    3. Be a device for the avoidance of regulation in regulated industries.
    4. Create barriers to entry unrelated to any efficiency gain.

Discuss the validity of each of these propositions using either real or hypothetical cases to illustrate your answer.

_______________________________

PRINCETON UNIVERSITY
Department of Economics

General Examination
for the Degree of Doctor of Philosophy
Industrial Organization

Time: 3 hours

May 1978

Do not write your name on any of your examination papers, but identify them with a Code Number which you have obtained from Mrs. Coleman.

Start a new paper or book for each question so that the examinations can be assembled by question rather than by candidate. Be sure that your Code Number appears on each sheet or book.

Answer either IA or IB, but not both. (20%)

IA. What does the survivor technique purport to show about economies of scale, and what are some of its pitfalls? Relate these to pitfalls in estimating a production cost function from a cross-section of firms of different sizes. Which of these pitfalls can lead to mistaken policy conclusions?

IB. What are some of the factors that make firm and plant economies of scale differ? Explicitly model one of them. Do these factors suggest using firm or plant degree of scale economies as a guide for policy towards the firm?

Answer any one of IIA, IIB, or IIC. (20%)

IIA. Explicitly show that a duopoly has the elements of a “Prisoners’ Dilemma” for the two firms. What are some aspects of the industry that would make implicit collusion between the two firms difficult?

IIB. Explain several factors that would lead to the larger firms in an industry being more fully vertically integrated than the smaller firms. Do all of these factors suggest that such integration is socially counterproductive?

IIC. Carefully explain what empirical evidence would support the proposition that market power is socially desirable in that it promotes technological progress.

All must answer this question. (35%)

III. Write and explain a system of simultaneous industry structural relations among the profit level, concentration, minimum efficient scale, advertising intensity, and some exogenous variables. From this perspective, what could be inferred from cross-sectional positive correlations between profit rates, concentration, and advertising intensity? What are some invalid inferences that are sometimes drawn from such findings?

Answer either IVA or IVB, but not both. (25%)

IVA. Consider a new electric utility company which is planning its production facilities. It can choose to install divisible but nonfungible generators dollars of two types. Type i requires ai dollars in fuel cost per KWH generated (up to capacity) and incurs bi dollars in capital costs per KWH of capacity per 24 hour period. The company can operate equipment of either or both types.
Let a1 < a2, b1 > b2, b1 + a1 > b2 + a2 and b1 + 2a1 < b2 + 2a2.
Each 24 hour period is divided into a 12 hour day subperiod and a 12 hour night subperiod. Demand is homogeneous during each subperiod, but day demand far exceeds night demand.
What is the least cost per 24 hour period of generating x KWH each day and y KWH each night, with x > y? If day and night prices were equated to long run marginal costs, would revenues cover total costs? Would the peak period customers pay all capacity costs?
Suppose the plant is built according to plan, new capacity requires one year construction time, and demands in both subperiods exogenously and unexpectedly grow a bit. Describe the new efficient prices. What do they signal about a desirable investment plan?

IVB. Contrast price regulation that constrains the anticipated rate of return on capital with that which constrains the rate of return calculated on the basis of last period’s output, last period’s cost, but current price. In both cases, assume that the regulated firm will do all it can to maximize profit. Can the regulator equate the allowed rate of return on capital to the market rate of return?

_______________________________

PRINCETON UNIVERSITY
Department of Economics

General Examination
for the Degree of Doctor of Philosophy
Industrial Organization

Time: 3 hours

May 1979

Do not write your name on any of your examination papers, but identify them with a Code Number which you have obtained from Mrs. Coleman.

Start a new paper or book for each question so that the examinations can be assembled by question rather than by candidate. Be sure that your Code Number appears on each sheet or book.

*  *  *  *  *  *  *  *  *  *  *  *  *  *  *

Because this is a relatively long test, be sure to allocate your time in accord with the numbers in parentheses below. These numbers will serve as the relative weights aggregating the grades of the different questions. Pithy answers to all questions are suggested.

All must answer this question. Do not spend more than 20 minutes on it. (20 minutes)

I. Consider a monopoly TV station that changed from collecting all its revenues from advertisers to a system by which it collected all its revenues from viewers by means of prices attached to individual programs. Characterize the changes you would expect in the station’s choices of aired programs. Explain how the station would have incentives to implement a price system which would, coincidentally, and alleged externalities aside, give the station incentives to select socially desirable programs.

Answer either IIA or IIB, but not both. (40 minutes)

IIA. Describe some ways in which a firm’s motives for vertical integration would depend on the structure of its own industry and on the structure of the industry into which it might integrate. Briefly, by reference to some polar cases, indicate how your assessment of the social desirability of such integration would be affected by knowledge of those industry structures.

IIB. It is now considered illegal for the manufacturer of a product in interstate commerce to require a franchisee to sell at retail at a specific price. Explain why a manufacturer might have incentives to control the prices at which its franchisees will sell its products, and evaluate the consequences of prohibiting such controls.

Answer either IIIA or IIIB, but not both. (50 minutes)

IIIA. It is a common practice of petroleum retailers in establishing new outlets (gas stations) to buy nearby potentially (or actually) competing sites and subsequently to re-sell those sites with covenants precluding their use for the retailing of petroleum products. Would society necessarily benefit if this practice were prohibited?

IIIB. Describe several different modes of entry deterrence and briefly trace their effects on industry welfare performance. Would these modes of entry deterrence be effective without structural entry barriers? Are there observable clues that such deterrence is taking place?

Answer either IVA or IVB, but not both. (70 minutes)

IVA. [Time-varying rates]

(i) What are the common economic features of the electric power and telecommunications industries that argue for different prices at different times of day?

(ii) Do time-invariant prices necessarily cause cross-subsidization in industries in which the characteristics you identified above are important? How does the answer depend on the presence of product-specific scale economies?

(iii) What factors would enlarge the welfare loss from such time-invariant rates?

(iv) Why might it be appropriate to see peak rates suddenly rise and then later fall after an unanticipated permanent expansion of demand for service during peak times? Might the same considerations pertain to off-peak times?

(v) Why might a regulated firm resist setting time-varying rates?

IVB. [Natural monopoly with no barriers to entry]

(i) Carefully describe a scenario in which an industry is a natural monopoly with no barriers to entry.

(ii) On the basis of a reasonable theory of firm behavior, characterize the principal features of the industry equilibrium.

(iii) In particular, if arbitrage were very costly to consumers, why or why not would you expect to see price discrimination?

(iv) Why or why not would you expect to see cross-subsidization?

(v) If subsidies to the industry were ruled out, and if regulation were costless, what, if any, aspects of industry welfare performance could be improved by regulation?

Source: Duke University. David M. Rubenstein Rare Book & Manuscript Library. Economists’ Papers Archive.  William J. Baumol Papers, Box 20, Folder “Indust[rial] Org[anization]”.

Image Source: Princeton seal from Wikimedia Commons.

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Exam Questions Math Princeton

Princeton. Mathematics for Economics Grad Students Exam. 1960

Before one gets too smug about the modest level of mathematical sophistication revealed in the following examination that was taken in 1960 by ten Princeton economics graduate students and only passed by half of them, it is important to keep in mind that the purpose of the examination appears only to have been to permit economics students to substitute mathematics for a foreign language as a formal requirement to be awarded a Ph.D. degree. As far as I am aware, by 1960 the exams to test a reading knowledge of a foreign language (at least those administered by an economics department itself) were rather low hurdles hardly capable of tripping any diligent student and generally a waste of time for all but the area specialists and economic historians. Still five of the ten economics grad students at Princeton failed the mathematics exam transcribed below!

__________________________

On Harold W. Kuhn

Princeton University obituary for Harold W. Kuhn (1925-2014).

Autobiographical sketch in WIKIMIZATION.

__________________________

MEMORANDUM

To: Members of the Economics Department
From: H. W. Kuhn
Re: Mathematics Examination for graduate students.

Attached is a copy of the first Mathematics Examination for graduate students in Economics which, as you know, can substitute for one language examination. This memorandum is to describe what the examination was intended to test, report on the performance of the students who took it, and invite comments from you concerning the design of future examinations. (Will Baumol is writing the next one now.)

By agreement of those charged with the conduct of the examination (Baumol, Coale, Kuhn, Okun, and Quandt), it deals only with two subjects, calculus and matrix algebra. The level of the calculus that is assumed is thoroughly elementary and could be acquired in a one-year course. However, it should be augmented by those calculus tools peculiar to economics such as Lagrange multipliers, partial derivatives, and optimization conditions. Study of R. G. D. Allen’s “Mathematical Analysis for Economists” is recommended. The level of matrix algebra is harder to specify. Almost any standard course is too much. Two indications of the level of proficiency demanded are the matrix algebra sections of “Finite Mathematics” by Kemeny, Snell, and Thompson or the Appendix to Dorfman, Samuelson, and Solow. Another book appropriate for study would be “Mathematical Economics” by R. G. D. Allen

The following is an explanation of the first test, question by question, with remarks on the performance of the ten students who took it.

  1. Straightforward translation of economic terms from words to formulas and back. Four parts out of five was par for the course.
  2. The definition of matrix multiplication and of a production matrix. All answers were correct.
  3. A test of understanding of the first and second order conditions for a maximum. Very poor performance; much confusion between necessary and sufficient conditions.
  4. A test of their acquaintance with an indispensable mathematical tool, the Lagrange multiplier. The first pages of “Value and Capital” will give an example. Good performance.
  5. This was intended to draw out the linear case in which solvability is stated in matrix terms. Good performance.
  6. The proper method was by means of partial differentiation. From the variety of answers (mostly weak), this should have been clued.
  7. This model is reproduced almost verbatim from “Finite Mathematics.” The question is intended to test the ability to translate matrix relations into meaningful economic conditions. The average was about half right.

The test was graded on a strict percentage basis, with 70% a passing grade. Five passed and five failed. This may be somewhat hard on those who failed but reflects my own belief that requirements are better too hard than so easy as to be meaningless.

COMMENTS INVITED

__________________________

PRINCETON UNIVERSITY

Department of Economics
Mathematics Examination

October 26, 1960

Please spend no more than two hours on this examination. No books or papers may be consulted. Please attempt all of the questions.

  1. Let y = f(z) be a production function, where y denotes the quantity of output for a quantity of input z. Let c = g(y) be the associated cost function. Let P = F(y) define the demand schedule.

Give the common names for

    1. dy/dz
    2. dc/dy
    3. Py

Give formulas for the

    1. marginal revenue
    2. price elasticity of demand.
  2. The number of tubes and the number of speakers used in assembling three different models (a), (b), (c) of TV sets are specified by a parts-per-set matrix.

\begin{gathered}\\ \begin{matrix}(a)&(b)&(c)&\  \  \  \  \  \  \  \ \end{matrix}\\ \left[ \begin{matrix}13&18&20\\ 2&3&4\end{matrix} \right] \begin{matrix}\text{tubes}\\ \text{speakers}\end{matrix}\end{gathered}

The number of orders received for the three different models in January and February are specified in a sets-per-month matrix

\begin{gathered}\begin{matrix}\  \  \ &\text{Jan.}&\text{Feb.} \  \ \end{matrix}\\ B=\  \left[ \begin{matrix}12&6\\ 24&12\\ 12&9\end{matrix} \right] \begin{matrix}(a)\\ (b)\\ (c)\end{matrix}\end{gathered}

Express the number of parts used per month as a matrix C in terms of A and B. How many tubes were used in February?

  1. Let y = f (x) be a differentiable function defined for

a ≦ x ≦ b. Let a < c < b.

    1. The conditions f'(c)=0 and f”(c)< are necessary and sufficient for f(c) to be a local maximum value for f. True or false? (Give explanation.)
    2. Describe a method for finding the absolute maximum value of f.
  1. Lagrange multipliers are used to solve what class of calculus problems? Give at least one example from economic theory.
  2. Discuss the assertion: Every system of n equations in n unknowns has a unique solution. (It is clearly false; show this by example and modify the statement to be useful.)
  3. The following formula gives the profit P in dollars as a function of the quantities x1, and x2 of two commodities.

P = x150 x235 + x185

When x1 = x2 = 100, P = 2 • 10170
Approximate P when x1 = 101 and x2 = 100

  1. Consider the following economic model: A set of n goods are produced (jointly by m activities. The ith activity requires aij units of good j and produces bik units of good k.
    Let x = (x1,…,xm) represent the levels of the activities
    and yt = (y1,…,yn) represent the prices of the goods, while A and B denote the input and output matrices. Suppose α and β are non-negative numbers. Give common English interpretations of the following equilibrium conditions:

    1. x (B – α A) ≧ 0
    2. (B – β A) y ≦ 0
    3. x (B – α A) y = 0
    4. x (B – β A) y = 0
    5. x B y > 0

What condition on A would insure that every process uses some good as input?
What condition on B would insure that every good can be produced in the economy?

Source:  Duke University. David M. Rubenstein Rare Book & Manuscript Library. Economists’ Papers Archive.  William J. Baumol Papers, Box 10, Folder “Princeton University 1952-69”.

Image Source: Harold W. Kuhn, ca. 1961. Wikimization website.

Categories
Exam Questions Money and Banking UCLA

UCLA. Monetary Economics, PhD qualifying exam. 1971

Having just spent nearly a month travelling along the East Coast of the U.S., it is great to get back to posting new content. On this trip I was able to get in three fine days of work in the Economists’ Papers Archive at Duke. While there I found much useful material for Economics in the Rear-view Mirror in the Robert W. Clower papers. A copy of his UCLA obituary can still be found at the Wayback Machine internet archive.

In 1971 Clower joined the UCLA economics department so it is unclear whether he actually contributed to the Ph.D. preliminary examination in monetary economics transcribed below 

_______________________

Ph.D. Qualifying Examination
Four Hours

May, 1971

Monetary Economics

Answer five of the following seven questions.

  1. [On the concept of money]
    1. “Contemporary monetary theory analytically treats money as merely another commodity.” State if (and why) you agree or disagree with this proposition.
    2. Money is sometimes distinguished from commodities by the following assertions. Briefly discuss the meaning of each assertion and whether you agree or disagree with it.
      1. Money has no “intrinsic value”; it cannot be enjoyed directly, but must first be converted into something else.
      2. Money is used but is not used up.
      3. Money buys goods and goods do not buy money.
      4. Money has superior liquidity than other goods.
      5. The value of money is fixed in terms of the unit of account.
      6. Money is traded directly for every commodity and vice versa, while commodities are not traded for one another.
    3. Discuss the limitations placed on research in monetary theory if money is considered merely as a commodity.
  2. Many writers have asserted in the press that the recent international currency “crisis” points up the unique role of the dollar in present international monetary arrangements. Discuss the international role of the dollar with reference to each of the following statements taken discussions of the crisis.
    1. Over the past couple of years the U.S. has been exporting an unwanted inflation to the countries of Europe, especially Germany.
    2. The immediate cause of the crisis was the presence of interest rates in the U.S. which were too low relative to those in Europe and therefore initiated massive capital flows from the U.S. to Europe.
    3. The massive accumulation by foreigners of dollars underlined the fact that the dollar has become de facto inconvertible into gold and was now little more than an unbacked IOU.
    4. The U.S. should be unconcerned with its balance of payments deficit. Under present arrangements any adjustments to international disequilibrium must be made by foreigners; and all the options available to foreign surplus countries, assuming moderately rational behavior on their part, should be acceptable to the U.S.
    5. The recent crisis points up the inherent instability of current international monetary arrangements. The increase in foreign short-term claims upon U.S. gold reserves and the revaluation of currencies in terms of the dollar will undermine the employment of the dollar as the banking currency of the world and speed the development of a unified European currency.
    6. The recent crisis has strengthened the world monetary system by bringing closer the day when the dollar-gold fixed exchange rate standard is replaced by a system of floating exchange rates.
  3. Discuss the following three propositions. (State whether they are true or false and explain why) .
    1. Legal reserve requirements are unnecessary to place a finite limit on the quantity of commercial bank deposits if the deposits are convertible into the government supplied dominant money.
    2. Elimination of the convertibility requirement would lead to an unlimited expansion of deposits.
    3. There is no limit on the extent to which the government can expand the supply of dominant money.
  4. An economist recently wrote a letter to the Wall Street Journal complaining that much discussion of how to control inflation has been based on a neo-quantity theory which emphasizes “the quantity of money” while ignoring “the quality of credit”. The Federal Reserve was established, he noted, to regulate commercial bank assets while current discussion (and policy) concentrates on the liability side of the commercial bank balance sheet and entirely ignores the asset side. He maintained that if, for example, commercial banks were forced to limit their lending activity to short-term, self-liquidating business loans, inflation would quickly be controlled. Evaluate this argument.
  5. [Monetary vs. fiscal policy.]
    1. It is sometimes argued that fiscal policy should be used to maintain domestic full employment while monetary policy should be used to maintain balance of payments equilibrium. Present this argument and clearly state the assumptions upon which it is based.
    2. Summarize and evaluate the existing empirical evidence on the effectiveness of monetary versus fiscal policy as a stabilization device
  6. [Inflation]
    1. Inflation is often considered to be a tax. In what sense is this correct? What is the magnitude of the tax? Who pays and who collects the tax?
    2. What are the effects of inflation on real resource allocation.
      [In (a) and (b) make sure you distinguish between anticipated and unanticipated inflation.]
  7. [The Gibson Paradox]
    1. What is the Gibson Paradox?
    2. Why is it considered to be a paradox?
    3. What theoretical explanations have been advanced to explain the phenomenon?
    4. What is the existing state of the evidence concerning these explanations?

Source: Duke University. David M. Rubenstein Rare Book & Manuscript Library, Economists’ Papers Archive. Robert W.Clower Papers, Box 4, Folder: “Monetary Economics PhD exams, Reading List, Exams. UCLA, 1971-1988”.

