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Chicago Exam Questions

Chicago. Price Theory (Econ 300A and B) Exams. Friedman, Winter Quarter, 1947

 

Norman Kaplan’s handwritten  list of readings for Milton Friedman’s price theory courses (Economics 300A and 300B) taught during the winter quarter of 1947 at the University of Chicago has been posted earlier. That winter quarter was the first time Friedman taught Economics 300B and only the second time he taught Economics 300A. In Friedman’s and Kaplan’s papers at Hoover and Chicago, respectively, I have found examination materials from that quarter.  Friedman’s two quarter sequence was not included in the course announcements for 1946-47, so I have included the announcement for 1947-48.    The 1948 course reading assignments have been transcribed as well.

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Course Announcement

300A,B. Price Theory. A systematic study of the pricing of final products and factors of production under essentially stationary conditions. Covers both perfect competition and such imperfectly competitive conditions as monopolistic competition, oligopoly, and monopoly. 300A deals primarily with the pricing of final products; 300B, with the pricing of factors of production. Prereq: Econ 209 or equiv. and Econ 213 or equiv or consent of instructor.

300A. Aut: MWF 9:30; Win: MWF 10:30; Friedman.
300B. Win: MWF 9:30; Spr: MWF 9:30; Friedman

Source: Announcements. The College and the Divisions, Sessions of 1947-1948.   Vol. XLVII, No. 4 (May 15, 1947), p. 224.

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PROBLEM FOR ECONOMICS 300A, WINTER 1947

Assume that a comprehensive system of point rationing is superimposed on a money price system. Each consumer is given an equal number of points although money incomes are very unequal. Point prices exist for every commodity for which a money price exists, and a consumer must pay over both points and money to purchase a commodity. To simplify the analysis, assume throughout (1) that the points are dated, (that is, can be used only during a specific period), (2) that fixed and known quantities of various commodities are available each period.

(a) Indicate (on an indifference diagram or in any other manner) how to determine the quantity of each good that an individual would purchase, given money prices, point prices, his money income, and his point income (i) if it is illegal to transfer points from one person to another and consumers conform to this requirement, and (ii) if points may legally be bought and sold for money. In this case, take as given to the individual consumer also the price of points in terms of money.

(b) If the only thing the government fixed were the number of points each individual receives, and it were to allow the money prices, point prices, and price of points in terms of money to be determined on the market, there would not be a unique set of values of these variables that would establish equilibrium, because the number of variables would be greater than the number of conditions. Explain this statement. Suppose the government tries to remove the indeterminacy by assigning values to some variables on the basis of criteria other than clearing the market. How many variables could the government so set and still have a determinate equilibrium? Does it matter which variables the government sets?

(c) It has been argues that every consumer will gain if non-transferable points, case (a) (i), were made freely transferable into money, case (a) (ii). Do you think this correct? Discuss.

 

Mid-Quarter Examination in Economics 300A
Winter, 1947

  1. (20 points) Define briefly:
    1. Indifference curve
    2. Income effect of a change in price
    3. Equilibrium price
    4. Marshallian demand curve
    5. Marginal rate of substitution
  2. (40 points) Indicate whether each of the following statements is true (T), false (F), or uncertain (U), and state briefly the reason for your answer.

A government subsidy of $100 per year to each grower of potatoes enacted after the end of a particular planting season and expected to be continued indefinitely will lower the price of potatoes (which it is assumed cannot be stored)

_____ a. for that season’s crop.

_____ b. in the long run.

During period when general business is improving, both the price and output of steel rise. This means

_____ a. that the income effect of the rise in price is greater than the substitution effect.

_____ b. that the demand for steel is inelastic.

_____ c. that the demand for steel increases with income.

Removal of rent control would

_____ a. reduce the money wages of maids.

_____ b. reduce the price of trailers.

_____ If the removal of rent controls were to lead to a rise in rents, then the total amount paid in rents would decline if the demand for rental housing were elastic and rise if the demand for rental housing were inelastic.

_____ “Since elasticity measures variation in quantity (demanded or offered) divided by variations in a price, the elasticity of demand for anything will be seven times as large for seven similar demanders as it is for one.” (A. C. Pigou)

_____ A rise in the price of coal will reduce the number of “Okies” trying to go to California.

  1. (40 points) Assume that a system of point rationing is superimposed on a price system. Each consumer is given a specified total number of points, point prices are set on various commodities, and a consumer must pay over both points and money to purchase a commodity. For simplicity, assume that there are only two commodities in the system. Indicate (on an indifference diagram or in any other manner), how to determine the quantity of each of the two commodities an individual would purchase, given money prices, point prices, his money income, and his point income.

(a) If it is illegal to transfer points from one person to another and consumers conform to this requirement. In your explanation, distinguish among the various special cases that may arise.

(b) If points may legally be bought and sold for money. In this case, take as given also the price of points in terms of money.

(c) Suppose that a fixed total quantity of each of the two goods is available; that point prices are fixed by the government, money prices are freely determined so as to clear the market; and that in case (a) some consumers are left with points which they cannot spend because they do not have enough money. The legal prohibition against transferring points is now removed, the point prices and the total number of points issued are unchanged, and the price of points in terms of money is determined in the open market. What, if anything, can be said about the price of points in terms of money under these conditions?

 

Source: Hoover Institution Archives. Papers of Milton Friedman. Box 76, Folder 9 “University of Chicago Econ. 300A”.

 

Final Examination 300A
Winter, 1947

Has not been found either in Milton Friedman papers (Hoover Archives) nor at the Norman Kaplan papers (University of Chicago Archives).

 

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Mid-Quarter Examination in Economics 300B
Winter, 1947

  1. Indicate briefly whether the following statements are correct or incorrect and why.
    1. Economic theorists contend that, under competition, wages are always equal to the marginal product of labor. It seems to follow that if they are right, the simplest way to raise the productivity of labor, and hence to increase the total output of society, is to force employers to pay higher wages.
    2. The value of the marginal product of a laborer employed at the same wage rate is higher if he is employed by a monopolistic firm than if he is employed by a competitive firm. It follows that the monopoly employs labor more efficiently.
    3. A rise in wages will tend to lower the marginal productivity of capital.
    4. The law of diminishing returns is contradicted by the fact that agricultural output of this country has increased tremendously despite a decrease in the proportion of the working population on farms.
  2. Discuss the conditions that may give rise to long-run decreasing cost for an industry. What are the implications of the various conditions for the state of competition in this industry.
  3. Suppose the wage differential between northern and southern laborers of the same grade were eliminated by raising the southern wage rates. Discuss the short- and long-run economic effects, including the effects on employment in the north and south.
  4. A particular industry composed of numerous competing firms each producing a single product has been hiring labor by the hour and is in a position of long-run equilibrium. This industry (and no other) is required, because of a new law, to hire the labor by the year at a guaranteed annual wage equal to the hourly wage prevailing prior to the change times the number of hours in a normal working year. Discuss (1) the short-run effect of this change on (a) the average and marginal cost curve of a typical firm, (b) the output of that firm, (c) the number of man hours of labor employed by that firm; (2) the long-run effects on the number of firms in the industry and the output of the industry.

 

Final Examination in 300B
Winter Quarter, 1947

Part I

  1. The income of farmers from the sale of their products depends on the prices at which the products sell. The general level of agricultural prices, in turn, depends primarily on the income of nonfarm population. But the income of the nonfarm population depends on the prices of nonfarm products which, in turn, depends partly on the income of farmers.
    This kind of analysis is often criticized as circular reasoning and hence as incapable of leading to any useful conclusions. Is this criticism valid? Explain your answer.
  2. Discuss the following quotation from Marshall:

“A useful history of the opposition to machinery is given in Industrial Democracy (by Sidney and Beatrice Webb)…It is combined with the advice (to trade unions) not generally to resist the introduction of machinery, but not to accept lower wages for working on the old methods in order to meet its competition. This is good advice for young men. But it cannot be followed by men who have reached their prime.”

  1. How would you expect prices in local, neighborhood, stores in large cities to compare with prices in the central shopping district (in Chicago, the “loop”)? In your answer, distinguish among different products, and include an evaluation of the statement so often made by neighborhood stores that they can charge lower prices because they pay lower rents.

Part II

  1. There are 100 each of A and B farms. The product schedules of one farm are
Number of laborers Total Product
A Farm B Farm
1 40 40
2 90 80
3 140 115
4 185 145
5 225 170
6 260 190
7 290 205
8 315 215
9 335 220

a) Determine wages, rents, and employment on both types of farms

(i) if there are 900 laborers and full competition
(ii) if with 900 laborers, the laborers on the A farms organize and succeed in setting a wage rate of 40,
(iii) if, with 900 laborers, the laborers on the A farms organize and succeed in raising the standard wage rate to 47.

b) State briefly the general economic principles illustrated by each part of the above problem.

  1. Consider a hypothetical society in which there is no investment, either net or gross. All capital is completely permanent, not subject to change in form but capable of being used for different purposes. There is no lending or borrowing, no selling or buying of capital goods: whoever owns the capital goods is forced by the laws or conventions of society to hold them and is permitted only to rent them out (i.e., all capital is subject to the conventions that now govern human capital). Hence there is no market interest rate that matters, and all saving takes the form of hoarding of cash. The total amount of money in society is fixed in nominal units (say dollars). Wages are initially rigid (by law or otherwise) and the society is in a state of Keynesian unemployment equilibrium, unemployment keeping the real income down to a level at which dissaving equals saving, so total net saving is zero.Now wages are made flexible. Describe the process of adjustment to a new equilibrium position. Does this new position involve unemployment? What is the equilibrium condition on total net saving? What forces operate to bring about the satisfaction of this equilibrium condition?

Source: Kaplan, Norman Maurice. Papers, Box 1, Folder 8, Special Collections Research Center, University of Chicago Library.

Image Source:  Milton Friedman, from University of Chicago Photographic Archive, apf1-06230, Special Collections Research Center, University of Chicago Library.

Categories
Exam Questions Harvard

Harvard. Graduate Core Economic Theory Exams and Enrollments. Taussig, 1923-1925

 

Examination questions spanning just over a half-century can be found in Frank Taussig’s personal scrapbook of cut-and-pasted semester examinations for his entire Harvard career. Up to the time when Schumpeter took over the core economic theory course from Taussig in 1935, Taussig’s course covering economic theory and its history was a part of almost every properly educated Harvard economist’s basic training. Taussig’s exam questions have been previously posted for the academic years 1886/87 through 1889/90 along with enrollment data for the course;  material for this course (including semesters when taught with/by other instructors) from 1890/91 through 1893/94; 1897-1900 ; 1904-1909 ; 1911-14 ; 1915-1917; 1918-1919 ; 1920-22 have been posted as well.  

This post begins with the printed course description from 1924 and a link to a list of reading assignments from 1923-24 taken from a student’s notes of the lectures and then addes the enrollment data and three years of semester final examinations for the years 1922-23 through 1924-25.

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Course Description: Economics 11
1924-25

ECONOMIC THEORY AND METHOD

Economic Theory. Mon., Wed., Fri., at 2. Professor Taussig.

Course 11 is intended to acquaint the student with the development of economic thought since the beginning of the nineteenth century, and at the same time to train him in the critical consideration of economic principles. The exercises are conducted mainly by the discussion of selected passages from the leading writers; and in this discussion the students are expected to take an active part. A careful examination is made of the writings of Ricardo and J. S. Mill, and of representative modern economists, such as Marshall, Böhm-Bawerk, Clark.

Source: Division of History, Government, and Government. Official Register of Harvard University, Vol. XXI, No. 22 (April 30, 1924), p. 71.

The course reading assignments for Economics 11 according to Frank W. Fetter’s student notes from 1923-24 was posted earlier.

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1922-23

Course Enrollment: Economics 11, 1922-23

[Economics] 11. Professor Taussig.—Economic Theory

Total 42: 36 Graduates, 3 Graduate Business, 2 Seniors, 1 Junior

Source: Harvard University. Reports of the President and Treasurer of Harvard College, 1922-23, p. 92.

  

1922-23
HARVARD UNIVERSITY
ECONOMICS 11
Midyear-Exam

Arrange your answers in the order of the questions

  1. (a) “Given machinery, raw materials, and a year’s subsistence for 1000 laborers, does it make no difference with the annual product whether those laborers are Englishmen or East-Indians?”
    (b) “In some exceptional industries it happens that the employer realizes on his product in a shorter time than this (a week), so that the laborer is not only paid out of the product of his industry, but actually advances to the employer a portion of the capital on which he operates.”
    (c) “On American whaling ships the custom is not to pay fixed wages, but a “lay,” or a portion of the catch, which varies from a sixteenth to a twelfth to the captain down to a three-hundredth to the cabin-boy. Thus, when a whaleship comes into New Bedford or San Francisco after a successful cruise, she carries in her hold the wages of her crew, as well as the profits of her owners, and an equivalent which will reimburse them for all the stores used up during the voyage. Can anything be clearer than that these wages — this oil and bone which the crew of the whaler have taken — have not been drawn from capital, but are really a part of the produce of their labor”?
    Are these three situations essentially similar? And what is the bearing of each of them on the question under debate?
  2. “The extra gains which any producer or dealer obtains through superior talents for business, or superior business arrangements, are very much of a similar kind (analogous to rent). If all his competitors had the same advantages, and used them, the benefit would be transferred to their customers, through the diminished value of the article; he only retains it for himself because he is able to bring his commodity to market at a lower cost, while its value is determined by a higher. All advantages, in fact, which one competitor has over another, whether natural or acquired, whether personal or the result of social arrangements, bring the commodity, so far, into the Third Class, and assimilate the possessor of the advantage to a receiver or of rent.” Did Walker add anything of essential significance to this statement of Mill’s?
    Mill, Principles of Pol. Econ., pp. 476-77.
  3. (a) “It is not to be understood that the natural price of labour, estimated even in food and necessaries, is absolutely fixed and constant. It varies at different times in the same country, and very materially differs in different countries. It essentially depends on the habits and customs of the people.”
    (b) “A tax on raw produce, and on the necessaries of the labourer, would have another effect — it would raise wages. From the effect of the principle of population on the increase of mankind, wages of the lowest kind never continue much above that rate which nature and habit demand for the support of the labourers. This class is never able to bear any considerable proportion of taxation; and, consequently, if they had to pay 8s. per quarter in addition for wheat, and in some smaller proportion for other necessaries, they would not be able to subsist on the same wages as before, and to keep up the race of labourers. Wages would inevitably and necessarily rise.”
    (c) “If I have to hire a labourer for a week, and instead of ten shillings I pay him eight, no variation having taken place in the value of money, the labourer can probably obtain more food and necessaries with his eight shillings than he before obtained for ten.”
    Are these several statements of Ricardo’s consistent?
  4. In which of the following passages is the tendency to diminishing returns treated as referring to the amount of the produce, in which as referring to the value of the produce? Which method of treatment seems to you the proper one?

(a) “Whatever rise may take place in the price of corn, in consequence of the necessity of employing more labor and capital to obtain a given additional quantity of produce, such rise will always be equalled by the additional rent or additional labor employed. . . . Whether the produce belonging to the farmer be 180, 170, 160, or 150 quarters, he always obtains the same sum of £720 for it; the price increasing in an inverse proportion to the quantity.” — Ricardo.
(b) The Channel Islands obtain agricultural produce to the value of £50 to each acre of the aggregate surface of the island. Fifty pounds’ worth of agricultural produce from each acre of the land is sufficiently good. But the more we study the modern achievements of agriculture the more we see that the limits of productivity of the soil are not attained. . . . I can confirm Mr. Bear’s estimate to the effect that under proper management even a cool greenhouse, which covers 4050 square feet, can give a gross return of £180.” — Kropotkin.
(c) “Ricardo, and the economists of his time generally were too hasty in deducing this inference [tendency to increased pressure] from the law of diminishing return; and they did not allow enough for the increase of strength that comes from organization. But in fact every farmer is aided by the presence of neighbours, whether agriculturists or townspeople. . . . If the neighbouring market town expands into a large industrial centre, all his produce is worth more; some things which he used to throw away fetch a good price. He finds new openings in dairy farming and market gardening, and with a larger range of produce he makes use of rotations that keep his land always active without denuding it of any one of the elements that are necessary for its fertility.” — Marshall.