Image Source: Screen shot from Abba—Money, Money, Money karaoke video.

Categories
Cambridge Exam Questions

Cambridge. Economics Tripos Examination Questions, 1923

Eighteen exams constituted the 1923 Economics Tripos at Cambridge University. This post adds them to the collection of transcribed artifacts that constitute the content of Economics in the Rear-view Mirror.

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Links to the 1923 Exams

Part I
English Economic History
Industry and Labour
Economic Theory (Value and Distribution)
Essay on one of seven subjects
Trade and Finance
Recent Economic and General History of Europe
Recent Economic and General History of the British Empire and the United States
Part II
Economic Principles
Public Finance
Subjects for an Essay
Structure and Problems of Modern Industry
Structure and Methods of Government in the Modern World
Distribution and Labour
Political Theory
Money, Credit and Prices
International Law
Economic Conditions in England 1823-1828, and Contemporary Social Thought
The Theory of Statistics

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Earlier and later
Economics Tripos

Links to economics examinations from the Economics Tripos at Cambridge University for other years:

Economics Tripos 1921.
Economics Tripos 1922.

Economics Tripos 1931.
Economics Tripos 1932.
Economics Tripos 1933.

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PART I

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MONDAY, May 28, 1923. 9-12.
ENGLISH ECONOMIC HISTORY.

  1. Summarize briefly the agricultural improvements of the 18th century and point out their influence on the enclosure movement.
  2. “The essence of the Industrial Revolution is the substitution of competition for the mediaeval regulations which had previously controlled the production and distribution of wealth” (TOYNBEE).
    Examine this statement.
  3. “The principles of the Poor Law reform of 1834 were the principles of Elizabethan Statutes.” Discuss.
  4. Explain the objects of the Corn Laws and the causes which led to their abolition.
  5. Indicate broadly the influence exerted by improved means of transport on the progress of the Industrial Revolution.
  6. Consider historically the use of the Income Tax as a means of effecting financial and social reform.
  7. What were the causes of the great depression of 1873-96?
  8. Show how the economic development of England since 1800 is reflected in the present distribution of her population.
  9. What do you consider to have been the principal influences operating during the 19th century to raise the wages of the very poor?
  10. Contrast broadly the character of the economic policy of the State in 1820 with that in the first decade of the present century.
  11. Contrast the situation of the agricultural labourer now with his situation one hundred years ago.

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MONDAY, May 28, 1923. 1.30-4.30.
INDUSTRY AND LABOUR.

  1. If co-operative societies do not charge higher prices than private traders, where does the so-called “divi” come from?
  2. “Trade Unionism has no definite policy in regard to the method of industrial remuneration.” Discuss this statement.
  3. How do you account for the comparative slowness of the development of a Trust movement in British industry?
  4. In what ways can the State most effectively take action to secure industrial peace?
  5. Discuss the advantages and disadvantages of the joint-stock system of business organization.
  6. Give an account of the difficulties of preparing an index number of the cost of living to the working classes.
  7.  “…Wage rates at any moment and in every part of the industrial field can be so adjusted to the demand for labour of various grades, that no unemployment whatever can exist. In other words … unemployment is wholly caused by maladjustment between wage-rates and demand.”
    Comment upon this theory of unemployment.
  8. What do you understand by “sweating”? Indicate the conditions and the types of industrial organization which are most likely to lead to sweating.
  9. Give an account of the main features of the German Cartel system, and compare the Cartels with the American trusts.
  10. If the private control of business is to disappear, what form of business management, do you consider, can most effectively take its place?
  11. “The worst effects of unemployment, privation and physical deterioration, have been prevented” (The THIRD WINTER OF UNEMPLOYMENT).
    “Many of the unemployed are now suffering the progressive deterioration which inevitably attaches to the condition of being maintained without work” (ANNUAL REPORT OF MINISTRY OF HEALTH).
    Examine these two statements bearing upon the present unemployment situation.

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TUESDAY, May 29, 1923. 9-12.
ECONOMIC THEORY
(VALUE AND DISTRIBUTION).

  1. Critically examine the argument that inasmuch as the instruments of production were made by Labour their earnings should go to Labour.
  2. On what grounds are economists justified in making any distinction between the rent of land and (a) the return to exceptional natural ability, (b) the return to acquired skill?
  3. Examine the view that fluctuations of credit are inevitable in an industrial system based on private enterprise.
  4. “In business generally, good luck and bad luck about balance one another; so that the existence of business risks does not affect costs of production.” Examine this statement.
  5. Trace the effects on the remuneration of the various agents of production engaged in any industry as the demand for the products of the industry sinks gradually to zero.
  6. Which do you consider most threatening to the interests of unorganized labour: the monopolistic power of associations of workpeople or that of associations of employers?
  7. What do you understand by the Supply of Labour; do you consider that economic influences play any important part in its regulation?
  8. Examine the view that the greater the proportion of supplementary to prime costs in any industry the more fluctuating will be the value of its products.
  9. “Economists concern themselves with imperfections in the manner in which production is adjusted to demands; they would be better employed in considering imperfections in the manner in which market demands express real needs.” Consider the importance of this criticism.
  10. On the supposition that one motor van employing two men does the same work as two horse vans together employing four men, examine the probable effects on the general level of wages of the substitution of the one for the other.
  11. “Every producer, whether entrepreneur, capitalist or workman, in effect sells his services to society for what they are worth; none therefore can draw from society any greater value than he contributes.” With what limitations would you accept this statement?
  12. “Monopolistic price policy ranges between two limits. At the one extreme it yields results which are more, at the other extreme it yields results which are less, beneficial to the community than would obtain under a régime of free competition.” Elucidate this statement.

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TUESDAY, May 29, 1923. 1.30-4.30.

Write an essay on one of the following subjects:

  1. The educational value of economic studies.
  2. The coming economic age.
  3. Finance, as an engine of social reform.
  4. Economic competition among nations.
  5. The decline of agriculture in Great Britain.
  6. Principles of settlement — Vienna and Versailles.
  7. Incentive in industry.

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WEDNESDAY, May 30, 1923. 9-12.
TRADE AND FINANCE.

  1. Before the war the price of gold was fixed at £3. 17s. 10½d. per oz.; now the price varies from day to day. Explain the reasons for this.
  2. Assume that a Capital Levy is successfully introduced reducing War Loan interest by £150 m. per annum, and that rates of Income Tax are reduced so as to diminish their total yield by a like sum. What would be the chief economic effects of these changes?
  3. To what extent can the Bank of England now control inflation and deflation by means of its discount policy?
  4. Consider the probable effects of a tax on sales, e. a tax on turnover, in this country.
  5. What are the principal factors now governing the London-New York exchange?
  6. Given that England is an exporter of machinery, consider the probable effects on this country of the development abroad of a large and efficient exporting engineering industry.
  7. Consider the proposal to meet the cost of a municipal tramway service by a local rate instead of by the collection of fares.
  8. Given a surplus of £50m. of State revenue over State expenditure, contrast the effects of employing this surplus (a) in reduction of debt, (b) in reduction of taxation.
  9. Discuss the problems arising from the present great accumulation of gold in the United States.
  10. “Whether speculation is good or bad depends partly on the speculator, partly on the conditions in which he operates.” Discuss.
  11. Consider the difficulties of stabilizing the value of the dollar.

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WEDNESDAY, May 30, 1923. 1.30-4.30.
RECENT ECONOMIC AND GENERAL HISTORY OF EUROPE.

  1. “After Trafalgar the war between England and France was to a great extent waged with economic weapons.” Explain the methods and results of this economic struggle.
  2. What measures were taken by the Congress of Vienna to restore a balance of power in Europe?
  3. “Until the middle of the nineteenth century the economic development of Germany was retarded by both political and economic circumstances.” Illustrate this statement.
  4. Discuss the results of the French Revolution of 1830.
  5. Explain the failure of the revolutionary movement of 1848-9 in Italy.
  6. Do you consider that Austro-Prussian rivalry was the chief obstacle to German unity in the period 1815-1866?
  7. In what sense were the years about 1860 a turning point in the agrarian history of modern France?
  8. “The foreign policy of Napoleon III recoiled upon himself.” Is this the explanation of his downfall?
  9. Explain the part played by the State in the industrial expansion of modern Germany.
  10. Compare either the tariff policy or the colonial policy of Germany and France during the period 1871-1914.
  11. “The great war followed inevitably when Germany abandoned the traditions of Bismarck’s foreign policy.” Examine this view.

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THURSDAY, May 31, 1923. 9-12.
RECENT ECONOMIC AND GENERAL HISTORY OF THE BRITISH EMPIRE AND THE UNITED STATES.

  1. “In the early history of both Canada and Australia serious problems were created by the land policy of the government.” Explain and compare these problems.
  2. Compare the position held by the East India Company in India in the years 1783 and 1856.
  3. What were the causes of the break up of South Africa into a group of States in the years 1836 to 1854?
  4. Illustrate the influence of the United States on the economic and political development of Canada.
  5. Compare the difficulties that had to be faced in the federation of the Australian and South African colonies.
  6. What are the causes of famines in India and what measures have been taken to mitigate their severity?
  7. “The making of the constitution was both a more difficult and a more important matter for the United States than winning the war of independence.” Discuss this view.
  8. Explain the reasons why in the United States the Northern and Southern States came to hold different views on the question of slavery.
  9. Discuss the influence of the Civil War on the financial and commercial policy of the United States.
  10. To what principal causes do you attribute the great industrial expansion of the United States since 1880?
  11. In what ways has the settlement of the Pacific Coast influenced the foreign policy of the United States?

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PART II

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MONDAY, May 28, 1923. 9-12.
ECONOMIC PRINCIPLES.

  1. “The whole of economic theory is built on the assumption that people always consciously seek their own greatest pleasure: and now that this assumption is discredited, economic theory is in ruins.” Comment.
  2. Examine fully the conditions under which a nation can impose a large part of the burden of a general import tariff on foreigners, and discuss whether, these conditions have any practical importance.
  3. Discuss the theoretical validity, and the practical consequences, of drawing a distinction between an element of cost and an element of surplus in the payments made to the factors of production other than land.
  4. How far does the theory that each factor of production is rewarded according to its marginal productivity appear to you to be applicable to the profits of business enterprise? Would you make any distinction in this respect between the profits of ordinary trade and manufacture and those of speculation in stocks or produce?
  5. In what sense does competitive price tend to equal “marginal” costs and in what sense does it tend to equal “average” costs of production? Explain the bearing of your answer on the problem of fixing the price of a nationalised coal supply.
  6. Explain carefully the connection between the phenomena of increasing return, joint supply and price-discrimination.
  7. In what circumstances, if any, is it justifiable for particular groups of producers (e.g. rubber-growing companies, building trade operatives) to take concerted measures to restrict output?
  8. “That able but wrong-headed man, David Ricardo, shunted the car of economic science on to a wrong line, on which it was further urged towards confusion by his equally able and wrong-headed admirer John Stuart Mill.” Explain and comment on this judgment of Jevons.
  9. Trace the probable economic effects of providing free and universal travelling facilities within Great Britain and paying for them out of general taxation.
  10. A is the only seller and B the only buyer of a certain commodity. At what point will the price of the commodity tend to settle?

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MONDAY, May 28, 1923. 1½-1½.
PUBLIC FINANCE.

  1. From what sources can government draw the real revenue required to meet an exceptional and temporary emergency such as a war?
  2. What are the principal factors which determine over a period of years (a) the maximum revenue which a government can raise by taxation for expenditure at home, (b) the maximum amount which it can pay as a tribute to foreign governments?
  3. What truth, if any, is there in the maxim that “an old tax is no tax”?
  4. “An income tax differentiates against saving by striking savings both when they are made and when they yield their fruit.”
    An income tax imposes the same burden on income applied to the saving-use as on income applied to the spending-use: hence those who say that it discriminates against saving really mean that it does not discriminate in favour of saving.
    Which of these opinions do you accept? and why?
  5. A government has decided to spend a large sum upon an undertaking which will be completed in three years and will therefore probably yield a net annual revenue equal to the interest (at the rate now current) upon its cost. By what economic considerations should it be guided in deciding whether to raise the sum by a loan or by taxation?
  6. A surplus of revenue over expenditure may be used either to pay off part of the national debt or to reduce taxation. In the present circumstances of this country, which course would be more favourable to the economic welfare of the people?
  7. Compare the following three methods of assisting an “infant industry” in respect of (a) their effectiveness, (b) the cost which they impose upon the community adopting them: (1) an embargo on competing imports, (2) a protective import duty, (3) a bounty on home production.
  8. Discuss the probable economic consequences of exempting from local rates for a period of fifteen or twenty years all working-class houses built in this country within the next three years.
  9. Assuming that a service performed by a local authority is to be aided by a grant from the central exchequer, how far should the amount of the grant depend on (a) the amount and quality of the service rendered, (b) the expenditure of the local authority on the service, (c) the wealth of the locality?
  10. Compare the effects of raising revenue by inflating the currency with those of a general tax on expenditure.

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TUESDAY, May 29, 1923. 9-12.
SUBJECTS FOR AN ESSAY.

  1. Broadcasting
  2. Economic Justice.
  3. “If indeed all the high talent of the country could be drawn into the service of the government, a proposal tending to that result might well inspire uneasiness.”
  4. Prison and the Prisoner.
  5. “Whither France? Whither Europe?”
  6. International Labour Legislation.

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TUESDAY, May 29, 1923. 1½-4½.
STRUCTURE AND PROBLEMS
OF MODERN INDUSTRY.

  1. To what causes do you attribute the present depressed condition of British agriculture? Can you suggest any measures which would promote a revival of this industry without inflicting an economic loss on the community as a whole?
  2. Explain shortly the nature and objects of the system of “deferred rebates” employed by shipping rings. Consider the arguments for and against its legal prohibition.
  3. Describe and account for the form which industrial combination has taken in modern Germany.
  4. In what way and to what extent does an organized produce exchange (a) bear and (b) eliminate the risks of productive industry? Does the Stock Exchange do either?
  5. Classify the principal risks against which insurance is taken out in this country, indicating in each case the type of agency through which insurance is usually effected. Are there any branches of insurance in which a greater measure of State control would promote the economic welfare of the people? Give reasons for your opinion.
  6. Illustrate from the experience of this and other countries the difficulties encountered by self-governing associations of manual workers seeking to undertake business on their own account. In what types of undertaking are these difficulties least serious and by what means can they be reduced?
  7. “Capital and labour have lost the power they once had to attract raw materials; these now attract labour and capital.” Examine this statement in relation to the localisation of industry in the modern world.
  8. Distinguish the various methods by which a nationalised industry might obtain new capital and consider their comparative advantages and disadvantages.
  9. Examine the part played by the wholesale merchant in aggravating or mitigating the cyclical fluctuation of trade.

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TUESDAY, May 29, 1923. 1½-4½.
STRUCTURE AND METHODS OF GOVERNMENT IN THE MODERN WORLD.

  1. “It is the special weakness of the American Federation that in a community distinguished above all others for enormous aggregations of capital the machinery for giving effect to the ideal of social justice is less effectual than it is in any other highly-civilized State.” Explain the meaning of this judgment and discuss its truth.
  2. Contrast and account for the part played by political parties in the British and American systems of government.
  3. “Second chambers are the political failure of the British Empire.” Discuss this statement.
  4. Compare and contrast the methods by which the control of the legislature over either foreign policy or public finance is secured in London, Washington and Paris.
  5. “The parts assigned to the President and to the electorate in the new German constitution are wholly incompatible with the Cabinet system of government.” Discuss this statement.
  6. Compare the part played by the permanent official in the English system of central and local administration with that played by him in either France or Germany.
  7. Explain the different uses made of committees in modern legislatures and discuss their value.
  8. What attempts have been made of recent years to improve methods of election to representative bodies, and how far have they proved successful?
  9. “The policy of His Majesty’s Government is that of… the gradual development of self-governing institutions with a view to the progressive realization of responsible government in India as an integral part of the British Empire.” Explain briefly how far this development has proceeded.

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WEDNESDAY, May 30, 1923. 9-12.
DISTRIBUTION AND LABOUR.

  1. How far would you consider the following phenomena as evidence that the distribution of income was becoming less unequal, (a) an increase in the number of moderate incomes relatively to the number of large incomes, (b) an increase in the number of estates subject to death duties relatively to the total number of the population?
  2. “If the demand for labour in general were distinctly less elastic than is commonly supposed, a number of commonly accepted doctrines would be exploded.” Discuss this statement and give illustrations of the doctrines referred to.
  3. Under what conditions is it economically advantageous to employers to work their machinery continuously by means of multiple shifts? Consider the effects of a more widespread adoption of this method of working and the reasons why it is not, in fact, more widely adopted.
  4. In what respects does a Whitley Council differ from a Trade Board? Estimate the utility of these two institutions and their probable future.
  5. “Unemployment insurance by industry is attractive in theory, but unworkable in practice.” Comment on this view.
  6. “The payment of different district rates for the same class of work leads to an uneconomic distribution of labour and capital between different districts and is, therefore, economically unsound.” Discuss this statement.
  7. “Men work harder after a fall in wages and less hard after a rise.” “A rise in wages is commonly followed by an increase in the efficiency of labour.” How far can these two statements be reconciled (a) with each other, (b) with the facts?
  8. Give some account of existing arrangements for conciliation and arbitration in British trade disputes. In what respects, if any, do you think that we should copy more closely the arrangements of other countries?
  9. Indicate the chief problems of organisation confronting the British Trade Union movement at the present time.

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WEDNESDAY, May 30, 1923. 9-12.
POLITICAL THEORY.