  1. “Ricardo expresses himself as if the quantity of labour which it costs to produce a commodity and bring it to the market, were the only thing on which its value depended. But since the cost of production to the capitalist is not labour but wages, and since wages may be either greater or less, the quantity of labour being the same; it would seem that the value of the product cannot be determined solely by the quantity of labour, but by the quantity together with the remuneration; and that values must partly depend on wages.” — J. S. Mill.
    What would Ricardo say to this? and in what way, according to Mill, do wages affect value?
  2. Explain briefly external economies; internal economies.
    It has been said that internal economies cause an increase of demand, external economies result from an increase of demand. Do you agree?
    Suppose internal economies to become greater indefinitely, as output enlarges; what consequences would ensue? Suppose the same for external economies, what consequences?
  3. “There is one general law of demand: the greater the amount to be sold, the smaller must be the price at which it is offered in order that it may find purchasers. . . . The one universal rule to which the demand curve conforms is that it is inclined negatively throughout the whole of its length.”
    “The demand curve over short periods — which may be a matter of weeks or months — is not necessarily inclined throughout in the same direction. It may be inclined positively. And similarly the supply curve does not necessarily have that constant positive inclination which is usually assumed. In the course of the higgling of the market this in its turn may have a negative inclination.”
    Whom do you believe to be the writers of these passages? Can they be harmonized? If so, how? If not, why not?
  4. The series of hypotheses made by Marshall concerning “meteoric showers of stones harder than diamonds”; the nature of the incomes derived by those finding them in the several cases; and the general principle which is thus illustrated.

 

 

1922-23
HARVARD UNIVERSITY
ECONOMICS 11
Year-end Final Exam

Arrange your answers in the order of the questions.

  1. “Labour of different kinds differently rewarded. This no cause of variation in the relative value of commodities.” On what grounds did Ricardo reach the conclusion summarized by him in these sentences? Is it consistent with the general trend of his theory of value?
  2. “This doctrine [about non-competing groups] was given its name by J. E. Cairnes. . . . He supposed it to be a rare and remarkable exception to what he believed was the general rule, that the cost-of-production regulated the price of goods — essentially a “labor-theory of value.” We regard it merely as a helpful way of presenting a particular case of the general rule that the value of agents is derived from their products when the market is viewed as a whole.”
    What would Cairnes say to this? What is your own view on the “general rule” stated in the concluding sentence?
  3. “Suppose that society is divided into a number of horizontal grades, each of which is recruited from the children of its own members; and each of which has its own standard of comfort, and increases in numbers rapidly when the earnings to be got in it rise above, and shrinks rapidly when they fall below that standard. Suppose, then, that parents can bring up their children to any trade in their own grade, but cannot easily raise them above it and will not consent to sink them below it. . . .
    On these suppositions, would Cairnes say that value was determined by cost? What would Marshall say?
  4. (a) “We have next to study the conditions of Business Management; and in so doing we must have in view a problem that will occupy our attention as we go on. It arises from the fact that, though in manufacturing at least nearly every individual business, so long as it is well managed, tends to become stronger the larger it has grown; and though prima facie we might therefore expect to see large firms driving their smaller rivals completely out of many branches of industry, yet they do not in fact do so.”
    (b) “Since then business ability in command of capital moves with great ease horizontally from a trade which is overcrowded to one which offers good openings for it; and since it moves with great ease vertically, the abler men rising to the higher posts in their own trade, we see, even at this early state of our inquiry, some good reasons for believing that in modern England the supply of business ability in command of capital accommodates itself, as a general rule, to the demand for it; and thus has a fairly defined supply price.”
    What is Marshall’s solution of the problem stated in the first of these passages? What sort of supply schedule do you suppose him to have in mind in the second? What would Walker say on both passages?
  5. “If the production of any, even the smallest, portion of the supply, requires as a necessary condition a certain price, that price will be obtained for all the rest. . . . The value, therefore, of an article (meaning its natural, which is the same with its average value) is determined by the cost of that portion of the supply which is produced and brought to market at the greatest expense. This is the Law of Value of the third of the three classes into which all commodities are divided. . . . Rent, therefore, forms no part of the cost of production which determines the value of agricultural produce.”
    By whom do you suppose this passage to have been written? What would Marshall say to it?
  6. “‘Rent is not an element in price’ — such is the classical statement on the subject. . . . But, if one defines rent as product imputable to a concrete agent, the impossibility of maintaining such a claim becomes apparent. Even if one were to restrict the term rent to the product created by land, the claim that it is not an element in adjusting market values would be absurd; for it would amount to saying that a certain part of the output of every kind of goods has no effect on their market value. The ‘price’ referred to in the formula is, of course, the market value expressed in units of currency.” What do you say?
  7. “When the artisan or professional man has once obtained the skill required for his work, a part of his earnings are for the future really a quasi-rent of the capital and labour invested in fitting him for his work, in obtaining his start in life, his business connections, and generally his opportunity for turning his faculties to good account; and only the remainder of his income is true earnings of effort. But this remainder is generally a large part of the whole. And here lies the contrast. For when a similar analysis is made of the profits of the business man, the proportions are found to be different: in his case the greater part is quasi-rent.” Why? or why not?
  8. (a) “Capital-goods imply waiting for the fruits of labor. Capital, on the contrary, implies the direct opposite of this: it is the means of avoiding all waiting. It is the remover of time intervals, — the absolute synchronizer of labor and its fruits. It is the means of putting civilized man in a position which, so far as time is concerned, is akin to that in which the rude forester stood, when he broke off limbs of dead trees and laid them on his fire. The very appliances which, in their extent and complexity, seem in one view to mean endless waiting, in another view mean no waiting at all but the instantaneous appearance of the final fruits of every bit of labor that is put forth.”
    (b) “Tools are productive, but time is the condition of getting tools — this is the simple and literal fact. The roundabout or time-consuming mode of using labor insures efficient capital-goods. . . . When the hatchet has worn itself completely out, and the fruits of using it are before the man in the large dwelling, he may look backward to the beginning of the process, when he faced nature empty-handed, and say: ‘Labor has done it all. Work and waiting have given me my goods.’ The working and the waiting have, indeed, insured the hatchet, as an incidental result of this way of working. Production that plans to put its fruits into the future will create capital-goods as an immediate effect, but labor and time are enough to make the ultimate effect certain. Let the man work intelligently through an interval of time, and the production of consumers’ wealth is sure.”
    (c) “The effort of postponement, or the preference of uncertain future for certain present consumables, necessary for supplying capital, if it is an effort, is a continuous one lasting all the time the capital is in use. The critic who asks, why a single ‘act of abstinence’ which is past and done with should be rewarded by a perpetual payment of annual interest, fails to realise that, so far as saving involves a serviceable action of the saver, it goes on all the time that the saver lies out of the full present enjoyment of his property, i.e. as long as his savings continue to function as productive instruments.”
    What would Clark say to the three propositions here stated? What are your own views?
    By whom do you suppose the passages to have been written?

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 1923-24

Course Enrollment: Economics 11, 1923-24

[Economics] 11. Professor Taussig.—Economic Theory

Total 51: 37 Graduates, 5 Graduate Business, 3 Seniors, 6 Radcliffe

Source: Harvard University. Reports of the President and Treasurer of Harvard College, 1923-24, p. 107.