  1. “It is a distinctive trait of medieval doctrine that within every human group it decisively recognises an aboriginal and active Right of the group taken as a whole.” Explain this statement, and show its connection with medieval theories of representation.
  2. If Hobbes’ theory of sovereignty is to-day one of the commonplaces of jurisprudence. ethically and politically we occupy ourselves with erecting about it a system of limitations each one of which is in some sort due to Locke’s perception.”
  3. “Rousseau’s doctrine of the General Will is merely a specious pretext for the coercion of minorities.
  4. “Natural rights are real things, arising from real and permanent facts in our psychology.”
  5. Within what limits do you consider that a government is justified in promoting or discouraging the creation and dissemination of opinion?
  6. What principles should, in your opinion, direct the action of a government in the case of a trade dispute? To what extent, if at all, do these principles require modification where the State, as employer, is party to the dispute?
  7. Examine the implications of the formula “Equality of opportunity,” and discuss its merits as a guide in legislation.
  8. “It is neither possible nor desirable that judges, in administering the law, should be unaffected by current political and social ideas.”
  9. “Liberty, as a principle, has no application to any state of things anterior to a time when mankind have become capable of being improved by tree and equal discussion. Until then there is nothing for them but implicit obedience to an Akbar or a Charlemagne if they are so fortunate as to find one.

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WEDNESDAY, May 30, 1923. 1½-4½.
MONEY, CREDIT AND PRICES.

  1. Explain and illustrate the influence exercised on the general level of prices by changes in the velocity of circulation of bank deposits.
  2. Give an account of the mechanism of dealing in forward exchange, and the forces determining the difference between the spot and forward prices of foreign currencies.
  3. Compare and contrast the banking systems of Great Britain, the United States, and any one other country.
  4. Describe any two index numbers of prices in actual use, and indicate any respects in which it seems to you that they could be improved upon.
  5. Discuss the advisability of immediately abolishing the restrictions on the export of gold from this country in the event of the dollar exchange reaching the pre-war parity.
  6. “The experience of Germany suggests that movements in the exchanges are usually the cause and not the result of changes in the level of prices.” Comment.
  7. Investigate the reasons for which the general level of prices may be permanently higher in one gold standard country than in another.
  8. Discuss the issues raised by the proposal to nationalise the banking system of Great Britain.
  9. Give an account of the gold exchange standard, with special reference (a) to its working in India before the war, (b) to its suitability as a solution of European currency problems.

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WEDNESDAY, May 30, 1923. 1.30-4.30.
INTERNATIONAL LAW.

  1. Discuss the legality of the German submarine campaign during the late war, and whether it suggests any conclusions as to the advisability of drawing up a new code of rules for the future conduct of war at sea.
  2. Suppose Greece made an unprovoked military attack on Bulgaria to-morrow, in what way would the application of the principles of neutrality by other countries differ either from the application which they would have had in June 1914 or from the application which they were given during the Greco-Turkish conflict in 1921 and 1922? Explain the differences.
  3. Discuss the legality of large-scale air-bombardments directed against cities such as London, Paris or Berlin.
  4. What is the mechanism provided in the various Treaties of Protection to racial, religious and linguistic Minorities, or established by the League of Nations, for dealing with complaints that the rights of these minorities have not been observed?
    Discuss its efficacy in the light of other proposals put forward and of the history of the protection of racial, religious and linguistic minorities during the 19th century and during the last three years.
  5. “An unprovoked declaration of war is at once the most immoral and the most legal of all crimes.” Discuss this statement.
  6. In what respects does the Permanent Court of International Justice differ from the Permanent Court of Arbitration? In what respects is it an improvement, and in what ways is it likely to improve the general system of international law?
  7. Discuss shortly any three of the following:
    1. The Venezuela Boundary dispute.
    2. The Newfoundland Fisheries dispute.
    3. The Anglo-French dispute concerning the Conscription Laws in Tunis.
    4. The pending dispute between Germany and the Allied Powers concerning transit through the Kiel Canal.
    5. The “Optional Protocol” attached to the Statute of the Permanent Court of International Justice.
  8. Discuss the proposals which have been made to summon an international conference for the codification of international law, and the relation of these proposals to the question of the obligatory jurisdiction of the Permanent Court of International Justice.
  9. Consider whether the application given to the principle of the Open Door in the A, B, and C Mandates respectively is in strict accordance with the principles laid down in Article 22 of the Covenant of the League of Nations.
  10. Compare the methods adopted for drawing up and bringing into force general international conventions before and since the establishment of the League of Nations, and their results.

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THURSDAY, May 31, 1923. 9-12.
ECONOMIC CONDITIONS IN ENGLAND 1823-1828, AND CONTEMPORARY SOCIAL THOUGHT.

  1. Indicate some of the pitfalls which must be avoided, if an impartial survey of economic conditions is to be derived from the Reports and Evidence of contemporary Parliamentary Papers.
  2. What evidence, if any, is there that the distress of the Hand-loom Weavers was caused by the introduction of machinery?
  3. Illustrate from Huskisson’s Speeches the closeness of the affinity between him and Adam Smith.
  4. What justification is there for calling the early English Socialists “the Ricardian Socialists”?
  5. “Co-operation seeks to put the working classes in that situation where they shall enjoy the produce of their labour, instead of that small part called wages.” (Extract from Address of Robert Owen, Chairman of the First Co-operative Congress.) Show the connection between the purpose of co-operation as thus defined and the future development of the Co-operative Movement in Great Britain.
  6. From what angles did the Emigration Committees of 1826 and 1827 approach their problem; and how far did their recommendations meet the problem which they set out to solve?
  7. How far was Cobbett correct in his view of the reactions of urban growth on rural industries?
  8. Explain exactly the difference between the Combination Acts of 1824 and 1825. On what grounds did the Government defend the modifications introduced by the Act of 1825?
  9. “The real wages of the labourer in a redundant population are no more than according to the habits of the country will enable him to subsist and propagate his race, and he must have the same real wages and will have no more, while the population is redundant, whether the taxes remain or are all repealed.” (PLACE, Diary, 12 Oct. 1826.)
    How far is this a legitimate deduction from the teaching of the Classical Economists?

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THURSDAY, May 31, 1923. 9-12.
THE THEORY OF STATISTICS.

  1. Explain what is meant by two attributes being “associated”; give more than one test of association, and prove the principal properties of the fourfold table (association table).
  2. “In selecting an index-number formula the purpose to which it is put is immaterial.” Discuss this.
  3. Explain the uses of a measure of dispersion, define the principal measures and briefly discuss their relative advantages.
    Find the mean and standard-deviation of the following distribution.
Marks Candidates
10—19 2
20—29 5
30—39 10
40—49 23
50—59 34
60—69 22
70—79 3
80—89 1
Total 100
  1. State the product-sum formula for the correlation coefficient, deduce its principal properties and describe the form of the arithmetic when calculating the coefficient for a grouped correlation table.
    The coefficient of correlation between age at death of father and age at death of son is found to be 0.14: for a character determined solely by hereditary constitution it is estimated that the correlation should be 0.5. Supposing that N deaths can be sorted into two distinct classes, in pN of which the age is determined solely by hereditary constitution, and in (1 – p)N of which the age is purely a matter of chance, find the value of p required to reduce the correlation from 0.5 to 0.14.
  2. If w0, w1, w2, are the numbers living in three successive ten-year age-groups; u0, u1, u2, u3, u4, u5 the numbers in the corresponding five-year age-groups, so that

w0 = u0 + u1,   w1 = u2 + u3,   w2 = u4+ u5

show, using Newton’s formula of interpolation, that we may take approximately

u2 = (1/2) w1 + (1/16)( w0 –  w2 ).

  1. What is meant by “standardising” a birth-rate or death-rate? Discuss the possible methods of standardising birth-rates, and their difficulties.
  2. Find the standard error of sampling of (a) the arithmetic mean, (b) the median, and show for what forms of frequency distribution the median will be relatively more stable than the mean.
  3. Explain the problem to be solved in constructing a life-table and the meaning of the columns usually headed lx, px, qx, dx, and mx, giving the principal relations between these quantities.
    Supposing that you already possessed tables showing, for a series of districts, the death-rates for quinquennial age-groups 0-5, 5-10, 10-15, etc., discuss how far the construction of the corresponding life-tables would tend to throw any further light on the differences between them.
  4. Describe and discuss the methods used for investigating, with the aid of the coefficient of correlation, the relations between two quantities varying with the time.

Source: Cambridge University. Economics Tripos Papers, 1921-1926. With the papers set in the Qualifying examinations 1925 & 1926. Cambridge at the University Press 1927, pp. 40-58.

Image Source: Kings College, Cambridge England. Library of Congress Prints and Photographs Division, Washington, D.C. 20540.

Categories
Economist Market Economists

Harvard. Renewal of Faculty Instructorship. Case of Paul Sweezy, 1940

 

The following records come from the President’s Office at Harvard University involving the terms of the reappointment of Paul Sweezy at the rank of Faculty Instructor in the Harvard economics department. Sweezy joined the army in the fall of 1942, so the debate about a two or five year reappointment turned out to be moot on account of the Second World War. What I found particularly interesting in these records is the last one posted below where we witness a member of the department’s visiting committee trying to scuttle Sweezy’s appointment because of his Keynesian fiscal proclivities.

“Mr. Bigelow presented newspaper and other clippings as evidence that Mr. Sweezy advocated economic doctrines in regard to the utility of government-spending in excess of income, and ways of meeting huge deficits, which characterized Mr. Sweezy in Mr. Bigelow’s opinion as an opponent of capitalism…”

In Sweezy’s defense the two members of the department present at the meeting with the Dean of the Faculty of Arts and Science felt it necessary to remind the others present that the department itself had nominated John Maynard Keynes to receive an honorary doctorate at the Tercentenary celebrations in 1936 (…but that honor somehow escaped Keynes…).

__________________________

Departmental Recommendation
to Appoint for a Five-year Term

(Copy)

February 23, 1940

Dear Dean Ferguson:

The Department of Economics has considered the reappointment of Paul Marlor Sweezy whose term as a Faculty Instructor expires in the current year. The Executive Committee voted unanimously that he be reappointed without specification of the term of such reappointment. It then voted to appoint him a Faculty Instructor for a period of five years. As indicated on the detailed record of this ballot, there were two dissenting votes. Letters from Professors Burbank and Slichter will explain in detail their reasons for not approving of the five-year term.

                  Mr. Sweezy’s instruction is in the fields of Industrial Organization and Socialism, and is primarily undergraduate. He is an experienced tutor, and at present is one of the two Examiners in Economics. He would at any time be considered a strong candidate for a Faculty Instructorship, and is especially valuable to the Department now in view of the recent departure of so many of our younger staff.

                  Biographical and bibliographical data are enclosed on separate sheets.

Yours very truly,
(S) E. H. Chamberlin
E. H. Chamberlin

Dean W. S. Ferguson
Copied by: MEH

*  *  *  *  *  *  *  *  *  *  *  *  *  *  *

Departmental Vote
to Appoint for a Five-year Term

Paul Marlor Sweezy

                  At a meeting of the Executive Committee of the Department of Economics on February 13, 1940, upon motion of Dean Williams, it was voted unanimously that we favor the reappointment of Paul Sweezy, without specification of term.

Professor Black Yes
Professor Burbank Yes
Professor Chamberlin Yes
Professor Crum Yes
Professor Frickey Yes
Professor Haberler Yes
Professor Hansen Yes
Professor Harris Yes
Professor Leontief Yes
Professor Mason Yes
Dr. Monroe Yes
Professor Schumpeter Yes
Professor Slichter Yes
Dr. Taylor Yes
Professor Usher Yes
Dean Williams Yes
Professor Wilson Yes

Dean Williams then moved that we recommend the appoint of Paul Sweezy as Faculty Instructor for a five-year term. The motion was carried with two dissenting votes.

Professor Black Yes
Professor Burbank No
Professor Chamberlin Yes
Professor Crum Yes
Professor Frickey Yes
Professor Haberler Yes
Professor Hansen Yes
Professor Harris Yes
Professor Leontief Yes
Professor Mason Yes
Dr. Monroe Yes
Professor Schumpeter Yes
Professor Slichter No
Dr. Taylor Yes
Professor Usher Yes
Dean Williams Yes
Professor Wilson Yes

*  *  *  *  *  *  *  *  *  *  *  *  *  *  *

Burbank’s Dissent
to Appoint for a Five-year Term

(Copy)

February 17, 1940

Dear Dean Ferguson:

                  You are familiar with the recommendation of the Executive Committee of the Department of Economics regarding Dr. Paul Sweezy.

                  Since I voted against the recommendation which is in your hands, I should like to state the reasons for my action.

                  I strongly favor continuing the present appointment of Dr. Sweezy for two years, or voting him a five-year appointment from 1937. Either action would give him a full five-year faculty term.

                  I take this position because I believe his status should be reviewed in about two years. The members of the Executive Committee have known Sweezy for a long period. We are, or should be, altogether familiar with his work and his promise for growth and accomplishment. I place two more years rather than four or five as the better time for revision both from Sweezy’s point of view and from the point of view of the Department.

                  I  have had many years of experience in placing men in other institutions. It has been our experience that it is extremely difficult to place the better men advantageously after they have passed the early thirties. In this particular category the matter of a few years is of real significance. If, in 1945, Sweezy should not be advanced, the difficulties in securing an acceptable place for him will be increased. I hope this can be avoided. I believe that the colleagues who are the principal supporters of the motion for the longer term would declare that this argument carries little or no weight. However, the fact that Dr. Sweezy has no invitations from other institutions of high standing carries very considerable weight in its bearing on this problem.

                  I was reluctant to recommend a longer appointment at this time because of my estimate of Dr. Sweezy’s promise.

                  In the immediate past men have not been advanced and have gone elsewhere who were regarded, I believe, by a majority of the members of the Committee as superior to Dr. Sweezy. There are a number of men on the ground whom I regard as more promising.

                  Further, I believe that in our present situation our Instructorships should be well staggered and filled with regard for our long-time development. Considering the urgent needs of the Department in particular areas, I think it unwise to fill too many places immediately. I urge this policy strongly, since I am convinced that in some fields it is likely to be exceedingly difficult to uncover the requisite ability. It may be decidedly to our advantage to develop competition in these areas, — that is, two Instructors in the subjects involved. I would not urge this course for all areas of study and instruction, but in Agriculture and related problems, and in Labor and related problems I believe such competition may be essential.

Very sincerely yours,
(s) H. H. Burbank
H. H. Burbank

Dean W. S. Ferguson
5 University Hall
Cambridge, Massachusetts

Copied by: MEH

*  *  *  *  *  *  *  *  *  *  *  *  *  *  *

Slichter’s Dissent
to Appoint for a Five-year Term

(Copy)

February 19, 1940

Dean W. S. Ferguson
Harvard University
Cambridge, Massachusetts

Dear Dean Ferguson:

                  At a meeting of the Department of Economics on February 13, I voted for the reappointment of Mr. Paul Sweezy as faculty instructor but against a term of five years. I favor a two-year term.

                  Mr. Sweezy is just completing a three-year term as faculty instructor. Consequently appointment for two more years would convert his three-year term into a five-year term which is more normal. On the other hand, appointment for five years following three would put Mr. Sweezy in a special class among faculty instructors and would easily be interpreted as a stronger endorsement of his work and qualifications than I think we are warranted in giving.

                  No one, of course, knows how rapidly Mr. Sweezy will develop during the next few years but I think that the chances are against our desiring to offer him a permanent place. If that is so, a two-year appointment is fairer than a five-year both to him and to the University.

Sincerely yours,
(S) Sumner H. Slichter

Copied by: MEH

*  *  *  *  *  *  *  *  *  *  *  *  *  *  *

Appendix: Sweezy c.v.

Paul Marlor Sweezy

Biography

Born April 10, 1910

A.B., Harvard, 1931
A.M., Harvard, 1934
Ph.D., Harvard, 1937

Married

1934-37 Annual Instructor in Economics and Tutor in the Division of History, Government and Economics, Harvard.

1937-40 Faculty Instructor in Economics and Tutor in the Division of History, Government and Economics, Harvard, for three years.

Bibliography

“A Note on Relative Shares,” Review of Economic Studies, Vol. I, No. 1, October 1933.

“Pigou’s Theory of Unemployment,” Journal of Political Economy, December, 1934.

“Economics and the Crisis of Capitalism,” The Economic Forum, Spring, 1935.

“John Strachey’s Theory and Practice of Socialism,” review in The Nation, December 5, 1936.

“On the Definition of Monopoly,” Quarterly Journal of Economics, February, 1937.

“Review of The United States: A Graphic History, by Louis Hacker et al.,” The Nation, December 11, 1937.

“Review of Economics for Everybody, by Mervyn Crobaugh,” The Nation, December 25, 1937.

“Review of Socialism versus Capitalism, by A. C. Pigou,” The Nation, February 5, 1938; and Plan Age, March 1938.

“Review of The Promises Men Live By, by Harry Schernan,” The Nation, March 26, 1938.

“Review of Socialism, by Ludwig Mises,” Science and Society, Spring, 1938.

“Wage Policies and Investment,” American Economic Review, Supplement, March, 1938.

“Review of On the Economic Theory of Socialism, by Oskar Lange and Fred M. Taylor,” The Nation, June 25, 1938.

“Expectations and the Scope of Economics,” Review of Economic Studies, June, 1938.

“Review of Confessions of an Economic Heretic, by J. A. Hobson,” The Nation, August 27, 1938.

An Economic Program for American Democracy. With R. V. Gilbert, G. H. Hildebrand, Jr., A. W. Stuart, W. Y. Sweezy, L. Tarshis, and J. D. Wilson. The Vanguard Press. 1938.