 

 

1923-24
HARVARD UNIVERSITY
ECONOMICS 11
Mid-year Exam

Arrange your answers in the order of the questions

  1. What bearing has the turn-over of retail shops on the question whether the reward of labor is derived from the contemporaneous product of labor?
  2. “Suppose I employ twenty men at an expense of £1000 for a year in the production of a commodity, and at the end of the year I employ twenty men again for another year, at a further expense of £1000 in finishing or perfecting the same commodity, and that I bring it to market at the end of two years, if profits be 10 per cent, my commodity must sell for [?]. Another man employs precisely the same quantity of labour, but he employs it all in the first year; he employs forty men at an expense of £2000, and at the end of the first year he sells it with 10 per cent profit, or for [?].
    Give the figures which Ricardo put into the bracketed spaces, and explain in what way he reached his figures.
    What principle does he mean to illustrate by examples of this kind?
  3. “Thus, in a charitable institution, where the poor are set to work with the funds of benefactors, the general prices of the commodities, which are the produce of such work, will not be governed by the peculiar facilities afforded to these workmen, but by the common, usual, and natural difficulties which every other manufacturer will have to encounter. The manufacturer enjoying none of these facilities might indeed be driven altogether from the market if the supply afforded by these favoured workmen were equal to all the wants of the community; but if he continued the trade, it would be only on condition that he should derive from it the usual and general rate of profits on stock; and that could only happen when his commodity sold for a price proportioned to the quantity of labour bestowed on its production.”
    What principle was Ricardo trying to elucidate in this passage? Is his reasoning sound?
  4. “The amount of produce raised, and therefore the position of the margin of cultivation (i. e., the margin of the profitable application of capital and labour to good and bad land alike) are both governed by the general conditions of demand and supply. They are governed on the one hand by demand; that is, by the numbers of the population who consume the produce, the intensity of their need for it, and their means of paying for it: and on the other hand by supply; that is, by the extent and fertility of the available land, and the numbers and resources of those ready to cultivate it. Thus cost of production, eagerness of demand, margin of production, and price of the produce mutually govern one another: and no circular reasoning is involved in speaking of any one as in part governed by the others.”
    Is this different from Ricardo’s doctrine on the relation between cost of production, value, rent? Is it inconsistent with Ricardo’s doctrine?
  5. “In short periods, that is, in periods short relatively to the time required to make and bring into full bearing improvements . . . no such direct influence on supply price is exercised by the necessity that such improvements should in the long run yield net incomes sufficient to give normal profits on their cost. And therefore when we are dealing with such periods, these incomes may be regarded as quasi-rents which depend on the price of the produce.”
    Would you regard “these incomes” as quasi-rents, in Marshall’s sense? Would you consider this a good definition of quasi-rents?
  6. Indicate summarily Mill’s doctrines regarding

the law of the accumulation of capital;
the factors on which the rate of profits depends;
the tendency of profits to a minimum.

Are they consistent with each other? Which of them, if any, is in accord with Ricardo’s doctrine on profits?

  1. “An increase in the aggregate volume of production of anything will generally increase the size, and therefore the internal economics possessed by a representative firm; it will always increase the external economies to which the firm has access; and thus it will enable it to manufacture at a less proportionate cost of labour and sacrifice than before.”
    Why “generally” in the first case? Why “always” in the second? or why not in either case?
  2. Explain

cost of production,
expenses of production,
supply price,
contemporaneous costs curve,
successive costs curve.

  1. “Among 1317 farms in one county in New York, 13 farms yielded labor incomes of over $2000. . . . Part of this difference was due to the soils being better than the average, and part was due to better management.” In the book from which this passage is taken, “labor income” is ascertained by deducting from the farm receipts (a) expenses incurred in operating the farm, (b) the interest which the farmer would have got if, instead of investing in the farm, he had lent his money at the current rate. Would you accept this definition of labor income?
    Does “economic rent” appear in the analysis? If so, where and how?

 

 

1923-24
HARVARD UNIVERSITY
ECONOMICS 11
Year-end Final Exam

Arrange your answers strictly in the order of the questions

  1. What is left, in the present stage of economic theory, of Ricardo’s doctrine of value? of wages? of profits?
  2. “When considering costs from the social point of view, when inquiring whether the cost of attaining a given result is increasing or diminishing with changing economic conditions, then we are concerned with the real costs of efforts of various qualities, and with the real cost of waiting. If the purchasing power of money in terms of effort has remained about constant, and if the rate of remuneration for waiting has remained about constant, then the money measure of costs corresponds to the real costs; but such a correspondence is never to be assumed lightly.” — Marshall.
    Consider separately the two propositions stated in these sentences, and give your opinion on them.
  3. “Let us now drop the supposition that labour is so mobile as to ensure equal remuneration for equal efforts, throughout the whole of society, and let us approach much nearer to the actual conditions of life by supposing that labour is not all of one industrial grade, but of several. Let us suppose that parents always bring up their children to an occupation in their own grade; that they have a free choice within that grade, but not outside it. Lastly, let us suppose that the increase of numbers in each grade is governed by other than economic causes: as before it may be fixed, or it may be influenced by changes in custom, in moral opinion, etc.” — Marshall.
    On these suppositions, is value determined by “real costs.”? Wherein, if at all, do the suppositions differ from those made by Marshall in earlier editions?
  4. “While we [the Austrians] say that the value of means of production, that is of cost-goods, is determined by the value of their products, the usual way of interpreting the law is to say that the value of their products, the usual way of interpreting the law is to say that the value of the products is determined by the amount of their costs, — by the value of the means of production out of which they are made.” — Böhm-Bawerk.
    What are grounds of this conclusion? What is your own view?
  5. “The difference between land and other durable agents is mainly one of degree; and a great part of the interest of the study of the rent of land arises from the illustration it affords of a great principle that permeates every part of economics.” — Marshall.
    Why is the difference mainly one of degree? and what is the great permeating principle?
  6. State the precise point on which Böhm-Bawerk rests his contention that there is no specific productivity of capital.
  7. Böhm-Bawerk remarks that the theory put forth by him bears a certain resemblance to the wage fund doctrine of the older English school, but differs from it in essentials. Explain the resemblance; point out the difference which Böhm-Bawerk believes to be essential; and give you instructor’s comment on that point of difference.
  8. Under the regulation for administering the Excess Profits Tax, while it was levied in the United States, an individual business man liable for this tax was allowed, when declaring his profits, to deduct from his receipts not only all outlays incurred but also (a) eight per cent on his invested capital, (b) a reasonable salary for his own labor of management.
    Were these two allowances in accord with the theoretic treatment of business profits by Clark? by Marshall? by your instructor?

____________________________________

 

Course Enrollment: Economics 11, 1924-25

 

[Economics] 11. Professor Taussig.—Economic Theory

Total 59: 43 Graduates, 2 Seniors, 8 Graduate Business, 6 Radcliffe

Source: Harvard University. Reports of the President and Treasurer of Harvard College, 1924-25, p. 75.

 

 

1924-25
HARVARD UNIVERSITY
ECONOMICS 11
Mid-Year Exam

 

  1. “When the labourer maintains himself by funds of his own, as when a peasant-farmer or proprietor lives on the produce of his land, or an artisan works on his own account, they are still supported by capital, that is, by funds provided in advance. The peasant does not subsist this year on the produce of this year’s harvest, but on that of the last. The artisan is not living on the proceeds of the work he has in hand, but on those of work previously executed and disposed of. Each is supported by a small capital of his own, which he periodically replaces from the produce of his labour.” J. S. Mill.
    Are the two situations here described essentially similar? and what general proposition or propositions do they illustrate?
  2. “In a charitable institution, where the poor are set to work with the funds of benefactors, the general prices of the commodities, which are the produce of such work, will not be governed by the peculiar facilities afforded to these workmen, but by the common, usual, and natural difficulties which every other manufacturer will have to encounter. The manufacturer enjoying none of these facilities might indeed be driven altogether from the market if the supply afforded by these favoured workmen were equal to all the wants of the community; but if he continued the trade, it would be only on condition that he should derive from it the usual and general rate of profits on stock; and that could only happen when his commodity sold for a price proportioned to the quantity of labour bestowed on its production.”

(a) What principle was Ricardo trying to elucidate in this passage?
(b) It has been argued that labor in a “charitable institution” is usually inefficient, and that nothing of the sort described by Ricardo happens. What would you say? What would Ricardo say?
(c) Trade-unions are opposed to the employment of convict labor, on the ground that it takes work from their members and tends to lower wages. Is their attitude inconsistent with the sort of reasoning Ricardo applies?