Monopoly and Competition in the English Coal Trade, 1550-1850. (Wells Prize essay 1937-38.) Harvard Economic Studies Vol. LXIII. Harvard University Press. 1938.

“Demand under Conditions of Oligopoly,” Journal of Political Economy, August 1939.

“The Thinness of the Stock Market,” American Economic Review, December, 1938.

“Review of Full Recovery or Stagnation, by A. H. Hansen,” The Nation, November 19, 1938.

“The Power of the Purse,” The New Republic, February 8, 1939.

“Marx on the Significance of the Corporation,” Science and Society, Spring 1939.

“Review of The Brandeis Way, by A. I. Mason,” Harvard Law Review, April, 1939.

“Review of Jobs for All, by Mordecai Ezekiel,” The New Republic, April 19, 1939.

“Government Spending, its Tasks and Limits,” (discussion), Social Research, May, 1939.

“Is Further Debt Financing Sound?” (symposium), The Business Bulletin, May, 1939.

“Review of Man’s Estate, by Alfred M. Bingham,” The Boston Transcript, July 22, 1939.

“Public Works as an Aid to Private Investment,” The American City, July, 1939.

“Review of Henry George, by Albert Jay Nock,” The Nation, October 28, 1939.

“Review of Ideas are Weapons, by Max Lerner,” The Nation, December 2, 1939.

“Major Interest Groups in the American Economy,” Appendix No. 11 in The Structure of the American Economy, National Resources Committee, 1939.

In preparation:

Lectures on Marxian Economic Theory. Accepted for publication by the Oxford University Press. (Eight chapters completed in first draft.

“A Contribution to the Economic History of the Law of Corporations.” Accepted for publication by The Quarterly Journal of Economics.

*  *  *  *  *  *  *  *  *  *  *  *  *  *  *

Dean Signals Green Light
to Appoint for a Five-year Term

C O P Y

February 26, 1940.

Dear Mr. Chamberlin:

                  I confirm herewith the message I gave you by telephone this morning, that we are agreed to have Dr. Paul Sweezy appointed as Faculty Instructor for five years beginning on September 1, 1940. It is part of this transaction that you and we are agreed that Dr. Sweezy should be informed (first) that this appointment involves no commitment for his election to a vacancy on the permanent staff, (second) that he will be considered for election to such a vacancy in competition both with other Faculty Instructors on the staff and with outsiders, and (third) that in all likelihood this competition will be severe.

                  Will you kindly write to him to this effect and send to me both a copy of your letter and of his acknowledgment of its receipt?

                  I am

Yours sincerely,
[unsigned]

Professor E. H. Chamberlin

*  *  *  *  *  *  *  *  *  *  *  *  *  *  *

Chairman Informs Sweezy
of the Appointment Decision

COPY

February 29, 1940

Dear Paul:

This letter is to confirm our conversation of several days ago. The Department of Economics has voted for you a five-year appointment as Faculty Instructor dating from September 1940, and this appointment has been approved by both Dean Ferguson and by President Conant. It goes without saying that it is an expression of a belief in your promise as an economist and in your continued usefulness to the Department over the five years to come.

                  The appointment, made during the transition from the old system to the new, in effect continues your tenure on a non-permanent basis over a period of eight years from your Ph.D. which is perfectly normal, but has the unusual result of extending over the entire eight-year period your status as “Faculty Instructor.” For this reason apprehension has been expressed both in the Department and by the University administration lest it be misinterpreted. In fairness to you it should be made perfectly clear that no one regards this appointment as involving any commitment whatever for subsequent election for a permanent position at Harvard. When such a permanent position is to be filled, the competition will include, as well as yourself and other Faculty Instructors on the ground, former members of the Department and still others from the outside. It looks now as if this competition would be severe.

                  I trust that you will understand the importance of avoiding any misunderstanding at this time. Will you please let me have an acknowledgement to this letter.

Sincerely yours,
(s) E. H. Chamberlin

Dr. Paul M. Sweezy
10 Forest Street
Cambridge, Massachusetts

*  *  *  *  *  *  *  *  *  *  *  *  *  *  *

Sweezy Confirms Understanding
Tenure Review will be Competitive

COPY

March 3, 1940

Professor Edward H. Chamberlin,
Department of Economics,
Littauer Center,
Cambridge, Mass.

Dear Professor Chamberlin,

                  I have your letter of February 29th regarding my appointment to a five year term as Faculty Instructor beginning next fall. Needless to say I am happy that the Department and the Administration feel the confidence in my work to date which this appointment implies.

                  I note that both the Department and the Administration are anxious to make it quite clear that this appointment carries with it no implication of further commitments. You may rest assured that I understand the situation in this respect completely; this letter will serve to furnish a formal record of the fact.

Sincerely,
(sgd.) Paul M. Sweezy

*  *  *  *  *  *  *  *  *  *  *  *  *  *  *

Official Announcement
of the Appointment Decision

PAUL MARLOR SWEEZY

Recommendation of the Dean of the Faculty:

                  I recommend the appointment of Dr. Paul Sweezy as Instructor in Economics and Tutor in the Department of Economics for five years from September 1, 1940. Dr. Sweezy’s three-year term as Faculty Instructor expires this year. Prior to his present appointment he served three years as Annual Instructor before receiving his doctorate. Consequently he is entitled under our rules to the five-year Faculty Instructorship for which he is recommended. He is thirty years of age.

                  The vote of the Department on which this recommendation is based was not unanimous. The two dissenters preferred to have the five-year period divided into two periods, one of two years and the other of three. This division seems to me to conflict with the essential idea on which the new type of Faculty Instructorship rests. It denies him the opportunity of sufficient time, free from the consequences on himself and his work of an intervening judgment, in which to demonstrate his scholarship. On the plan of the dissenters Dr. Sweezy would come up for consideration again a year hence. It is not urged that the Department would be in a better position to reach a definite decision regarding him twelve months from now than it is in at present. The action recommended by the great majority of the Department is best calculated to give Dr. Sweezy a fair chance. The Department has only one other Faculty Instructor on the five-year tenure at present and he has just been appointed. Their quota is six. Hence they could have another man in direct competition with Dr. Sweezy in 1944. Dr. Sweezy is comparatively young. There is, therefore, little risk in keeping him on for five years longer. In a subject like Economics the five years between the ages of 30 and 35 constitute the period in which a man ordinarily comes to maturity.

                  The enclosed letter from me to Professor Chamberlin makes clear to Dr. Sweezy the situation in which he stands on entering on his five-year term.

[signed] W. S. Ferguson

March 20, 1940.

*  *  *  *  *  *  *  *  *  *  *  *  *  *  *

Memorandum of the discussion between Mr. Albert Bigelow, Professors Burbank and Chamberlin, and Assistant Dean Buck, and myself [W. S. Ferguson, Dean of the Faculty of Arts and Sciences] Thursday, May 9, 1940.
Dramatis Personae

Albert Francis Bigelow. Harvard Class of 1903. Harvard Law Graduate. Member of the Economics Visiting Committee. Republican member of the Massachusetts House of Representatives 1925-1944. [His son, Albert Bigelow, was a prominent pacifist.]

Paul Herman Buck. Assistant Dean of the Faculty of Arts and Sciences, associate professor in history as of 1939. He received the Pulitzer prize in American History in 1938 for his book on the Reconstruction Period after the Civil War.

William Scott Ferguson. Dean of Faculty of Arts and Sciences, McLean Professor of Ancient and Modern History (Fun fact: Ferguson invented the reading period at Harvard)

Harold Hitchings Burbank, David A. Wells Professor of Political Economy. Former chairman of the Department of Economics, chairman of the Board of Tutors in the Division of History, Government and Economics.

Edward Hastings Chamberlin, Professor of Economics and Chairman of the Department of Economics.

*  *  *  *  *  *  *  *  *  *  *

                  Mr. Bigelow presented newspaper and other clippings as evidence that Mr. Sweezy advocated economic doctrines in regard to the utility of government-spending in excess of income, and ways of meeting huge deficits, which characterized Mr. Sweezy in Mr. Bigelow’s opinion as an opponent of capitalism and, on this basis, queried “whether or not he arrived at his views by thorough scholarship and by intellectual processes which command the respect of his peers” — that is to say, met the conditions formulated in the Report of the Visiting Committee of the Economics Department for 193[last digit omitted]. General discussion followed. Professor Chamberlin pointed out that the position taken by Mr. Sweezy was substantially that held by Professor Keynes of Cambridge University, scholar to whom Harvard had tendered an honorary degree at the Tercentenary. Neither Professor Burbank nor Professor Chamberlin was able to define the degree of Mr. Sweezy’s radicalism and affirmed vigorously that in making their recommendation the Department was not actuated for or against him by considerations of his politico-economic opinions. They regarded Mr. Sweezy as a well-trained economist, a man of real ability, and an excellent teacher. Mr. Bigelow raised the question whether the point of view advocated sympathetically by Mr. Sweezy was not considered dispassionately by other members of the Department in their teaching. Professor Burbank affirmed that this was the case, adding that the men who agitated irresponsibly on matters of current controversy were not in the Harvard Department of Economics.

                  Mr. Bigelow also inquired whether Mr. Sweezy was not likely to influence emotionally the opinions of young men predisposed by present conditions to seek, by any or every means, an escape from their immediate troubles. The point was made that individual undergraduates were taught economics not by one man alone but by at least four or five, among them men who were more orthodox than he in their economic theories. Professors Burbank and Chamberlin were clear that it was impossible not to have instruction on socialism in the Economics Department at Harvard and that without the services of Sweezy they would be very hard put to give it. Accordingly somebody else would be needed to replace Mr. Sweezy; and, according to Mr. Burbank, there was only one man in the country whom they regarded as his superior (Lange of Chicago) and whom in his opinion they would prefer to Sweezy when and if they contemplated making a permanent appointment in this field. He is not procurable on an Instructor’s salary. Professor Burbank thought that the needs of the Department on its permanent staff placed Labor, Economic History, and Agricultural Economics prior to the field represented by Mr. Sweezy. It was pointed out by Mr. Buck that with its quota of six Faculty Instructors, the Department could easily provide for these permanent needs and yet retain Mr. Sweezy as a Faculty Instructor of the new type. He pointed out that since the Department would have at best only two Faculty Instructors next year (excluding Sweezy) they had a real need for Sweezy to insure greater continuity in tutoring and to perform other departmental duties such as the conduct of General Final Examinations. This was admitted by both Mr. Burbank and Mr. Chamberlin.

                  I took the point of view that I was recommending Mr. Sweezy’s appointment on the grounds of his training in Economics and his intellectual distinction and his excellence as a teacher, adding that since the question of his opinions had been raised I should like to urge that neither at the present time nor a year from now* could an explanation be given which would seem to Mr. Sweezy or his friends to be at all adequate for our failure to reappoint him: in view of our agreement as to his qualifications he would be entitled to think that he was denied the type of appointment granted to his competitors primarily because of his political opinions, whereas should he be given his five-year appointment and not elected to a permanency at its termination (which Professor Burbank thought highly probable) there would be an explanation for letting him go which he could not contest; namely, the prior needs for men in other fields, the fact that, however good they were, only one Faculty Instructor out of every two would find a vacancy open for him, and the regularity of turn-over at that stage.

                  Mr. Bigelow intimated that he might wish to discuss the matter further with me and with President Conant. (Mr. Bigelow called me up later to say that he would ventilate the problem on Monday but would not press for adverse action.

[signed] W. S. Ferguson

* The date at which a decision would have to be made if he were given a two-year appointment only.

Source: Harvard University Archives. Records of President James B. Conant, Box 154, Folder “Economics, 1939-1940”.

Image Source: Paul Sweezy in the Harvard Class Album 1942.

Categories
Econometrics Exam Questions Harvard Suggested Reading Syllabus

Harvard. Introduction to Econometrics, Syllabus and Final Exam. Sims, 1967-68

Christopher A. Sims, portrait from his senior year

 

Christopher Sims was awarded a Ph.D. in economics from Harvard in February 1968 and in the Spring term of 1967-68 he still taught at the rank of “Instructor in Economics” (Note: he was promoted to assistant professor of economics beginning with the Fall term of 1968-69). We see from the official course announcement for the 1967-68 academic year that the staffing of the undergraduate introduction to econometrics course had not been determined until some time after the printing of the course announcements. 

An earlier post provides the course syllabus and partial reading list for Sims’ graduate course on time series econometrics.

_______________________________

Course Announcement

Economics 195. Introduction to Econometrics.

Half course (spring term). Tu., Th., S., at 11. Dr. ——

Statistics applied to testing of economic hypotheses and estimation of economic parameters. Will center on multiple regression and analysis of variance techniques and their application to tests on time series and cross-section data and to estimation of simultaneous equation models.

Prerequisite: Statistics 123 [Statistics in the Social Sciences] or equivalent.

Source: Harvard University, Faculty of Arts and Sciences. Courses of Instruction, Harvard and Radcliffe, 1967-1968. Pp. 127-128.

_______________________________

Course Outline and Reading List

Dr. Sims
Spring 1968

Economics 195
Reading List and Outline

Alternative texts

Carl F. Christ, Econometric Models and Methods, Wiley, 1967
or
J. Johnston, Econometric Methods, McGraw-Hill, 1963

Other references not required for purchase:

Arthur S. Goldberger, Econometric Theory, Wiley, 1964

E. Malinvaud, Statistical Methods of Econometrics, Rand-McNally, 1966

Other required purchases:

National Income and Product of the U.S., 1929-65, U.S. G.P.O.

Economic Report of the President, 1968, U.S. G.P.O. (This may not be available until a few weeks after the semester begins.)

Some source of statistical tables — the F, t, normal and chi-squared distributions — will be necessary. Christ includes such tables. If you buy Johnston instead and you own no other source of tables, adequate sources are:

Tables for Statisticians, Barnes and Noble, or

Standard Mathematical Tables, Chemical Rubber Publishing Co.

Course Outline

Unstarred readings are passages which should parallel part of what is covered in class.

(*) Readings which are required and which may not be covered in class.
(**) optional readings.

  1. Least squares in econometrics.
    1. Abstract models which justify LS.
    2. How such Models arise in economics: structural models and conditional forecasts.

Johnston, p. 13-29, 106-112

Goldberger, p. 156-165, 179-80, 266-74, 278-80, 288-304.

Christ, Ch. VIII, IX.1-4, IV.4-6

  1. Tests of linear hypotheses in regression models

Johnston, p. 112-138

Goldberger, p. 172-180

Christ, p. 495-514

  1. Constructing models: Principles, gimmicks, and pitfalls.
    1. Models in general: Data transformations; altering specifications in the light of results.
    2. Time series forecasting models: Multicollinearity; distributed lags; lagged endogenous variables.

Christ, Ch. V

Johnston, p. 201-207, p. 212-221

Goldberger, p. 192-4

(*) Christ, p. 579-606

(*) Friend, Irwin and Robert C. Jones, “Short-Run Forecasting Models” in Models of Income Determination.

(*) Orcutt, G.H., and S.F. James, “Testing the Significance of Correlations between Time Series”, Biometrika 12/48

(**) National Bureau of Economic Research, The Quality and Significance of Economic Anticipations Data, 1960.

(**) National Bureau of Economic Research, Short Term Economic Forecasting (Studies in Income and Wealth, v. 27)

(**) National Bureau of Economic Research, Models of Income Determination (Studies in Income and Wealth, v. 28)

  1. Refinements of multiple regression
    1. Nonspherical disturbances and generalized least squares.

Christ, IX.5, IX.13

Goldberger, p. 201-212, 231-243

Johnston, Ch. 7

Zellner, A. “An Efficient Method for Estimating Seemingly Unrelated Regressions”, J. Amer. Stat. Assoc., 6/62

(**) Balestra, P. and M. Nerlove, “Pooling Cross-Section and Time Series Data in the Estimation of a Dynamic Model”, Econometrica, 7/66

    1. Errors in variables and instrumental variable estimation.

Goldberger, p. 282-287

    1. Dummy variables and analysis of variance

Goldberger, p. 218-231

Johnston, p.221-228

    1. Distributed lag estimation

Johnston, Ch.8.3

Goldberger, p. 274-8

Almon, S. “The Distributed Lag between Capital Appropriations and Expenditures”, Econometrica, 1/65

(**) Mundlak, Y., “Aggregation over Time in Distributed Leg Models”, Int. Econ. Rev. 5/61

(**) Jorgenson, D., “Rational Distributed Lag Functions”, Econometrica, 1/66

  1. Testing Revisited
    1. Serial correlation; the Durbin-Watson Statistic

Johnston, Ch.7.4

Christ, Ch.X.4

Goldberger, p. 243-244

Nerlove, M., and Wallis, K., “Use of the Durbin-Watson Statistic in inappropriate situations”, Econometrica, 1/66

    1. Tests of structural stability and forecast accuracy

Johnston, Ch.4.4

Christ, Ch. X.6, 7, 9

Goldberger, p. 169-70, 210-11

(**) Theil, H., Applied Economic Forecasting.

(**) Sims, C. “Evaluating Short-term Macro-economic Forecasts: The Dutch Experience”, Rev. Econ. and Stat. 5/67

  1. Estimation and testing in simultaneous equations models
    (Reading assignments for this section will be made when it is reached in class).
  1. Possible Additional. Topics
    (Readings for topics in this section will be assigned when and if they are reached in class.)

    1. Bayesian regression
    2. Nonlinear regression
    3. Principal components and discriminant analysis
    4. Spectral analysis

Source: Harvard University Archives. Syllabi, course outlines and reading lists in economics, 1895-2003. Box 9. Folder “Economics, 1967-68”.

_______________________________

Final Examination
Economics 195

Spring 1968
Dr. C. Sims

Do all questions on the exam. Do not spend more than the suggested amount of time on any one question, unless you have time left over at the end. Most questions include at least some quite difficult parts, so you need not finish every question to get a good grade. Formulas and a table appear on the last page.

  1. (Time: 25 minutes)
    1. Define the terms “consistent estimator” and “unbiased estimator”.
    2. We wish to estimate a scalar parameter β, and we have available four estimators, bi(n), 1=1, … 4, where n is sample size.
      Suppose we know that these estimators have the forms

b1(n) = β + (1 + ν) / n

b2(n) = β + 2 ν /n

b3(n) = β + ν /200

b4(n) = β (1 + (ν / n)),

where ν ∼ N(0,1). For each of the four estimators, tell whether it is consistent or inconsistent, biased or unbiased.

    1. Among the three estimators b1(n), b2(n) and b3(n), which is the minimum variance unbiased estimator for a sample of size 10? Would your answer change if b4(n) were included in the comparison?
  1. (Time: 40 minutes)
    We are interested in measuring the relationship between I.Q. and income using the relationship:

yi(t) = α + β xi(t) + νi(t)

where yi(t) is the income and xi(t) the I.Q. of the i’th individual at time t. The variable νi(t) is an unobserved random term assumed to satisfy E [νi(t) | xi(t)] = 0.

    1. Suppose we have observations on yi(t0) and xi(t0) for a large cross-section of individuals at a single time (t=t0). What additional assumptions are necessary to guarantee that least squares regression of y on x in this sample will yield unbiased estimates of α and β? Comment briefly on the reasonableness of these assumptions in this context.
    2. Suppose we have observations on y0(t) and x0(t) for a single individual (i=0) for a large number of time periods. What additional assumptions are necessary to guarantee that least squares regression of y on x in this sample will yield unbiased estimates of α and β? Comment briefly on the reasonableness of these assumptions in this context.
    3. For a given sample size, which would you expect to yield more reliable estimates for this model — a cross-section as in part (a) or a time series on an individual as in part (b)? Why?
    4. Give sufficient conditions for the regression in part (b) to yield consistent estimates of α and β. Comment briefly on the reasonableness of these assumptions in this context.
  1. (Time: 35 minutes)

Economist A believes an individual’s savings in a given year depend only on his mean income over the current year and the preceding year, i.e.,

\bar{y}_{i} =\left( 1/2 \right) \left( y_{i}+y_{i}\left( -1 \right) \right).

Economist B believes savings depend only on the change in income between the current and the preceding year, i.e.,

\Delta y_{i}=y_{i}-y_{i}\left( -1 \right) .

They take a sample of 20 randomly selected individuals and regress savings (si) on current and lagged income
(yi and yi (-1)) with no constant term to obtain

1)      si = .08 yi – .02 yi(-1) + residual

as an estimated equation. Their computer printout contains in addition the following information:

\sum y_{i}^{2}=5;     \sum y_{i}\left( -1 \right)^{2} =5;     \sum y_{i}y_{i}\left( -1 \right) =4;

\sum s_{i}y_{i}=.32;     \sum s_{i}y_{i}\left( -1 \right) =.22;     \sum s_{i}^{2}=.0374;

\hat{\sigma}^{2} =\ .0009

(\hat{\sigma}^{2} =\ \text{equation residual variance, unbiased estimate).}

Formulate A’s and B’s theories as hypotheses about the coefficients in (1) and compute a test of each theory at the 5% level of significance in a two-tail test. Can either hypothesis be rejected at this significance level? State the assumptions about the distribution of the residuals in the model which are necessary to justify the test you use here.

(See table on last page)

  1. (Time: 40 minutes)
    1. Two of the following cannot be covariance matrices. Which two? (Point out what’s wrong with each of the two). (7 minutes)
      1. \left[ \begin{matrix}4&1\\ 1&2\end{matrix} \right]
      2. \left[ \begin{matrix}4&-1\\ -1&4\end{matrix} \right]
      3. \left[ \begin{matrix}4&1\\ -1&4\end{matrix} \right]
      4. \left[ \begin{matrix}1&-3\\ -3&3\end{matrix} \right]
      5. \left[ \begin{matrix}1&0\\ 0&1\end{matrix} \right]
    1. What is multicollinearity? (7 minutes)
    2. What is a Koyck distributed lag relationship? (7 minutes)
    3. What is an Almon polynomial distributed lag relationship? (7 minutes)
    4. What are some advantages and disadvantages of the Koyck as compared to the Almon distributed lag relationship for purposes of econometric model-building? (12 minutes)
  1. (Time: 45 minutes)

Consider the following model of income and employment determination in New England:

[demand for output] (A) Y = a1 + b1 Yus + c1W + ν1

[demand for labor] (B) E = a2 + b2 Y + ν2

[wage determination] (C) W = a3 + b3 (L – E) + ν3

[labor supply] (D) L = a4 + b4 t + c4 W + d4 E + ν4

where Y is aggregate income in New England

L is labor force (number at work or looking for work in New England)

E is employment (number actually at work in New England)

W is the ratio of New England wages to the national average.

Yus is aggregate U.S. income.

t is the current year.

νi, i = 1, . . ., 4 are random disturbances.

    1. Which variables are most reasonably treated as endogenous, which as exogenous in this model?
    2. Would any of the variables you specify as exogenous possibly be better treated as endogenous in a larger model? Why?
    3. Using the order criterion, which equations in the model are under-identified? over-identified?
    4. Describe briefly in words the simplest way to obtain consistent estimates of equation (A) (under the usual assumptions about distribution of residuals).
    5. Suppose you discovered that the residuals from equation (A) were highly correlated with federal defense expenditures. How would you modify the model? How would this modify your answer to part (c)?
Table and Formulae t-statistic
P[ |t| > x]
Degrees of Freedom .1 .05 .01
2 2.920 4.303 6.965
8 1.860 2.306 2.896
14 1.761 2.145 2.624
15 1.753 2.131 2.602
16 1.746 2.120 2.583
17 1.740 2.110 2.567
18 1.734 2.101 2.552
19 1.729 2.093 2.539
20 1.725 2.086 2.528

Ordinary least squares

\hat{b} =\left( X^{\prime}X \right)^{-1} X^{\prime}Y

V\left( \hat{b} \right) =\sigma^{2} \left( X^{\prime}X \right)^{-1}

\hat{\sigma}^{2} =\left( Y^{\prime}Y-\hat{b}^{\prime} X^{\prime}Y \right) /\left( n-k \right)

t-test on H_{0}:\ c^{\prime}b = M


t=\frac{c^{\prime}b-M}{\sqrt{\hat{\sigma}^{2} \left( X^{\prime}X \right)^{-1}}}

Source: Harvard University, Faculty of Arts and Sciences. Papers Printed for Final Examinations [for] History, History of Religions, Government, Economics, … (June 1968).

Image Source: Christopher A. Sims ’63 in Harvard Class Album 1963. From the Harvard Crimson article “Harvard and the Atomic Bomb,” by Matt B. Hoisch and Luke W. Xu (March 22, 2018). Sims was a member of the Harvard/Radcliffe group “Tocsin” that advocated nuclear disarmament.

Categories
Economic History Economists Gender Harvard

Radcliffe/Harvard. Ph.D. economic history alumna Esther Clark Wright, 1931

Esther Clark Wright (1916)

Today we meet the Canadian Radcliffe/Harvard Ph.D. in economic history (1931), Esther Clark Wright. A link to her list of publications will be found below. The main artifact for this post consists of transcriptions of documents in her graduate record in the Division of History, Government, and Economics.

_______________________

HARVARD UNIVERSITY
DIVISION OF HISTORY, GOVERNMENT, AND ECONOMICS

Application for Candidacy for the Degree of Ph.D.

[Note: Boldface used to indicate printed text of the application; italics used to indicate the handwritten entries]

I. Full Name, with date and place of birth.

Esther Clark Wright, May 4, 1895, Fredericton, N.B., Canada.

II. Academic Career: (Mention, with dates inclusive, colleges or other higher institutions of learning attended; and teaching positions held.)

1912-1916. Acadia University.
1918. Toronto University.
1920-21. Oxford University.
1926–. Radcliffe College.

Fredericton High School. 1920,1922-23. English and History.
Moulton Ladies College, 1923. History and Latin.
Harvard. Assistant in Business History, 1927.

III. Degrees already attained. (Mention institutions and dates.)

B.A. Acadia, 1916. Honors in Economics.

IV. General Preparation. (Indicate briefly the range and character of your under-graduate studies in History, Economics, Government, and in such other fields as Ancient and Modern Languages, Philosophy, etc. In case you are a candidate for the degree in History, state the number of years you have studied preparatory and college Latin.)

History, 1 yr.
Economics and Sociology 3 yrs.
Greek and Latin, 4 yrs. each.
French and German, 1½ yrs each.
Philosophy, 1 yr.
Logic and Ethics, 1 yr.
Psychology, 1 yr..

V. Department of Study. (Do you propose to offer yourself for the Ph.D., “History,” in “Economics,” or in “Political Science”?)

Economics.

VI. Choice of Subjects for the General Examination. (State briefly the nature of your preparation in each subject, as by Harvard courses, courses taken elsewhere, private reading, teaching the subject, etc., etc.)

  1. Economic Theory. S7a. Ec. 11. Courses at Toronto and Stanford (not registered).
  2. Labor Problems. Ec 34. Seminary at Toronto. Private reading..
  3. Socialism and Social Reconstruction. Ec. 7b. Private reading.
  4. Canadian History. Course at Toronto. Private reading. (Special Topic: The Settlement of New Brunswick). Teaching.
  5. [Sociology] Ec. 12. Course at Toronto. (Course credit).
  6. (Economic History since 1750) Ec 2. Ec 20. Course at Oxford. Assistant in Business History at Business School.

VII. Special Subject for the special examination.

Economic History since 1750.

VIII. Thesis Subject. (State the subject and mention the instructor who knows most about your work upon it.)

The Genesis of the Civil Engineer. A Study in the Economic History of Great Britain, 1760-1830. Professor Gay..

IX. Examinations. (Indicate any preferences as to the time of the general and special examinations.)

April 28 or 30, 1930. General.
Special, Tues May 19/31

X. Remarks

Professors Gay, Ripley, Mason, [Dr.] Furber, Chamberlin

Special Committee:  Professors Gay, Usher, and Dr. Monroe

Signature of a member of the Division certifying approval of the above outline of subjects.

[signed] H. H. Burbank

*   *   *   [Last page of application] *   *   *

[Not to be filled out by the applicant]

Name: Esther Clark Wright

Approved: December 10, 1929

Ability to use French certified by Professor A. E. Monroe, March 8, 1930.

Ability to use German certified by Professor A. E. Monroe, November 6, 1930.

Date of general examination April 30, 1930. Passed (Edwin F. Gay, Chairman)

Thesis received April 1, 1931

Read by Professors Gay and Usher

Approved June 1, 1931.

Date of special examination Monday, June 8, 1931. Passed. (Edwin F. Gay, Chairman)

Recommended for the Doctorate June 4, 1931

Degree conferred  June 17, 1931

Remarks.  [left blank]

*  *  *  *  *  *  *  *  *  *  *  *  *  *

General Examination,
date and examiners requested
[carbon copy]

April 21, 1930.

Dear Sir:

Will it be possible for you to serve as a member of the committee for the general examination in Economics of Mrs. Esther Wright on Wednesday, April 30, at four o’clock? Mrs. Wright’s fields for this examination are:

  1. Economic Theory and its History.
  2. Labor Problems.
  3. Socialism and Social Reconstruction.
  4. Canadian History.

Mrs. Wright’s special field is Economic History since 1750 and she is offering course credit in Sociology.

The committee consists of Professors Gay (chairman), Chamberlin, Mason, Ripley, and Dr. Furber.

Very truly yours,
[unsigned copy]
Secretary of the Division

*  *  *  *  *  *  *  *  *  *  *  *  *  *

Change of thesis title
[carbon copy]

June 6, 1931

My dear Mrs. Wright:

Professor Gay has asked me to tell you that he would like you to change the title of your thesis to

The Genesis of the Civil Engineer in Great Britain

As it is desirable to have this done before the examination, could you attend to it on Monday? The thesis is in my office.

Very sincerely yours,
[unsigned copy]
Secretary

*  *  *  *  *  *  *  *  *  *  *  *  *  *

Radcliffe College

College Record of Mrs. Esther Clark Wright.
SUBJECT GRADE
1926-27 Course

Half-Course

Economics 2

A minus

 

SUBJECT GRADE
1927-28 2hf. Course

Half-Course

Economics 20″
Prof. Gay

A minus

 

SUBJECT GRADE
1928-29 Course

Half-Course

Economics 20
Prof. Gay

A minus
Economics 34″ A
Economics 7b” A

 

SUBJECT GRADE
1929-30 Course

Half-Course

Economics 11

Economics 12

A.B. Acadia University 1916

Source: Harvard University Archives. Division of History, Government & Economics, Ph.D. Degrees Conferred 1930-31. (UA V 453.270), Box 11.

__________________________

Course Names and Instructors

1926-27

Economics 2. Economic History since the Industrial Revolution. Professor Gay.

1927-28

Economics 20. Economic Research. Professor Gay.

1928-29

Economics 20. Economic Research. Professor Gay.

Economics 34. Problems of Labor. Professor Ripley.

Economics 7b. Programs of Social Reconstruction. Asst. Professor E. S. Mason.

1929-30

Economics 11. Economic Theory. Professor Taussig.

Economics 12. Some Fundamental Problems in Economic and Social Theory. Professor Carver.

Source: Radcliffe College Catalogue [for] 1926-27, 1927-28, 1928-29, 1929-30.

_______________________

Some of her personal backstory

…After her undergraduate study at Acadia, she studied at the University of Toronto and then at Oxford. Her studies at Oxford were cut short after just one year by her younger brother’s illness, which ended his life in October 1921. It was on the journey back to Fredericton from Oxford that she met her future husband, Conrad Payling Wright.

The courtship between the two comprised largely of correspondence over the next two years and culminated in their marriage, in 1924, on the family farm outside of Fredericton. This was unusual at the time because her family held positions of esteem in the local congregation and thus they were expected to marry in a church. After marriage, Esther Clark Wright moved to California where her husband was studying at Stanford University. She soon discovered that she was unable to have children which, though devastating, enabled her to pursue her academic studies and research at liberty. She joined her husband at Stanford, and then following that she studied at Radcliffe (Harvard University), where she graduated with a PhD in economics in 1931.

Back in Fredericton, her father had risen through the political ranks, beginning as mayor of Fredericton and eventually becoming the Lieutenant-Governor of New Brunswick. He had also opened several car dealerships in anticipation of the coming demand for automobiles. Her family’s prosperity ensured that Wright never had to depend on any other income to maintain her material comfort and this enabled her to spend time pursuing her research. This also provided her with much more independence in marriage than her female contemporaries enjoyed. Her relationship with her husband was tumultuous with the two of them often maintaining separate residences throughout their sixty-five-year marriage….

Source: New Brunswick Literary Encyclopedia website article “Esther Isabelle (Clark) Wright”.

__________________________

Esther Isabelle Clark Wright’s publications, 1914-1988.

__________________________

Esther Isabelle Clark Wright
Timeline of her life and career

1895. Born May 4 in Fredericton, New Brunswick, Canada

1916. B.A. Acadia University (Wolville, Nova Scotia). Honors in Economics.

1924. July 31. Married Conrad Payling Wright.

1931. Ph.D. in economics from Harvard. Dissertation: “The Genesis of the Civil Engineer in Great Britain, 1760-1830.”

1943-47. Lectured in sociology at Acadia University.

1975. Honorary D. Litt. awarded by Acadia University

1981. Honorary Ll.D. awarded by Dalhousie University.

1984. Honorary D. Litt. awarded by the University of New Brunswick.

1990. Died June 17

1990. Posthumously awarded Order of Canada. “A prolific author and respected scholar, her excellent research has been used by many students, historians and genealogists studying Maritime history, particularly the Loyalist migration, or tracing family roots.”

Image Source: Esther Isabelle Clark from the Acadia University Class of 1916 photo.

Categories
Exam Questions Harvard History of Economics

Harvard. Exams for history of economics to 1848. Bullock, 1907-1908

Anne Robert Jacques Turgot, 1727-1781

The semester exam questions for the fifth time Charles Jesse Bullock taught this history and literature of economics through 1848 at Harvard. He also covered the field of public finance. Guess which field is not really taught much any more…

__________________________

Earlier versions of the course
by year and instructor

1899-1900. The History and Literature of Economics to the close of the Eighteenth Century. [William James Ashley]

1901-02. History and Literature of Economics, to the opening of the Nineteenth Century. [Charles Whitney Mixter]

1903-04. History and Literature of Economics to the opening of the Nineteenth Century [Charles Jesse Bullock]

1904-05. History and Literature of Economics to the year 1848. [Charles Jesse Bullock]

1905-06. History and Literature of Economics to the year 1848. [Charles Jesse Bullock]

1906-07. History and Literature of Economics to the year 1848 [Charles Jesse Bullock]

__________________________

History and Literature of Economics to the year 1848

Course Enrollment
1907-08

Economics 15. Asst. Professor Bullock. — History and Literature of Economics to the year 1848.

Total 7: 7 Graduates.

Source: Harvard University. Report of the President of Harvard College, 1907-1908, p. 67.

ECONOMICS 15
HISTORY OF ECONOMIC THEORY
Mid-Year Examination, 1907-08

  1. Describe the development of theories of commerce from the time of Aristotle to that of the Schoolmen.
  2. Compare the Republic of Plato with More’s Utopia.
  3. Give an account of the economic opinions of Xenophon.
  4. Describe the development of the doctrine of usury from the time of Aristotle to the year 1500.
  5. What do you think of Ingram’s treatment of the economic thought of the Middle Ages?
  6. How did Aristotle classify the various branches of the art of acquisition?
  7. How far would Aristotle’s classification of the various branches of the art of acquisition harmonize with the views of the Schoolmen concerning the various branches of industry and trade?
  8. What is your opinion of the Scholastic doctrine concerning usury?