  1. It has been said:

(a) that the law of diminishing returns refers to the physical quantity of the produce obtained from land, not to the value of the produce;
(b) that the law of diminishing returns refers to the yield from each several piece of land, not to the yield from land at large;
(c) that if all land were equally endowed by nature, and if all were used, the income of the land-owners would be in the nature of a monopoly gain.

Which of these statements would you accept, which reject?

  1. “In estimating the exchangeable value of stockings, for example, we shall find that their value, comparatively with other things, depends on the total quantity of labour necessary to manufacture them and bring them to market. First, there is the labour necessary to cultivate the land on which the raw cotton is grown; secondly, the labour of conveying the cotton to the country where the stockings are to be manufactured, which includes a portion of the labour bestowed in building the ship in which it is conveyed, and which is charged in the freight on the goods; thirdly, the labour of the spinner and weaver; fourthly, a portion of the labour of the engineer, smith, and carpenter, who erected the buildings and machinery, by the help of which they are made; fifthly, the labour of the retail dealer, and of many others, whom it is unnecessary further to particularise.”
    What is the bearing of this enumeration on Ricardo’s theory of value? on his theory of profits?
  2. “The cause of profit is that labour produces more than is required for its support.”
    “The capitalist may be assumed to make all the advances and receive all the profit. His profit consists of the excess of the produce above the advances.”
    Are these two statements inconsistent with each other?
    Which, if either, was Ricardo’s doctrine? Which Mill’s? Which, if either, comes near the truth?
  3. What is the short-period point of view, what the long-period point of view, in the discussion of value at the hands of Mill? of Marshall?
  4. Under what circumstances, if under any, would you expect to find

(a) a demand curve positively inclined;
(b) a successive costs curve negatively inclined;
(c) a contemporaneous costs curve negatively inclined?

  1. Wherein is the incidence of a tax on dwellings significant as regards the doctrine of quasi-rent? That of a tax on printing-presses?
  2. Would you expect an increase of demand for an article to lead to external economies in its production? to internal economies?

 

 

1924-25
HARVARD UNIVERSITY
ECONOMICS 11
Year-end Final Exam

Arrange your answers in the order of the questions
Questions 1, 2, 3 may be answered as one, if you prefer

  1. Explain summarily

“real” costs of production,
money costs of production,
expenses of production,
supply price,
derived supply price.

  1. Would you reckon “economic rent” among the expenses of production of a commodity? Quasi-rent?
  2. (a) When a supply curve is laid out for the purpose of representing conditions of diminishing returns, is it supposed to indicate gradations in real costs or in money costs?
    (b) When a supply curve is constructed for a manufactured commodity, on the basis of data furnished by cost accountants, does it indicate gradations in real costs or in money costs?
  3. (a) “The ordinary bargain between labour and capital is that the wage-receiver gets command over commodities in a form ready for immediate consumption, and in exchange carries his employer’s goods a stage further towards being ready for immediate consumption. But while this is true of most employees, it is not true of those who finish the process of production. For instance, those who put together and finish watches, give to their employers far more commodities in a form ready for immediate consumption, than they obtain as wages. And if we take one season of the year with another, so as to allow for seed and harvest time, we find that workmen as a whole hand over to their employers more finished commodities than they receive as wages.”
    (b) There is, however, a rather forced sense in which we may perhaps be justified in saying that the earnings of labour depend upon advances made to labour by capital. For — not to take account of machinery and factories, of ships and railroads — the houses loaned to workmen, and even the raw materials in various stages which will be worked up into commodities consumed by them, represent a far greater provision of capital for their use than the equivalent of the advances which they make to the capitalist, even when they work for a month for him.”
    (c) “The whole question, whether goods are advanced by one class of persons to another, in order to tide that other class over an interval of waiting, clearly has reference, not to the relation of capitalists in general to laborers in general, but to the relation of certain sub-groups to other sub-groups in the producing series. It is the sub-group A´´´ [those making finished goods] that must advance the stock of the article A´´´ to all the sub-groups that are below it in the series, if any advances at all are needed; but does it actually make any advances? . . . Nothing of this kind, however, takes place. The stocks of A´´´, B´´´ and C´´´ are drawn upon and replenished simultaneously, like water in a full pipe, with an inflow at one end and an outflow at the other.”

Explain whom you believe to be the writers of these passages; what Böhm-Bawerk would say on the general propositions here laid down; what your own views on them are.

  1. “When an artisan or a professional man has exceptional natural abilities, which are not made by human effort, and are not the result of sacrifices undergone for a future gain, they enable him to obtain a surplus income over what ordinary persons could expect from similar exertions following on similar investments of capital and labour in their education and start in life; a surplus which is of the nature of rent.” Would Marshall agree to this as regards (a) the incomes of professional men; (b) business profits? Would you?
  2. Explain briefly whether anything in the nature either of a producer’s surplus or of a consumer’s surplus appears as regards (a) instruments made by man and the return secured by their owners; (b) unskilled labor and the wages paid for it.
  3. Is interest “earned”? Are business profits “earned”?
  4. Are there grounds for maintaining that Clark’s doctrine of the “zone of indifference” is inconsistent with his doctrine of the specific productivity of labor and capital?
  5. “Suppose a poor man receives every day two pieces of bread, while one is enough to allay the pangs of positive hunger, what value will one of the two pieces of bread have for him? The answer is easy enough. If he gives away the piece of bread, he will lose, and if he keeps it he will secure, provision for that degree of want which makes itself felt whenever positive hunger has been allayed. We may call this the second degree of utility. One of two entirely similar goods is, therefore, equal in value to the second degree in the scale of utility of that particular class of goods. . . . Not only has one of two goods the value of the second degree of utility, but either of them has it, whichever one may choose. And three pieces have together three times the value of the third degree of utility, and four pieces have four times the value of the fourth degree. In a word, the value of a supply of similar goods is equal to the sum of the items multiplied by the marginal utility.” — Wieser.
    What is meant by “value” in this passage? Do you think the analysis tenable? and do you think it inconsistent with the doctrine of total utility and consumer’s surplus?

 

Source for examination questions: Harvard University Archives. Prof. F. W. Taussig, Examination Papers in Economics 1882-1935 (Scrapbook).

Image Source: Frank W. Taussig, Harvard Class Album, 1925.

Categories
Exam Questions Johns Hopkins Suggested Reading

Johns Hopkins. Reading list and exam for Economic Fluctuations and Growth. Domar, 1957

 

 

The following macroeconomics course outline with readings and examination questions come from the last academic year that Evsey Domar taught at Johns Hopkins University (1957-58) before he moved to M.I.T.

Note: the last three reading items in section VII (Solow (1956), Solow (1957), and Abramovitz (1956) have clearly been added after the original syllabus was typed (a lighter typewriter ribbon and a larger font were used).

___________________________

THE JOHNS HOPKINS UNIVERSITY

ECONOMIC FLUCTUATIONS AND GROWTH
E. D. Domar
Political Economy 605
Fall, 1957-58

READING LIST

Students not familiar with accounting are advised to read Mason and Davidson, Fundamentals of Accounting, Chapters 3-5, 9, 13, 17, 21, 25-26, or an equivalent.

The purpose of this list is to suggest to the student the sources in which the more important topics of the course are discussed from several points of view. His objective should be the understanding of these topics and not the memorization of opinions expressed.

Items marked with an * are strongly recommended. (I don’t like to use the expression “required” in a graduate reading list.)

  1. NATIONAL INCOME AND RELATED ITEMS

*Kuznets, S., National Income and Its Composition (New York, 1941), particularly vol. I, Chapter 1.
*Ruggles, R. & N., National Income Accounts and Income Analysis (New York, 1956).
*National Income, 1954 Edition, Supplement to the Survey of Current Business.
*Leontief, “Output, Employment, Consumption and Investment,” Quarterly Journal of Economics, Feb., 1944.
Leontief, The Structure of American Economy (New York, 1951)

 

  1. KEYNESIAN ECONOMICS — GENERAL

Students without prior training in this field are advised to study D. Dillard, The Economics of John Maynard Keynes (New York, 1948), A. H. Hansen, A Guide to Keynes (New York, 1953), or K. Kurihara, Introduction to Keynesian Dynamics (New York, 1956).