Source: Harvard University Archives. Harvard University. Mid-year Examinations, 1852-1943. Box 8, Bound Volume: Examination Papers, Mid-Years 1907-08.

ECONOMICS 15
HISTORY AND LITERATURE OF ECONOMICS.
Year-end Examination, 1907-08

  1. What connection can be traced between the economic thought of the sixteenth century and that of the thirteenth and fourteenth centuries?
  2. What traces of Aristotle’s influence can be seen in the political and economic theories of Adam Smith?
  3. What doctrines concerning money can be found in the writings of Aristotle, the Schoolmen, Davanzati, and Hume?
  4. Write a brief account of economic thought in England, France, and Italy from 1540 to 1590.
  5. Write a brief survey of the condition of economic thought in England, France, Germany, and Italy about the middle of the eighteenth century.
  6. Compare the opinions of Thomas Mun with those of two earlier and two later English Mercantilists.
  7. What was Turgot’s theory of distribution?
  8. At what points did Smith’s theory of distribution differ from that of Turgot?
  9. Describe the progress of Smith’s doctrines in France and Germany up to the year 1850.

Source: Harvard University Archives. Harvard University, Examination Papers, 1873-1915. Box 8, Bound vol. Examination Papers 1908-09 (HUC 7000.25), pp. 38-39.

Image Source: Jean-Antoine Houdon’s bust of Anne Robert Jacques Turgot (1727-1781). Boston, Massachusetts, Museum of Fine Arts.

Categories
Biography Economists Industrial Organization Policy Yale

Yale. Appointment to Council of Economic Advisers. Merton J. Peck, 1968

 

In an earlier post that featured a 1955 reading list for a course on industrial organization at Harvard taught by Carl Kaysen and Merton J. Peck, I proudly introduced that artifact with a few details about my first Yale economics professor, Joe Peck. I worked as his “bursary boy” over the next three years, undertaking the tasks of library runs, photocopying, and light editorial work to finance some of the out-of-pocket expenses of my undergraduate life. 

Peck was freshly back from the Council of Economics Advisers in the last year of President Johnson’s administration (1968), when I first encountered him as my instructor in the double-credit introductory seminar “Early Concentration Economics” in the Fall of 1969. Incidentally, the seminar was co-taught by another Joe, Joseph Persky, then a visiting lecturer from Harvard, where he was completing his Ph.D. dissertation. From those earlier regional/urban economics research days, Joe Persky has become a distinguished historian of economics.

Two documents regarding Merton J. Peck’s appointment as a member of the President’s Council of Economic Advisers in 1968 are included in this post along with his obituary that was published in the Yale Daily News.

Fun Fact: In the obituary you will find a quote from yet another Joe, Joseph Altonji, now a Yale professor of economics, but then a fellow student with me in the graduate sequence of Statistics and Econometrics at Yale and my successor in the role of student assistant to Joe Peck.

_________________________

NOMINATION OF MERTON J. PECK
Monday, February 5, 1968

U.S. Senate, Committee on Banking and Currency
Washington, D.C.

The committee met pursuant to notice at 10:08 a.m., in room 5302, New Senate Office Building, Senator John Sparkman (chairman of the committee) presiding.

Present: Senators Sparkman, Proxmire, McIntyre, Spong, and Bennett.

The CHAIRMAN. The committee is meeting in open hearing on the nomination of Mr. Merton J. Peck of Connecticut to serve as a member of the Council of Economic Advisers.

Mr. Peck was born in Cleveland, Ohio, on December 17, 1925, and attended public schools in Shaker Heights and Medina, Ohio, as well as Evanston, Ill. He served in the Army from 1944 to 1946 with overseas duty in Okinawa and Japan. Mr. Peck graduated from Oberlin College in 1949 and took his graduate training in economics at Harvard, receiving his Ph. D. in 1954. He taught at Harvard College from 1954 to 1955, at the University of Michigan 1955-56, and the Harvard Graduate School of Business Administration 1956-61. During 1961 and 1962 Mr. Peck served as Assistant Deputy Controller and Director of System Analysis in the office of Charles J. Hitch, the Assistant Secretary of Defense.

In 1963 Mr. Peck was appointed professor of economics at Yale University. In July 1967 he was appointed chairman of the Yale Economics Department.

Mr. Peck, I welcome you to the committee. We are glad to have you with us this morning. We have a more complete biographical sketch which will be printed in the record.

(The information follows:)

BIOGRAPHICAL SKETCH OF MERTON J. PECK

Merton Joseph Peck was born in Cleveland, Ohio, on December 17, 1925, and attended public schools in Shaker Heights and Medina, Ohio, as well as Evanston, Illinois. He served in the Army from 1944 to 1946, with overseas duty in Okinowa and Japan.

Mr. Peck graduated from Oberlin College in 1949 and took his graduate training in economics at Harvard receiving his Ph. D. in 1954. He taught at Harvard College (1954-1955), University of Michigan (1955-1956), and the Harvard Graduate School of Business Administration (1956-1961).

During 1961 and 1962 Mr. Peck served as Assistant Deputy Controller and Director of System Analysis in the Office of Charles J. Hitch, the Assistant Secretary of Defense (Controller).

In 1963 Mr. Peck was appointed Professor of Economics at Yale University. In July 1967 he was appointed Chairman of the Yale Economics Department.

Mr. Peck has written Competition in the American Aluminum Industry, 1945–58 (Harvard University Press 1961), and he is a joint author of Economics of Competition in the Transportation Industry (Harvard University Press 1959), Weapons Acquisition: An Economic Analysis (Harvard Business School 1962), Technological Change, Economic Growth and Public Policy (Brookings Institution 1967). He has also contributed articles to various professional journals

Mr. Peck married Mary McClure Bosworth in 1949. They have four children: Richard, age 13; Katherine, age 11; Sarah, age 9; David, age 7. The Pecks reside in New Haven, Connecticut.

Mr. Peck’s parents died when he was young and he was raised by his aunts, Mrs. A. R. Lyon and Miss Olive S. Peck, who now reside in Arlington, Virginia.

Mr. Peck is a member of the American Economic Association, the Econometric Society, and the Association of American University Professors.

The CHAIRMAN. Mr. Peck, I also have a letter addressed to me which I shall read into the record.

“DEAR MR. CHAIRMAN: I regret that previous commitments prevent me from being present this morning to present the President’s nominee as a member of the Council of Economic Advisers, Mr. Merton J. Peck.

“It is an honor to introduce Professor Peck to this distinguished committee. Professor Peck was born in Cleveland, Ohio, in 1925. He graduated from Oberlin College in 1949, after serving 2 years in the Pacific theatre as a member of our Armed Forces. Upon receiving a Ph.D. degree in economics from Harvard, Professor Peck began a distinguished teaching career that led to his appointment last year as chairman of the Yale Economics Department. He now resides with his family in New Haven, Conn.

“Professor Peck combines a background of academic experience and public service, having served for 2 years in the Department of Defense as Assistant Deputy Controller and Director of Systems Analysis. Well known as an author on economic policy, he has published studies of competition in the aluminum and transportation industries. His latest book, published by the Brookings Institution, is “Technological Change, Economic Growth, and Public Policy.’

“I have touched only briefly on the accomplishments of Professor Peck, but they indicate the obvious ability and wide experience he would bring to the Council of Economic Advisers. I strongly urge that his nomination be favorably considered by this committee.

Sincerely,
ABE RIBICOFF.”

That letter will be printed in the record.

Senator BENNETT. Mr. Peck, is your official residence in Connecticut at the moment?

Mr. PECK. Yes, Senator; it is.

The CHAIRMAN. May I say we have the approval of both Senator Dodd and Senator Ribicoff. I may say for the record that accompanying Dr. Peck is Mr. Charles Warden, special assistant to the Chairman of the Council of Economic Advisers.

Senator BENNETT. Mr. Chairman, the official attitude of the Republicans on this committee has always been that the President is certainly entitled to select his economic advisers and we should under no circumstances raise any question about that privilege.
That is a kind of a negative endorsement, but in addition to that, I think Mr. Peck’s credentials are very impressive and I am sure all of the Republicans will be happy to vote for his approval.

The CHAIRMAN. Very well. Senator Spong?

Senator SPONG. I am impressed with Dr. Peck’s credentials. I would like to ask him a couple of questions, however.
Dr. Peck, have you ever been retained as a consultant by private industry?

Mr. PECK. Yes, I have.

Senator SPONG. Do you intend to end all such activities if you are confirmed and become a member of the Council of Economic Advisers?

Mr. PECK. Yes, I have.

Senator SPONG. You have ended it all?

Mr. PECK. Yes, sir.

Senator SPONG. Thank you.

The CHAIRMAN. Do you have any interest in any undertaking or activity which you feel would constitute a conflict of interest?

Mr. PECK. No, I do not.

The CHAIRMAN. Have you checked your situation with the General Counsel of the Council of Economic Advisers?

Mr. PECK. No, I have not, but I will do so. I have a financial statement that I filed.

The CHAIRMAN. You have filed a financial statement?

Mr. PECK. Yes.

The CHAIRMAN. With the Council?

Senator BENNETT. With us.

The CHAIRMAN. Oh, with our committee?

Mr. PECK. Yes, sir.

The CHAIRMAN. Very well; are there any further questions?

Senator BENNETT. No further questions.

The CHAIRMAN. Thank you very much Dr. Peck. I wish you a successful and happy tenure in office.

Mr. PECK. Thank you very much, Mr. Chairman. I look forward to this unusual post as a unique opportunity to serve and, if I am confirmed, I will do so to the best of my ability.

The CHAIRMAN. Thank you, and we shall hope to see you from time to time.

(Thereupon at 10:15 a.m., the committee went into executive session.)

*  *  *  *  *  *  *  *  *  *  *  *

(Excerpts from the Employment Act of 1946
and related laws follow):

EMPLOYMENT Act of 1946,
AS AMENDED, AND RELATED LAWS
(60 Stat. 23)
[PUBLIC LAW 304-79TH CONGRESS]

AN ACT To declare a national policy on employment, production, and purchasing power, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SHORT TITLE

SECTION 1. This Act may be cited as the “Employment Act of 1946 “.

DECLARATION OF POLICY

SEC. 2. The Congress declares that it is the continuing policy and responsibility of the Federal Government to use all practicable means consistent with its needs and obligations and other essential considerations of national policy, with the assistance and cooperation of industry, agriculture, labor, and State and local governments, to coordinate and utilize all its plans, functions, and resources for the purpose of creating and maintaining, in a manner calculated to foster and promote free competitive enterprise and the general welfare, conditions under which there will be afforded useful employment opportunities, including self-employment, for those able, willing, and seeking to work, and to promote maxi mum employment, production, and purchasing power. (15 U.S.C. 1021.)

ECONOMIC REPORT OF THE PRESIDENT

SEC. 3. (a) The President shall transmit to the Congress not later than January 20 of each year an economic report (hereinafter called the “Economic Report”) setting forth (a) the levels of employment, production, and purchasing power obtaining in the United States and such levels needed to carry out the policy declared in section 2; (2) current and foreseeable trends in the levels of employment, production, and purchasing power; (3) a review of the economic program of the Federal Government and a review of economic conditions affecting employment in the United States or any considerable portion thereof during the preceding year and of their effect upon employment, production, and purchasing power; and (4) a program for carrying out the policy declared in section 2, together with such recommendations for legislation as he may deem necessary or desirable.

(b) The President may transmit from time to time to the Congress reports supplementary to the Economic Report, each of which shall include such supplementary or revised recommendations as he may deem necessary or desirable to achieve the policy declared in section 2.

(c) The Economic Report, and all supplementary reports transmitted under subsection (b) of this section, shall, when transmitted to Congress, be referred to the joint committee created by section 5. (15 U.S.C. 1022.)

COUNCIL OF ECONOMIC ADVISERS
TO THE PRESIDENT

SEC. 4. (a) There is created in the Executive Office of the President a Council of Economic Advisers (hereinafter called the “Council”). The Council shall be composed of three members who shall be appointed by the President, by and with the advice and consent of the Senate, and each of whom shall be a person who, as a result of his training, experience, and attainments, is exceptionally qualified to analyze and interpret economic developments, to appraise programs and activities of the Government in the light of the policy declared in section 2, and to formulate and recommend national economic policy to promote employment, production, and purchasing power under free competitive enterprise.1 The President shall designate one of the members of the Council as Chairman.

(b) The Council is authorized to employ, and fix the compensation of, such specialists and other experts as may be necessary for the carrying out of its functions under this act, without regard to the civil service laws and the Classification Act of 1949, as amended, and is authorized, subject to the civil service laws, to employ such other officers and employees as may be necessary for carrying out its functions under this act, and fix their compensation in accordance with the Classification Act of 1949, as amended.

(c) It shall be the duty and function of the Council—

(1) to assist and advise the President in the preparation of the Economic Report;

(2) to gather timely and authoritative information concerning economic developments and economic trends, both current and prospective, to analyze and interpret such information in the light of the policy declared in section 2 for the purpose of determining whether such development and trends are interfering, or are likely to interfere, with the achievement of such policy, and to compile and submit to the President studies relating to such developments and trends;

(3) to appraise the various programs and activities of the Federal Government in the light of the policy declared in section 2 of this title for the purpose of determining the extent to which such programs and activities are contributing, and the extent to which they are not contributing, to the achievement of such policy and to make recommendations to the President with respect thereto;

(4) to develop and recommend to the President national economic policies to foster and promote free competitive enterprise, to avoid economic fluctuations or to diminish the effects thereof, and to maintain employment, production, and purchasing power;

(5) to make and furnish such studies, reports thereon, and recommendations with respect to matters of Federal economic policy and legislation as the President may request.

(d) The Council shall make an annual report to the President in December of each year.

(e) In exercising its powers, functions, and duties under this act—

(1) the Council may constitute such advisory committees and may consult with such representatives of industry, agriculture, labor, consumers, State and local governments, and other groups as it deems advisable;

(2) the Council shall, to the fullest extent possible, utilize the services, facilities, and information (including statistical information) of other Government agencies as well as of private research agencies, in order that duplication of effort and expense may be avoided.

(f) To enable the Council to exercise its powers, functions, and duties under this act, there are authorized to be appropriated such sums as may be necessary.

*  *  *  *  *  *  *  *  *  *  *  *

REORGANIZATION PLAN No. 9 of 1953

(Prepared by the President and transmitted to the Senate and the House of Representatives in Congress assembled, June 1, 1953, pursuant to the provisions of the Reorganization Act of 1949, as amended)

COUNCIL OF ECONOMIC ADVISERS

The functions vested in the Council of Economic Advisers by section 4 (b) of the Employment Act of 1946 (60 Stat. 24), and so much of the functions vested in the Council by section 4 (c) of that act as consists of reporting to the President with respect to any function of the Council under the said section 4 (c), are hereby transferred to the Chairman of the Council of Economic Advisers. ***

1 The Postal Revenue and Federal Salary Act of 1967 provides that the annual rates of basic compensation shall be $30,000 for the Chairman and $28,750 for the other two members of the Council of Economic Advisers.

Source: On the nomination of Merton J. Peck to be a member of the council of economic advisers, February 5, 1968. Hearing Before the Committee on Banking and Currency, United States Senate. Ninetieth Congress, Second Session.

_________________________

Remarks by President Lyndon B. Johnson at the Swearing in of Merton J. Peck as a Member, Council of Economic Advisers, and upon Designating Arthur M. Okun as Chairman

February 15, 1968

Dr. and Mrs. Peck and family, Mr. and Mrs. Okun and family, Secretary Wirtz, distinguished guests, ladies and gentlemen:

I want to welcome all of you to this ceremony this morning.

I stand here with one eye wet and one eye dry. Gardner Ackley’s departure saddens me. I would hope that he feels the same way.

When Gardner took the CEA chairmanship more than 3 years ago, the economy was already setting peacetime records. He has kept the curve climbing, turning a youthful boom into a mature and solid 8-year expansion.

Of all the good advice Chairman Ackley has given to me throughout the years, I was happiest to accept one of his fine recommendations to appoint Art Okun as his successor.

Art brings many special talents to this new job. His forecasts are so amazingly accurate that one newspaper once called him the administration’s secret weapon.

Far away from the limelight, he has been invaluable to international monetary policy — to the Treasury Department in developing the Rio Accord — to drafting the new system of Special Drawing Rights. And I am relying heavily on Chairman Okun and the Council to help us move this Nation and all nations towards swift acceptance of these new monetary arrangements.

To fill the Council vacancy, we have Merton Joseph Peck from Yale University.

I am delighted that he joins Jim Duesenberry and Art Okun at this particular time. One of our most urgent concerns in the Nation now is price stability. We have recently created a Cabinet committee to concentrate heavily on this problem. Dr. Peck is an expert on markets. He will bring special insights to price and wage problems arising from structural imperfections in labor markets, product markets, and markets for services.

Looking around us as we meet here this morning, we see more and more evidence of our economic strength. The January unemployment rate, we are pleased to say, was the lowest in more than 14 years. Corporate profits for the last quarter of 1967 were pointing upward again–to new records.

But we cannot rejoice without recognizing the dangers posed by price and cost increases. To preserve our record-breaking prosperity, we must combine it with a return to price stability.

As we have long emphasized, the first order of business is the prompt enactment by the Congress of the penny on the dollar tax increase that we will need to pay for part of our extraordinary defense costs.

Second, we need full cooperation and restraint from business and labor in their price and wage decisions. Excessive wage and excessive price increases can weaken the dollar. They cannot win lasting gains for any group. The short-run sacrifices that we ask promise long-term benefits to all of us.

Third, we must work through the new Cabinet committee for structural improvements in every market — for greater efficiency, greater productivity, and greater incentives for cost-reduction and price competition.

I will continue to look to the Council of Economic Advisers for advice on guarding our prosperity against inflation.

I was talking to someone last night and he was outlining for me the progress that our country has made throughout the years. He said, “Mr. President, there are two things that a leader must never take his mind off of in our political system. You will have many messages and many bills, but two simple rules, I suggest.”

I said, “Tell me what they are” — because he was a man of wisdom and experience and nonpartisanship.

He said, “The first one is the buck-that dollar — it must be sound. It must be stable and people must have some of them. The next one is–you don’t have to be told that one, but I want to remind you every day — the ballot. Because through the ballot people can gain the rewards they think they are entitled to. They can bring about the reforms that are essential. They can turn into motion the revolutions that are inside of all of us and they can bring them to reality and bring them to reality constitutionally and appropriately, and as we human beings should. We don’t have to act like animals to get our revolutions and reforms translated into action. That comes through the ballot.”

So, if my economic advisers are not trained counselors on the ballot, they are on the buck and that seems to be a major portion of a President’s problem. I am going to continue to look to them to guard our prosperity against inflation. They will have the help of the President and I hope they will have the help of the Cabinet and the Congress and the business and labor communities.

The Council today enjoys a worldwide reputation, I think, a reputation of three wise men who have been responsible and are responsible in the future for guiding the American economic miracle.

We expect great things from you, Dr. Peck. I am happy to welcome you officially into the world’s smallest, but the world’s most vital fraternity.

Gardner, you are on sabbatical leave, but we will expect you to carry on your good work across the ocean.

Note:
The President spoke at 1:15 p.m. in the Cabinet Room at the White House. In his opening words he also referred to Secretary of Labor W. Willard Wirtz. During his remarks he referred to James S. Duesenberry, member of the Council of Economic Advisers, and to Gardner Ackley, outgoing Chairman of the Council, whose nomination as Ambassador to Italy was announced by the President on January 1.

Establishment of the Cabinet Committee on Price Stability was announced by the President in his message to the Congress transmitting the Economic Report.

The tax increase referred to by the President was enacted as the Revenue and Expenditure Control Act of 1968.

Source:  Lyndon B. Johnson, Remarks at the Swearing In of Merton J. Peck as a Member, Council of Economic Advisers, and Upon Designating Arthur M. Okun as Chairman.
Online by Gerhard Peters and John T. Woolley, The American Presidency Project 

_________________________

Professor led the Economics Department during its ‘golden age’

by CYNTHIA HUA
Yale Daily News, 18 March 2013

Merton Peck, a devoted teacher who chaired the Economics Department during its “golden age,” died in Florida on March 1. He was 87 years old.

A respected scholar and administrator, Peck came to Yale as an economics professor in 1963 and served as chair of the Economics Department for several terms in the 1960s, 1970s and 1980s. His former colleagues remember him for his kind and patient nature and ability to foster compromise during his lengthy tenure. In addition to recruiting many prominent economists to his department, Peck strengthened the faculty by keeping peace and oversaw a period of growth in the department, said Richard Nelson GRD ’56, a former economics professor.

“One of the reasons he stayed in the chair [position] for so long is because he was able to push the department upward and avoided conflict,” said Gustav Ranis GRD ’56, a economics professor. “He didn’t have any enemies.”

When disputes arose in the department, Peck listened to both sides and gently brought arguments to a resolution, Ranis said. He frequently met with faculty individually and ensured that all professors felt their voices were heard, Ranis said, adding that nobody in the department was ever upset under Peck’s leadership.

William Brainard GRD ’63 said Peck was respected among colleagues for the care and attention he devoted to teaching economics. His undergraduate seminars, Brainard said, were often so popular that he had to teach more than one section of the same course.

“He embodied many of the characteristics a professor should strive for, in being both a great scholar and giving a lot to Yale in terms of leadership,” economics professor Joseph Altonji ’75 said.

Brainard said Peck’s congenial personality and clarity of thought made him a sought-after adviser. Altonji, who worked for Peck as a research assistant and took one of his undergraduate courses, said Peck was influential in his decision to pursue a doctorate in economics and, later, to become a professor.

An expert in the economics of technology, Peck specialized in industrial organization and government regulation, producing books and papers that touched on numerous disciplines, including defense, communications and transportation. He served as a member of Secretary of Defense Robert McNamara’s “Brain Trust” and on former President Lyndon Johnson’s Council of Economic Advisors in the 1960s.

Peck earned his bachelor’s degree at Oberlin College in the 1940s, during which time he met his wife, Mary Bosworth Peck, who died in 2004. The couple married in Oberlin, Ohio, in 1949, the year of Peck’s graduation from college. He went on to receive a doctorate in economics from Harvard.

During World War II, Peck served in the Signal Corps in Japan. His service abroad launched a lifelong interest in Japan that led to his later academic interest in the country and technology as an industry, said his son Richard.

Throughout his life, Peck remained modest about his intellectual and administrative achievements, Richard said. Outside of academics, Richard said Peck, who retired in 2002, cultivated a love of reading and jazz music.

Peck is survived by his children, Richard, Katherine, Sarah and David, and four grandchildren.

This article was updated to reflect the version published in print March 25.

Image Source: Chicago Tribune, Jan 4, 1968. Section 1B, p. 10. Newspaper image of Merton J. Peck touched-up at Economics in the Rear-view Mirror.

Categories
Distribution Harvard Suggested Reading Syllabus

Harvard alumnus. Extension course of six lectures on distribution. William M. Cole, 1896

During one of my recent scavenger hunts in the internet archive hathitrust.org I  scored the serendipitous discovery of a syllabus for six lectures given in 1896 by the recent Harvard economics A.M. alumnus and later professor of accounting, William M. Cole. His subject was the unequal distribution of wealth and the lectures were held under the auspices of the American Society for the Extension of University Teaching of Philadelphia. In previous years this subject was treated by  Richard T. Ely and John Bates Clark.

Cole had been a teaching assistant for Frank W. Taussig’s introduction to the principles of economics and one presumes much (if not all) of what Cole offered his public was theory à la Taussig, warmed up and perhaps somewhat dumbed down for popular consumption.

An earlier post provides more detail about the later career of William M. Cole.

___________________________

Homecoming, 1896

…Portland people will be interested to know that Mr. William M. Cole, who is in this city to represent the American University Extension Society at Assembly hall tonight, is a Portland boy. He was a Brown medical scholar at the High school, graduating from Harvard as one of the eleven Summa cum laude men of his class, has been instructor in political economy at Harvard and at Radcliffe, and was secretary of the Massachusetts commission on the unemployed. He is now a lecturer on economics for the American University Extension Society. Mr. Cole devotes his leisure largely to literary work. His latest work is “An Old Man’s Romance,” published last summer, and favorably reviewed by such literary papers as the Bookman, the Bookbuyer, the Boston Transcript and the Atlantic Monthly. It appeared under the pseudonym, Christopher Craigie. Mr. Cole had an article “Alone on Osceola,” in the August New England Magazine.

Source: The Portland Daily Press (Portland, Maine)
6 Feb 1896, p. 8.

___________________________

Cole Lectured on Wealth Distribution four times in 1896

  • Bangor, Maine. Mar. 16, 30 Apr. 13, 20, 27 May 4
  • Farmington, Maine. Feb 18 Mar. 17, 31 Apr. 14, 21, 28
  • Portland, Maine. Apr. 2, 9, 16, 23, 30 May 6
  • Saco, Maine. Feb. 19, Mar. 18, Apr. 1, 15, 22, 29.

Source: The American Society for the Extension of University Teaching, Philadelphia. The Citizen (April 1896) p. 72.

___________________________

[Series E.]

University Extension Lectures
under the auspices of
The American Society
for the
Extension of University Teaching.
Syllabus of a
Course of Six Lectures on

The Causes of the Unequal Distribution of Wealth Treated with Special Reference to the Principles Underlying the Problems of Labor, Land and Capital.

BY
WILLIAM MORSE COLE, A. B.
Late Instructor in Political Economy in Harvard University.

No. 16.
Price, 15 Cents.

Copyright, 1896, by
American Society for the Extension of University Teaching,
111 S. Fifteenth St., Philadelphia, Pa.

___________________________

The Causes of
the Unequal Distribution of Wealth.

CLASS.— At the close of each lecture a class is held for those students who wish to study the subject more thoroughly. All who attend the lectures may remain for the class discussion, whether desirous of participating in it or not. The object of the class is to give the students an opportunity of coming into personal contact with the lecturer, in order that they may, by conversation and discussion, the better familiarize themselves with the principles of the subject, and get their special difficulties explained.

PAPERS.— Students are urged to send to the lecturer at regular intervals papers on the topics set. These papers are returned with corrections and comment.

EXAMINATIONS.— Those students whose papers and attendance upon the class exercises have satisfied the lecturer of the thoroughness of their work will be admitted to an examination at the close of the course. Each student who passes the examination successfully will receive from the society a certificate in testimony thereof.

STUDENTS’ ASSOCIATION.— The formation of a Students’ Association for the reading and study before and after the lecture course, as well as during its continuance, is strongly recommended. In the case of fortnightly lectures the sessions of the Association may be held on the same evening of the alternate week.

REFERENCES.

NOTE.— Since Economics is a comparatively new science, the amount of new literature of which the permanent value has not yet been determined is very great. Much of the new doctrine, moreover, is incorporated in general text-books and set forth in detail rather for the specialist than for the general reader and thinker. It is deemed wise, therefore, to refer for this course to a few only of the standard books. These will familiarize the student with recognized doctrine so that he may read new literature with discrimination.

LECTURE I.

Wealth.— J. S. Mill, Political Economy, first ten pages of Preliminary Remarks; or J. L. Laughlin’s Abridgment of Mill, Preliminary Remarks.

Agents in Production.— Mill [The reference “Mill” will mean J. S. Mill, Political Economy.], Bk. I, Chaps. I to VII (incl.); or, Laughlin [The reference “Laughlin” will mean J. L. Laughlin’s Abridgment of Mill’s Political Economy.], Bk. I. F. A. Walker, Political Economy, Part. II.

Rent.— Mill, Bk. II, Chap. XVI; or Laughlin, Bk. II, Chap. VI. Walker, Polit. Econ., Part II, Chap. I, §§ 44, 45; Part IV, Chap. II.

Law of Diminishing Returns.— Walker, Wages Question, Chap. V.

LECTURE II.

Unearned Increment.— Mill, Bk. V, Chap. II, §§ 5, 6; or, Laughlin, Bk. V, Chap. I, § 5. Henry George, Progress and Poverty, Bk. VII, Chap. III; Bk. VIII, Chap. II. Walker, Polit. Econ., Pt. IV, Chap. II, §v258; Pt. VI, Chap. VII (3d Ed., Chap. X).

LECTURE III.

Wages and Profits.— Mill, Bk. II, Chap. XI, §§ 1, 2, 3; Chap XV; or, Laughlin, Bk. II, Chap. II, §§ 1, 2, 3; Chap. V. Walker, Polit. Econ., Pt. IV, Chaps. III. IV. V.

LECTURE IV.

The Increase of Capital.— Mill, Bk. I, Chap. XI and Chap. VIII; or, Laughlin, Bk. I, Chap. VIII and Chap. VI.

Trusts.— E. von Halle, Trusts (Macmillan & Co., 1895).

Railroads.— A. T. Hadley, Railroad Transportation, (G. P. Putnam’s Sons, 1890) Chaps. III, IV, V.

LECTURE V.

Wages in Different Employments.— Mill, Bk. II, Chap. XIV; or, Laughlin, Bk. II, Chap. IV. J. E. Cairnes, Political Economy, Part I, Chap. III, § 5. Report Mass. Commission on Unemployed, Pt. IV, p. 1 to lii. Walker, Wages Question, Chap. XIV.

Trade Unions.— J. E. Cairnes, Political Economy, Pt. II, Chaps. III, IV. Walker, Wages Question, Chap. XIX.

Profit Sharing.— N. P. Gilman, Profit Sharing (Houghton, Mifflin & Co., 1889) Chaps. IX, X.

The Question of Population.— Mill, Bk. II, Chap. XI, § 6; Chaps. XII, XIII; or Laughlin, Bk. II, Chap. II, §§ 4, 5; Chap. III. Walker, Wages Question, Chap. VI; Chap. XVIII, § 3.

The Wages Fund.— J. E. Cairnes, Pt. II, Chap. I. Walker, Wages Question, Chaps. VIII, IX.

LECTURE VI.

International Trade.— Mill, Bk. III, Chap. XVII; or Laughlin, Bk. III, Chap XIII. J. E. Cairnes, Political Economy, Pt. III, Chap. I.

The Classical View of Laissez Faire.— Mill, Bk. V, Chap. XI. J. E. Cairnes, Polit. Econ., Pt. II, Chap. V.

Instability of Modern Conditions.— Walker, Polit. Econ., Pt. III, Chap. VI. C. F. Dunbar, The Theory and History of Banking, (G. P. Putnam’s Sons, 1891) Chaps. I, II. Report Mass. Commission on Unemployed, Pt. IV, Introduction.

___________________________

LECTURE I.
The Agents in the Production of Wealth and the Primary Principle of Rent.

The field of economic study is the production, distribution, and exchange of wealth in civilized society and among men actuated by normal motives and conducting their operations in the normal manner. Economics, therefore, does not offer its conclusions to be applied directly to abnormal conditions or transactions. It is highly practical, for it furnishes the general, fundamental principles which give an insight into all economic activity. Its relation to politics, or the art of government, is like that of physiology to hygiene. It does not decide between policies, —it furnishes the knowledge of principles which enables one possessed of facts and having certain aims to decide for himself. (See Quarterly Journal of Economics, July, 1891, “The Academic Study of Political Economy,” by C. F. Dunbar.)

A knowledge of the primary laws of production and distribution is essential for a comprehension of the problems of wealth and poverty. Not all things useful or agreeable are wealth, but only those which are also transferable, capable of accumulation, and limited in quantity.

Man’s only physical power is that of moving things. His mechanical agency in producing wealth is therefore small. Without the forces and materials supplied by nature, man would be helpless. Yet, in modern times, even with the maximum assistance of nature, few men unassisted by capital could produce a tithe of what they consume. Thus land and labor are the requisites of production: and capital, though not always absolutely necessary, is a necessity if modern methods are used, and in any case increases the produce many fold.

Not all labor is productive of wealth; but some which seems at first sight unproductive is in reality highly productive and much that is unproductive is of far greater importance to the community than it could be if it were devoted to production.

Capital, in the economic sense of the word, is wealth set apart to assist further production. The owner has sacrificed his immediate satisfaction in the use of it by devoting it to increase the productive forces of the community. It serves its use by being consumed, but would be valueless to the community if it were hoarded. Recompense for its consumption is furnished in the product which it assists in producing.

Of the three parts into which the produce of industry is commonly divided, we shall first consider rent. Rent owes its origin to the diversity of lands. If all land were like all other land and there were enough to satisfy everyone, there would be no rent. At one time in every country there was enough good land to satisfy everyone, and therefore no one paid rent. The poor lands were not cultivated. As the community grew and required a greater produce, however, the law of diminishing returns came into effect and forced cultivation down on poorer lands or induced more expensive processes of cultivation on the old lands. As the community was thus obliged to pay more for its produce, the better lands, producing as cheaply as before, yielded more than enough to pay the normal wages and profit. The owner demanded this surplus in rent, and the cultivator not only was able to pay it, but was forced to do so by the competition of others. Rent, then, is payment made to the owner of superior land for its use, and the amount of rent is measured by the superiority of that land over land which yields only normal wages and profits, i.e., the superiority of that land over the poorest land which must be cultivated to supply the needs of the community. A change in the demand for products which affects the margin of cultivation therefore affects rents.

Not only fertility, but accessibility, surroundings, etc., determine rent. These are the chief elements in the rental price of stores, offices, wharves, factories and residences. Yet a part of this is not rent but profit on the capital invested in the buildings.

Rent forms no part in the cost of production, for it is paid for superior advantages.

LECTURE II.
The Land Question.

Rent arises not only from superior fertility or productiveness, but from superior accessibility and superior surroundings. These are variable and are often the result of the growth of society, independent of effort on the part of the owners of land. Yet the owners appropriate the increase in rental or selling value without recompense to the society which produced it. Such appropriation of “unearned increment” is the origin of many fortunes in every community. Though legally and politically just, such appropriation is morally unjust. Yet there is no apparent way of remedying the injustice by any political machinery now in operation. A man who refused to appropriate the unearned increment would simply leave it for another’s benefit. The advocates of the single tax recommend the abolition of all injustice arising from appropriation of unearned increment by seizing for public benefit without compensation to the owner, except for improvements made, all land now privately owned. This would secure for society not only all present and future but also all past unearned increment. This would bring great wealth to the public treasury and thus make it possible to relieve poverty, but it would perpetrate an injustice much greater than that which it would correct; for the greater part of the unearned increment has been appropriated by past owners, and to confiscate the property of present owners would be to take away from them property for which they have already paid a presumably fair price. The single tax advocates say that there never was properly any valid title to land, since the land was created for all and no man made it, —and that therefore it is a man’s own fault if he buys and pays for a right which the seller did not possess.