*J. M. Keynes, The General Theory of Employment, Interest, and Money (New York, 1936), Philadelphia, 1944).
*American Economic Association, Readings in Business Cycle Theory, essays 5, 6, 7, 8.
S. E. Harris, The New Economics (New York, 1947) essays 1-19, 30-33, 38-46.
*A. P. Lerner, Economics of Control (New York, 1944), chapters 21-23, 25.
*K. K. Kurihara, Post Keynesian Economics (New Brunswick, N. J., 1954), essays 1, 11*.
*American Economic Association, Readings in the Theory of Income Distribution (Philadelphia, 1946), essay 24.
L. R. Klein, The Keynesian Revolution, chapters 3-5.
H. S. Ellis, A Survey of Contemporary Economics (Philadelphia, 1948) Vol. 1, chapter 2.
*Income, Employment, and Public Policy, Essays in Honor of Alvin H. Hansen (New York, 1948, essay I.)
*A. F. Burns, “Economic Research and the Keynesian Thinking of our Times,” in his The Frontiers of Economic Knowledge, (Princeton, 1954), or in the Twenty-Sixth Annual Report of the National Bureau of Economic Research, Inc. (New York, 1946). See also the discussion by Hansen and Burns in the Review of Economic Statistics, November, 1947.
Patinkin, D., Money, Interest, and Prices (Evanston, Ill., 1956)

 

  1. THE THEORY OF INTEREST

Readings in the Theory of Income Distribution, essays 22, 23, 26
Readings in Monetary Theory, essays 6, 11, 15
*Haberler, Prosperity and Depression, (Lake Success, N.Y., 1946), chapter 8.
*J. E. Meade and P. W. S. Andrews, “Summary of Replies to Questions on Effects of Interest Rates,” and “Further Inquiry into the Effects of Rates of Interest,” Oxford Economic Papers, No. 1, 1938 and No. 3, 1940.
*J. G. Gurley and E. S. Shaw, “Financial Aspects of Economic Development,” American Economic Review, September, 1955
A. G. Hart, Money, Debt, and Economic Activity, Second Ed. (New York, 1953).
*J. F. Ebersole, “The Influence of Interest Rates,” Harvard Business Review, Vol. XVII, 1938, pp. 35-39.
*H. D. Henderson, “The Significance of the Rate of Interest,” Oxford Economic Papers, October, 1938, pp. 1-13.
R. S. Sayers, “Business Men and the Terms of Borrowing,” Oxford Economic Papers, Feb. 1940, pp. 23-31.
P. W. S. Andrews, “A Further Inquiry into the Effects of Rates of Interest,” Oxford Economic Papers, Feb. 1940, pp. 32-73.
*W. H. White, “Interest Inelasticity of Investment Demand – the Case from Business Attitude Surveys Re-examined,” American Economic Review, Sept. 1956, pp. 565-87.
F.A. Lutz, “The Interest Rate and Investment in a Dynamic Economy,” American Economic Review, Dec., 1945.

 

  1. THE CONSUMPTION FUNCTION

Post-Keynesian Economics, essay 15.
Income, Employment and Public Policy, Essays in Honor of Alvin H. Hansen, (New York, 1948) essay III.
*J. S. Duesenberry, Income, Saving, and the Theory of Consumer Behavior (Cambridge, Mass., 1949).
*B. F. Haley, A Survey of Contemporary Economics (Homewood, Illinois, 1952), Vol. II, essay 2.
*T. E. Davis, “The Consumption Function as a Tool of Prediction,” The Review of Economics and Statistics, August, 1952.
W. W. Heller, F. M. Boddy & C. L. Nelson, Savings in the Modern Economy, A Symposium (Minneapolis, 1953).
*R. Ferber, A Study of Aggregate Consumption Functions, National Bureau of Economic Research, Technical Paper 8 (New York, 1953).
M. Friedman, A Theory of the Consumption Function (Princeton, N. J., 1957).

 

  1. THE MULTIPLIER AND THE ACCELERATOR

*Readings in Business Cycle Theory, essays 9-12.
*Haberler, Prosperity and Depression, chapter 13.
*S. Kuznets, “Relation between Capital Goods and Finished Products in the Business Cycle,” in Economic Essays in Honor of Wesley Clair Mitchell, (New York, 1935).
*R. F. Kahn, “The Relation of Home Investment to Unemployment,” Economic Journal, 1931. Republished in Hansen and Clemence, Readings in Business Cycles and National Income (New York, 1953), essay 15.
*Haavelmo, T., “Multiplier Effects of a Balanced Budget,” Econometrica, 1945; reprinted in Readings in Fiscal Policy, pp. 335-343.
*William A. Salant, “Taxes, Income Determination, and the Balanced Budget Theorem,” The Review of Economics and Statistics, May, 1957.

 

  1. PRICE FLEXIBILITY AND EMPLOYMENT

*A. C. Pigou, “The Classical Stationary State,” The Economic Journal, December, 1943.
*O. Lange, Price Flexibility and Employment, (Bloomington, Indiana, 1944).
*M. Friedman, “Lange on Price Flexibility and Employment,” American Economic Review, Sept. 1946.
*Readings in Monetary Theory, essay 13.
*T. C. Schelling, “The Dynamics of Price Flexibility,” American Economic Review, Sept. 1949.
D. Patinkin, Money, Interest, and Prices (Evanston, Ill., 1956).

 

  1. THEORY OF GROWTH

*E. D. Domar, Essays in the Theory of Economic Growth (New York, 1957), Foreword, Essays I, III-V.
W. Fellner, Trends and Cycles in Economic Activity, (New York, 1956)
A. H. Hansen, Fiscal Policy and Business Cycles (New York, 1941)
*R. F. Harrod, Towards a Dynamic Economics (London, 1951), Part III.
W. W. Leontiev [sic], Studies in the Structure of the American Economy, (New York, 1953).
J. Robinson, The Accumulation of Capital, (London, 1956).
*Simon Kuznets, “Towards a Theory of Economic Growth,” R. Keckachman, ed., National Policy for Economic Welfare at Home and Abroad (New York, 1955)
*Robert M. Solow, “A Contribution to the Theory of Economic Growth,” The Quarterly Journal of Economics, Feb. 1956.
*Robert M. Solow, “Technical Change and the Aggregate Production Function,” The Review of Economics and Statistics, August, 1957.
*Moses Abramovitz, “Resource and Output Trends in the United States since 1870,” American Economic Review Papers and Proceedings, May, 1956, pp. 5-23.

 

Source:   Duke University. David M. Rubenstein Rare Book and Manuscript Library. Economists’ Papers Archive. Papers of Evsey D. Domar, Box 15, Folder “Macroeconomics, Old Reading Lists”.

___________________________

THE JOHNS HOPKINS UNIVERSITY

ECONOMIC FLUCTUATIONS AND GROWTH
(Political Economy 605, Fall Term 1957-58)

Final Examination—Three hours
January 23, 1958
E. D. Domar

Please answer all questions in any order you like. Your reasoning is more important than your answers.

I. (25%)

(a) Explain the basic economic philosophy which forms the foundation of modern National income (and gross product) estimates in Western countries.

(b) Show how this philosophy is transformed into specific criteria used by the U.S. Department of Commerce in their estimates of GROSS NATIONAL PRODUCT, NATIONAL INCOME, AND CONSUMER DISPOSABLE INCOME. Illustrate your discussion with examples.

(c) “Existing methods of computing national income or product exaggerate the difference between the incomes (or products) of advanced and of undeveloped countries.”

Comment fully.

II. (15%)

The following comment was made by Mr. Ayzenshtadt, a Soviet economist, in 1947:

“Even the greatest admirers of Keynes and of his theory that loan capital is the main propeller of the industrial cycle, do not see anything new in it…Keynes himself thinks that the ‘novelty’ of his system lies in the equilibrium formula of the economic process in which the independent and dependent variables are arranged as follows:

Independent Variables:

(1) Propensity to consume
(2) Marginal efficiency of capital
(3) Rate of interest
(4) Liquidity preference

Dependent Variables:

(1) Savings
(2) Investment
(3) Level of Employment”

Comment. Be specific.

III. (15%)

“The best cure against inflation is increased production.” Do you agree? Why or why not? Comment fully.

IV. (25%)

Write an analytical essay on the subject: “The effect of a proportional personal and corporate income tax on the rate or rates of interest.”

V. (20%)

Examine the effect on GROSS NATIONAL PRODUCT of a $100 increase in GROSS PRIVATE CAPITAL FORMATION.

(a) Discuss the conceptual and analytical questions involved.
(b) Try to make a numerical estimate

 

Source:   Duke University. David M. Rubenstein Rare Book and Manuscript Library. Economists’ Papers Archive. Papers of Evsey D. Domar, Box 16, Folder “Final Exams. Johns Hopkins, Stanford, U of Michigan”.

Image Source: MIT Museum website

Categories
Exam Questions Harvard Suggested Reading Syllabus

Harvard. International Trade and Commercial Policy. Haberler, Harris, Leontief 1940

 

Of the fields with a deep bench at Harvard in the immediate pre-WWII era, international trade could boast three faculty members and two post-docs of great distinction: Gottfried Haberler, Wassily Leontief, Seymour Harris; and Wolfgang Stolper and Heinrich (a.k.a. “Henry”) Heuser. This post has the course outlines with assigned readings for both the trade theory and commercial policy semesters and the final examination questions for commercial policy. 

______________________________

Henry Heuser from AEA List of Members 1948

HEUSER, HENRY KARL-MARIA, 1747 F St., N.W., Washington, D.C. (1942) Int. Monetary Fund, econ., res., govt serv.; b. 1911; B.A., 1932, McGill; M.A., 1933, Ecole des Science Economiques et Politiques (Paris); Ph.D., 1938, Univ. of London. Fields 10, 1a, 7. Doc. dis.  Economics of exchange control. Pub. Control of international trade (Rutledge, London, 1938; Blakiston, Philadephia, 1939).

Source:  Alphabetical List of Members (as of June 15, 1948) in the 1948 Directory of the American Economic Association (Jan., 1949). American Economic Review, Vol. 39, No. 1.p. 85.

 

Obituary for Henry Heuser (1911-95) from the Washington Post
April 21, 1995

Henry K. Heuser, 83, an economist who retired in the early 1970s from the Agency for International Development, died of cancer April 18 at the Washington Hospice.

Mr. Heuser was born in Berlin. In the mid-1920s, he immigrated to Canada. He graduated from McGill University and also studied at Ecole des Sciences Economiques in Paris and at the London School of Economics, where he received a doctorate.

In the late 1930s, he taught economics and international trade at the University of Minnesota, Harvard University and the Fletcher School of Law and Diplomacy at Tufts University. He was author of a book, “Control of International Trade,” which was published in 1939.

During World War II, he was an intelligence officer with the Office of Strategic Services, then after the war he worked in Paris on the Marshall Plan for the economic rehabilitation of postwar Europe.

In the late 1940s, he worked for the Federal Reserve and the International Monetary Fund, then joined U.S. foreign assistance programs. He served in Italy, Korea, Tunisia, Libya, Sudan and the Ivory Coast.

On retiring from AID, Mr. Heuser lived in the Tuscany region of Italy, where he restored a 16th-century monastery and grew grapes for Chianti wine. He returned to Washington about 1987.

Survivors include his wife of 48 years, Maria Heuser of Washington; five children, Chilla Heuser-Rousselle of Paris, Alice Heuser of Potomac, Stephen Heuser of London, Tayo Heuser Shore of Narragansett, R.I., and Michael Heuser of Beverly Hills, Calif.; and 13 grandchildren. MARK LEE PATTEN Carpenter

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Course Enrollment
1940-41

[Economics] 43a 1hf. Professor Haberler and Associate Professor Leontief.—International Economic Relations, I. Theory of International Trade.

Total 22: 1 Graduate, 13 Seniors, 3 Juniors, 2 Sophomores, 3 Others.

 

Source: Harvard University. Report of the President of Harvard College and Reports of Departments for 1940-41, p. 63.

______________________________

Course Description
1940-41

Economics 43a 1hf. International Economic Relations, I. Theory of International Trade. Half-course (first half-year). Mon., Wed., and (at the pleasure of the instructors) Fri., at 9. Professor Haberler and Dr. Stolper.

The course will deal with the following subjects: Monetary problems of international trade; the pure theory of international trade.

 

Source: Division of History, Government, and Economics Containing an Announcement for 1940-41. Official Register of Harvard University, Vol. XXXVII, No. 51 (August 15, 1940), p. 56.

______________________________

Economics 43a
International Trade and Commercial Relations
[1939-40]

During the first half of the term the monetary problems of International Trade will be discussed in the following order:

The theory and measurement of the balance of payments
Gold Standard
Paper standard and purchasing power parity theory
Exchange Depreciation
The transfer problem and capital movements
The present gold problem
Problems of exchange control

Assignments of the first six weeks:

Haberler, Theory of International Trade, pp. 1-117.
Whale, International Trade, Chs. 17-19, 21-23
Department of Commerce, The Balance of International Indebtedness of the United States for 1938.
Graham and Whittlesey, “The Gold Problem,” Foreign Affairs, January, 1938.
Meade and Hitch, Economic Analysis, Part V, pp. 307-355.

 

The second half of the term will be devoted to the pure theory of international trade and to some of its applications. The classical theory will be discussed and confronted with Ohlin’s approach. The concept of the terms of trade will be taken up and some applications of monopoly theory, especially to the problem of dumping, will be treated.

Assignments for the second half of the term:

Meade and Hitch, Economic Analysis, Part V, pp. 356-408.
Haberler, International Trade, Chs. IX-XII, and Ch. XVIII.
Ohlin, Interregional and International trade, Parts I and II.
Viner, J., Memorandum on Dumping (League of Nations).

 

Source: Harvard University Archives. Syllabi, course outlines and reading lists in Economics, 1895-2003 (HUC 8522.2.1) Box 2, Folder “Economics, 1940-1941”.

______________________________

Final Examination
Economics 43a 1hf.
1940-41

[Not found (yet).]

______________________________

Course Enrollment
1939-40

[Economics] 43b 2hf. Associate Professor Harris , Drs. Heuser and Stolper.—International Economic Relations, II. Commercial Policy.

Total 18: 11 Seniors, 6 Juniors, 1 Other.

 

Source: Harvard University. Report of the President of Harvard College and Reports of Departments for 1939-40, p. 99.

______________________________

Course Description
1940-41

[Economics 43b 1hf. International Economic Relations, II. Commercial Policy.] Half-course (second half-year). Mon., Wed., at 12, and a third hour at the pleasure of the instructors. Professor Haberler, Associate Professor Harris, and Dr. Stolper.

Omitted in 1940-41.

 

Source: Division of History, Government, and Economics Containing an Announcement for 1940-41. Official Register of Harvard University, Vol. XXXVII, No. 51 (August 15, 1940), p. 56.