This raises the question whether the right to exclusive control over land is a moral right. The usual answer is summed up in the phrase, “Give a man an insecure tenancy of a garden, and it will become a desert; but give him a nine years’ lease of a desert, and he will convert it into a garden.” Private ownership is considered necessary for a proper care and cultivation of landed property. This, however, is solely on the ground of policy. Yet, justice demands as much. In many localities population is excessive, crowds closer and closer together, and thereby not only raises the cost of living, but destroys much that makes the pleasure of the old inhabitant. If he, and his ancestors before him, or anyone from whom he may purchase, have chosen a place for their habitation or their work, no justice can demand that he be caused to suffer by the encroachment of a new population or an increased population for which he is not responsible. If population is to grow, as some predict, until it is pressed for means of subsistence, there is the more reason for sustaining, now while the world is big enough for all, the right of anyone to secure for himself and his descendants land which shall be their allotted space. Certain incompetent classes of population can grow in excess of all usefulness for themselves or others, and as their growth involves evil to those who are innocent of irresponsible growth, the one protection in the right of private property in land cannot justly be withdrawn.

This right of private property in land, however, does not include the right to appropriate the “unearned increment” which is the creation of society. The assumption of it by society would be both just and politic. The difficulty is one of practicability. The assumption could not cover the unearned increment of the past, for that cannot be traced; it could not cover all that in the present and future, for many of the present land owners have already compensated past owners for expected increment, and would thus suffer from injustice; and the line between earned and unearned increment, and the amount of increment, are not always apparent. Justice demands this assumption, however, and ways of making it practicable will be devised.

In one class of land, no private right of ownership should be recognized at all. Much of the world’s mineral wealth, for example, is locked up in few localities. This belongs to society at large. All mines, therefore, should be public property, and managed for society’s interest.

In the same category belong all lands having special narrowly-limited properties, such as that comprising grand scenery and natural transportation routes. Permanent private control of them constitutes monopoly, which is counter to public justice.

LECTURE III.
The Relation of Profits and Wages.

No man works in these days without the assistance of capital; and even his wages are paid out of capital. Temporarily, therefore, the rate of wages will depend upon the number of persons desiring employment and the number of commodities suitable for their use which are offered them by persons desiring their services. An increase in the number of persons desiring employment, without a corresponding increase in the capital available for their payment, produces lower wages, and an increase in the capital offered as wages, without corresponding increase in the number desiring employment, produces higher wages. A sudden rise in the value of commodities produced does not necessarily bring with it the ability to pay higher immediate wages, for as wages are usually paid out of capital, the wage-paying power is not immediately affected.

Labor is required by capital. The rate of wages, therefore, cannot permanently remain below the point which suffices to supply a working population. The amount which will supply population is determined largely by the workers themselves. If workers are unwilling to undertake the support of families at a given rate of wages, the number of marriages declines, the birth rate is reduced, and the population fails to supply the demand of capitalists for workers. Then the competition of employers for workers raises wages until the point at which workers are willing to marry and assume the support of families is reached. This point is in the long run the minimum limit of wages. Though there is no maximum limit, there is in most communities a natural force which tends to keep wages from reaching a very high range. The tendency of population to increase is generally manifest, and in most communities there appears to be a marked connection between the rate of increase and the wages of labor. An increase of wages among certain classes of workers often results in a larger population; and this, when unaccompanied by a proportionally increased capital, results in a reduction of wages. Thus the rise in wages counteracts itself. This increase in population, however, is by no means universal, and is in no case necessary. An important check on sudden fluctuations in wages is found in migration of laborers.

As capital greatly increases the world’s produce, and is a necessary element in carrying on business by modern methods, the possessor of it receives a share of the produce. This share is called profit, or, more strictly speaking, interest. The justification of this share lies in the fact that capital is the result of self-denial on the part of someone at sometime, in devoting to productive use wealth which might have given him immediate personal gratification if spent. Similar self-denial is involved also on the part of an inheritor of wealth who devotes it to productive use. Interest is not only just, but its payment is dictated by policy, for capital would not increase rapidly enough to assist the growing population if this inducement were withdrawn.

Chronologically, interest or profit is a residue. It consists of the balance of production after wages are paid. If the total amount of production is fixed, the greater the share of labor, the smaller that of capital, and vice versa. The rate of profit cannot permanently remain below that point at which it is worth the while of possible capitalists to save rather than to spend their wealth; for the moment it falls below that point expenditure increases and the fund for paying wages decreases, until laborers are obliged to accept lower wages or go without work. Then this reduction of wages increases profits, and it thus restores the rate at which wealth will be saved. A very high rate of profit, on the other hand, stimulates saving, and thus, by increasing the amount of capital seeking to hire laborers, raises wages and partially counteracts itself. The migration of capital is an important check upon extreme variations.

Yet high wages and high profits are not inconsistent. The interests of laborers and of capitalists are conflicting only in the act of dividing the produce of industry. They have a common ground in the desire to increase the produce so that the share of each may be larger.

The distinction between interest and profits is wide. One is the share of the owner of capital as such, and the other is the share of a manager, — or, strictly speaking, wages of superintendence. Thus, profits though usually associated with capital, are really reward for labor; and they form the usual path by which men pass from the rank of laborer to that of capitalist.

LECTURE IV.
The Problems of Capital.

No adequate understanding of economic problems is possible without some appreciation of the amount of capital involved in modern industries. Formerly, labor was assisted by capital; now the function of labor is chiefly directing capital. Dividing capital into two parts, the auxiliary (which the laborer employs in his work), and the remuneratory (which supports the laborer while he is engaged in production), the remuneratory will be found in many industries but a tithe as much as the auxiliary. Man has acquired and accumulated great control over the forces and supplies of nature, and converting these into capital he increases many fold the production of wealth. Whatever, therefore, affects the amount of capital in a community is of great importance.

No judgment upon the value of the service of capital is adequate unless it takes into account the element of risk involved in modern investment. A turn of fashion, a change of government policy, a new discovery in science, a new invention in machinery, may annihilate not only expected profits but capital itself. New investments are often surrounded with great risk. As it is the expectation rather than the actual existence of profit that determines the conversion of wealth into capital, a rate of profit extraordinarily high is justified if the possibility of it was needed to induce capitalists to enter a venture clearly for the public good.

Great combinations of capital result often from the risks of business. The prosperity of each business firm is dependent not only on the ability of its manager, but also, in a certain degree, upon that of competitors. An ill-judged move by one firm often brings disaster to its bitterest enemies as well as to itself. A union of interest so that the wisest counsel will prevail among all concerned is a natural step. Moreover, the union forms an insurance of each against the monopoly of special privileges and improvements by the others.

Much of the gain from the combination of capital arises from the conduct of business upon large scales. Too much emphasis can hardly be placed upon this element. Great saving arises from cheaper purchase of material in large quantities; from better utilization of material through a larger range of methods, machines and facilities; and through economy in purchasing, selling and directing agencies. Each member of a combination has the advantage of the best knowledge of every other member. Whether the goods produced are sold cheaper in consequence or not, society is richer, because the energy and capital saved are available for other things.

Combinations of capital to control the markets and exact tribute from consumers have no such economic basis. They are analogous to the monopoly of rich mines discovered by accident. It will be found, moreover, that combinations of capital to force unduly high prices are seldom permanently successful unless they are founded on a natural monopoly. In such cases it is the monopoly of things which should be the property of society at large, and not the combination of capital, that brings evil. Though a powerful combination having no natural monopoly may for a time control the market, it cannot long keep prices above the point at which they would be maintained without the combination; for whenever they raise prices artificially beyond that point a large profit can be made by any outside producer, and such will not be wanting.

One is not accustomed to consider crime an element in economics. Yet we find a species of it an important element in our discussion of capitalism. Unfortunately, the great combinations are not free from evidence of it. Many of them have been known to commit robbery and bribery. Their facilities for such work in bankrupting railroads, robbing stockholders, bribing legislatures, securing unjust discrimination, and the like, are great. Though their economic power gives them this political power, the question is not properly one of economics. Justice will not suffer any economic consideration, whatever it may be, to issue the final word in the matter of combinations of capital, if it is found that they create moral degradation and political corruption.

LECTURE V.
The Problems of Labor.

Though the wages of labor are found to differ in different employments in consequence of the conditions of each trade (as, e.g., the cost of learning, steadiness of employment, agreeableness, etc.,) the differences are often found much greater than can be accounted for by such causes. The explanation lies in the existence of barriers setting off non-competing groups, — the wages of the members of each group being determined largely by the economic position of the commodity which they produce. The wages of workers above the lowest class are determined partly by the principles that govern rent. This is especially clear of the entrepreneur or manager’s class.

The steady growth of improvements, adding to the productive power of capital, decreases the proportional though not the absolute share of the laborer in the product of industry. A great hope for the laborer lies in the possibility of becoming a capitalist. The law of minimum wages shows that a laborer who begins his career with determination may become a capitalist.

Co-operation is specially directed toward the realization of interest and profits for the laborer. Its failures have been due largely to inadequate appreciation by the co-operators of the functions of the entrepreneur.

Profit sharing, though aiming less high directly, may, when scientifically conducted, give the laborer as good opportunities. In principle, it furnishes the laborer opportunity to use his employer’s facilities for producing wealth, and to share with his employer the produce resulting.

The most popular agency for improving the worker’s lot is the trade-unions. Associations of workers to gather and spread information concerning trade conditions, to set high standards of workmanship, to stir up public opinion against inhuman employers, and to perform other like functions, are economic agents of good; but trade-unions have often defied natural law and involved themselves in inevitable destruction. Their danger is the blind following of unintelligent leaders, but a knowledge of fundamental economic principles is spreading among them.

Trade-unions, co-operation and profit-sharing are at best but palliatives. The ultimate labor problem lies deeper. Three fundamental questions must be asked. What does the laborer do for society? What does society do for the laborer? What does society owe the laborer?

The grades of labor are infinite, — from him who has brute strength and will work faithfully when under supervision, to him who has executive ability to direct and combine the varied works of a thousand others. The first can barely without aid support himself, and he cannot render to society much that it desires. The service of this man is hardly greater than that of his ancestors two centuries ago: if he does more, he does so through the help of inventions or the capital of others. It is the work of others, therefore, and not his work which is of increased utility.

The worker who is able by quick mind and nimble fingers to operate a delicate machine — the manipulation of which has been taught him — contributes somewhat individually to society; but the greater part of the gain here, also, lies in the machine which he operates. If, however, he can devise new methods, acquire versatility to operate several machines and thus economise time or labor, or invent a new machine or process, he has contributed something to economic progress. The services which may be rendered to society are infinite, and society’s wants are infinite.

Wages are higher in this generation than ever before in the history of the world. The poorest laborer counts as necessities articles of consumption which were luxuries for the well-to-do a century ago . Poverty to-day is rather relative than absolute. Fluctuations in circumstance rather than continued distress constitutes present-day poverty . For the fluctuations society is largely responsible, but the opportunities for success to make a fair average are continually growing.

Society does not owe more than it has received. A proper aim of life is development, which must proceed from generation to generation. A class of population industrially as incapable as its ancestors of two hundred years ago is a drag on society. Its labor is hardly more valuable to society than to itself. The highest grades of labor, utilizing the advance in knowledge and accumulated wealth, are able to render greater service to society than to themselves, and their reward is greater in consequence.

Though society may not owe more to the laborer, can she afford to give more? Clearly the advance of wealth renders high wages possible for all. Yet, even if society owes a living to every man of this generation, it does not owe a living to all the children he may beget. Whether one accepts the so-called Malthusian theory or not , one comes face to face with poverty which is clearly due to excessive population in certain classes. The growth of these classes is out of proportion to the growth of the services which they render society, and society cannot afford to assume the responsibility for their support and for the support of their increase.

The positive check to population has but infrequent play in our civilization. The preventive, though obvious, is alarmingly absent in the classes most needing a check. The true remedy for poverty, therefore, is a combination of the preventive check, operating in these classes, with an improvement in the character of the population which, through proper conditions of birth and education, shall lift the new generations into more efficient industrial classes.

LECTURE VI.
Modern Tendencies.

Not many years ago the wealth of the community depended largely upon its own industrial conditions. As the means of transportation were improved, the natural advantages of one section were reaped in part by others, through a division of labor. Division of labor sprang up internationally as well as locally, determined by comparative rather than absolute cheapness.

Nowadays though trade is continuing between different sections of the world, it is not merely international. The inhabitants of other continents obtain some of the advantages of the natural resources of America by coming personally to our shores. This change, though not wholly economic, had its origin in economic changes.

The natural resources of America are great only relatively: great because the population is unusually energetic and has not been numerous. As America absorbs more and more of the rest of the world, and becomes more and more like it, she loses more and more of her economic advantage.

Though the tendency is for greater correspondence in the industrial condition of different countries, the tendency is for greater inequality in the distribution of wealth in each country. Every year sees new control over the forces of nature, and this control is not universally shared. The man who by executive or inventive ability can add to the comfort or pleasure of many others is usually able thereby to secure a fair income. The number of men who can and do render service to society in such manner is yearly increasing. The ignorant laborer, on the other hand, has not, as a rule, ability or capital either to make or to use new discoveries, methods or combinations. The maximum productiveness of mere obedient brute force was reached many hundred years ago, and there is no economic reason why the man who has now nothing but obedient brute force to offer society should receive more for his work than such a man received several hundred years ago. Thus as society grows both in numbers and in wealth, the difference in income between the most serviceable member of society and the least serviceable member, economically speaking, becomes greater and greater.

Not only is the distribution of wealth tending to greater inequality, but to greater instability. Commercial transactions were formerly carried on largely with money. To day, money plays practically no part except in the retail trade. Its chief use is as a common measure of value. The world’s financial work is carried on almost wholly by credit. Merchants buy goods largely with notes or with checks; these notes and checks are discounted or deposited with banks, and in return bank credits are given. With these bank credits in the form of checks other payments for goods or notes are made, and thus the circuit is completed without the use of money. Though the banks hold money in reserve for the payment of their obligations, it is in small proportion to the amount of them; and much of this money, moreover, is either bank-bills or government legal tender, — both of these being paper based almost entirely on government credit. In international relations, finally, most payments are made in drafts (which correspond in nature to notes or checks), and international balances are settled largely in bonds, which are themselves forms of credit. The failure of any person concerned in these transactions to meet his obligation may precipitate difficulty on others, who again involve a new circle, and a financial crisis may result. In such a crisis not only speculative but real values collapse, and able, careful men of high financial standing may be rendered penniless by the misjudged steps of men across seas of whom they have never heard. Labor as well as capital may be involved in these disasters, for commercial stagnation often results temporarily. With most barriers broken down between nations, each is partly involved in the disasters of others, whether those disasters result from unpredictable circumstances or from mis judged or short-sighted policy.

One of the premises of economics is freedom from artificial restrictions. Until one realizes that natural laws are in operation, one is surprised to see how wages and profits, values, prices, etc., work themselves out to equilibrium. The conclusions of economics show that things must be thus and so. Yet we must not assume too readily that they are actually so in real life. All logic is based on premises, and therefore before applying the logic of economics to any particular phase of life, we must see that the premises correspond with the actual conditions. As a matter of fact, few communities realize the freedom which economics assumes. Whether one believes that this or that is the true fundamental principle for improving the condition of man- kind, one must know that a particular individual can never be judged wholly by that which is true of his class, that the hazards of modern industrial life have rendered generalization useful only for large classes, and that individual duty toward other individuals is greater than ever before.

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Questions.

LECTURE I.

  1. Which, if any, of the following persons are agents in increasing the wealth of the community: a pianist, a piano maker, a soldier, a dress maker, an architect, a hairdresser, a teamster, the captain of an excursion steamer? In each case, give your reason for including or excluding the person named.
  2. Would the total wealth of the community be increased immediately or ultimately, or both, if you sold to your neighbor for $9000 a house which cost you $8000, thus compelling him to save $1000 on the expense of a trip to Europe, and you devoted your profit to establishing a harness shop?
  3. Explain fully the cause of rent and show how rent may be estimated.
  4. How does Mr. Walker’s treatment of the law of “diminishing returns” differ from Mr. Mill’s?

LECTURE II.

  1. Explain the nature of the “unearned increment” from land.
  2. State the grounds for the assumption of “unearned increment” by the State
  3. What do you think of the justice of Mr. George’s single tax on land?
  4. What do you think of General Walker’s objections to the public assumption of the “unearned increment?”

LECTURE III.

  1. What do you understand to be the minimum rate of wages that may prevail in any community?
  2. Is there any economic reason for paying women lower wages than men?
  3. Explain by what process wages and profits are kept at an equilibrium.
  4. What is the difference between interest and profits?

LECTURE IV.

  1. Explain the chief advantages of production upon a large scale.
  2. What is the effect upon labor of the sudden conversion of large amounts of remuneratory capital into auxiliary capital? Is this a necessary result?
  3. What do you think of Karl Marx’s statement that capital is unproductive, and interest is mere confiscation of the product of laborer’s industry?
  4. What, in your opinion, are the comparative dangers in a combination of steel manufacturers and a combination of cotton cloth manufacturers?

LECTURE V.

  1. Do you believe that the restriction of population is the only fundamental remedy for poverty in the laboring classes?
  2. What would you give as the law of the differences of wages in different employments?
  3. Would you say that the failures of profit-sharing militate against it as a practicable palliative for the condition of laborers?
  4. What do you think of a proposition to “make work” by inaugurating an eight-hour day?

LECTURE VI.

  1. Do you look upon restriction of immigration as an economic necessity in the near future?
  2. Explain the effect of changes in transportation upon the growth of cities.
  3. What do you understand to be the conditions under which international trade will spring up?
  4. What is your attitude toward the doctrine of “Laissez-faire?”

Source: University Extension Lectures under the auspices of The American Society for the Extension of University Teaching. Syllabus. Series E. Number 16.

Image Source: William Morse Cole faculty portrait in Radcliffe College, Book of the Class of 1913-14. Colorised at Economics in the Rear-view Mirror.