______________________________

Economics 43b
1939-40

Week Subject Reading
Feb. 5-10 General case for free trade and criticism
(Dr. Stolper)
Haberler, Chs. 13, 14.
Robertson, “The Future of International Trade,” Economic Journal, March, 1938.
Feb. 12-17 General effect of tariffs, partial analysis. Preferential tariffs.
(Dr. Stolper)
Haberler, Ch. 15
Feb. 19-March 9 Special tariff arguments. Discussion of some of the Hutchins Committee Report. Schüler and Keynes arguments. Foreign Trade Multiplier.
(Dr. Stolper)
Beveridge, Tariffs, the Case Examined, Chs. 5, 9, 10, 13.
Haberler, Chs. 16, 17, and Ch. 12, §4 review Macmillan Report, Addendum I.
Copland, D.B., “A Neglected Phase of Tariff Controversy,” Q.J.E., 1931.
Anderson, Karl, “Protection and the Historical Situation,” Q.J.E., 1938.
Samuelson, Marion Crawford, “The Australian Case for Protection Re-examined,” Q.J.E., 1939.
Taussig, Chs. 13 and 16.
Suggested reading: Taussig, Chs. 14, 15.
March 11-16 Dumping, anti-dumping duties
(Dr. Stolper)
Haberler, Ch. 18, omitting the graphs.
Robinson, J., Economics of Imperfect Competition, Ch. 15, sec. 1-4.
Viner, J., Memorandum on Dumping (League of Nations).
March 18-April 20 Other measures, particularly quotas. Exchange Control and Clearing. Exchange Agreements, etc.
(Dr. Heuser)
Haberler, Chs. 19, 20, 21.
Heuser, Control of International Trade, Ch. VI.
Ellis, Exchange Control, Supplement to Q.J.E., 1939, Ch. I.
Ellsworth, Chs. IX, X.
April 22-27 Tariff History: The glass industry.
(Dr. Davis)
Probably Taussig, Tariff History.
April 29-May 4 Reciprocal Trade Agreements
(Dr. Stolper)
Tasca, Reciprocal Trade Policy, selected chapters.

 

Source: Harvard University Archives. Syllabi, course outlines and reading lists in Economics, 1895-2003 (HUC 8522.2.1) Box 2, Both in Folders “Economics, 1939-1940 (2 of 2)” and “Economics, 1940-1941”.

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HARVARD UNIVERSITY
ECONOMICS 43b2
1939-1940

Part I
(One hour and a half)

Take both questions. Write one hour on one of them and one-half hour on the other.

  1. “Territorial jurisdiction over a particular area can never be of economic advantage as long as there is free trade in commodities.” Do you agree?
  2. Discuss the relative merits of general depreciation, discriminating exchange rates, and export subsidies as means of restoring equilibrium after a period of strict exchange control.

Part II
(One hour and a half)

Answer question 3 and two other questions.

  1. Take (a), (b), (c), or (d) only.
    1. Do you think that Marshall’s argument for free trade are applicable to the United States of to-day?
    2. Outline the reciprocal trade agreements program of the U. S. A. and its probable effects on various sectors of the American economy. Do you think the program leads towards increased bilateralism or towards greater free trade?
    3. “Increased competition from newly industrialised countries compels the older industrial countries to choose between higher tariffs or lower standards of living.”
    4. It has been claimed that the protective effect of an import quota and a tariff combined are cumulative. Discuss with regard to the effects in the importing country as well as in the exporting countries.
  2. If a country’s exports are subject to foreign tariffs it cannot improve its position by levying tariffs on its imports. Give your considered opinion of this assertion.
  3. Under conditions conducive to a flight of capital [,] restrictions on capital exports may fail completely to bring about a permanent improvement in the balance of payments. Discuss.
  4. The total volume of trade between two countries under exchange clearing is just as likely to increase as to decrease. Discuss with respect to clearings between (a) a free country and a control country, (b) two control countries.
  5. “The operation of the foreign trade multiplier necessitates reconsideration of the proposition that employment and national income can never be increased by the introduction of tariffs.” Discuss.

Final. 1940.

 

Source: Harvard University Archives. Faculty of Arts and Sciences. Papers Printed for Final Examinations. History, History of Religions,…Economics,…Military Science, Naval Science (June, 1940) in Harvard University. Final examinations, 1853-2001 (HUC 7000.28) Box 5.

Image:  Haberler, Leontief and Harris from Harvard Album 1942.

Categories
Exam Questions Harvard

Harvard. Theory of Monopolistic Competition, Final Examinations. Chamberlin, 1936-37

 

Having recently published his magnum opus in 1933, Harvard economist Edward H. Chamberlin taught a one semester graduate economic theory course devoted to the theory of monopolistic competition three successive years (1935/6 through 1937/8) before going on to teach the core graduate theory course. In the Harvard archives I have been able to find copies of the final examination questions for the first two years which along with course enrollment data are transcribed below.

Chamberlin, Edward Hastings. The Theory of Monopolistic Competition–A Re-orientation of the Theory of Value. Cambridge, Massachusetts: Harvard University Press, 1933.

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Course Announcement
1935-36

Economics 12 1hf. Monopolistic Competition and Allied Problems in Value Theory

Half-course (first half-year). Tu., Th., at 3, and a third hour to be arranged
Associate Professor Chamberlin

 

Source: Harvard University. Announcement of the Course of Instruction offered by the Faculty of Arts and Sciences for the Academic Year 1935-36 (Second Edition), p. 139.

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Course Enrollment
1935-36

[Economics] 12 1hf. Associate Professor Chamberlin.—Monopolistic Competition and Allied Problems in Value Theory.

Total 8: 8 Graduates.

 

Source: Harvard University. Report of the President of Harvard College and Reports of Departments for 1935-1936, p. 83.

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1935-36
HARVARD UNIVERSITY

ECONOMICS 121
[Final exam]

Answer either four or five questions.

  1. Discuss the influence of the number of producers in an industry upon the elasticity of demand for the product of the individual firm.
  2. Discuss the difficulties inherent in the concept of a “group equilibrium.” In what degree do you regard the concept as valid? useful?
  3. Discuss either (a) excess capacity, or (b) “product” variation under imperfect knowledge.
  4. Discuss alternative methods of treating selling costs, giving your preference and the reasons for it.
  5. In what respects do the theories of monopolistic and imperfect competition alter the case both for and against interfering with the “free play of competitive forces,” as developed by traditional economic theory?

Mid-Year. 1936.

 

Source: Harvard University Archives. Examination Papers Finals, 1936 (HUC 7000.28 vol. 78 of 284)

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Course Enrollment
1936-37

[Economics] 102a 1hf. (formery 12). Associate Professor Chamberlin.—Monopolistic Competition and Allied Problems in Value Theory.

Total 6: 4 Graduates, 1 Senior, 1 Radcliffe.

 

Source: Harvard University. Report of the President of Harvard College and Reports of Departments for 1936-1937, p. 93.

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1936-37
HARVARD UNIVERSITY

ECONOMICS 102a1
[Final exam]

  1. Discuss the question of “free entry” into an industry and its significance for the theory of monopolistic competition.
  2. “The problem of the individual demand curve bears on the questions whether we can discuss the competitive position of an isolated firm at all; a demand curve of a single firm is drawn, which presupposes that the other firms do not change their supply, or change it in a distinct way…Must we not make it clear that such a curve is valid only for a short interval?” Discuss.
  3. To what extent do you regard the standardization of products as a remedy for the ignorance of buyers as to their qualities? Discuss briefly any other remedies you might wish to propose.
  4. “The production cost curve and the selling cost curve are really nothing more than alternative techniques for treating what is essentially the same problem.” Discuss.
  5. “Value productivity, and nothing but value productivity, is what matters in distribution theory.” Discuss.
  6. Discuss one of the following:
    1. Monopsony.
    2. Monopolistic competition and the theory of profits.
    3. Monopolistic competition and the business cycle.
    4. The definition of a “commodity.” 

Final. 1937. 

Source: Harvard University Archives. Examination Papers Finals, 1937 (HUC 7000.28 vol. 79 of 284)

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Course Enrollment
1937-38

[Economics] 102a 1hf. (formerly 12). Professor Chamberlin.—Monopolistic Competition and Allied Problems in Value Theory.

Total 6: 2 Graduates, 2 School of Public Administration, 1 Radcliffe.

 

Source: Harvard University. Report of the President of Harvard College and Reports of Departments for 1937-1938, p. 86.

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1937-38
HARVARD UNIVERSITY

ECONOMICS 102a1
[Final exam]

[Not (yet) found.]

 

Image Source: Edward H. Chamberlin from the Harvard Class Album, 1939.

Categories
Columbia Economists Exam Questions Pennsylvania

Columbia. Economics Ph.D. alumnus, 1905. Enoch M. Banks, Academic Freedom Poster Child, 1911

 

During a random check of my John Bates Clark files, I came across a final examination for a course “Economics 161” with the handwritten note:  “E. M. Banks, Penn”. I figured this was a sign from Clio that I should check for that course at the University of Pennsylvania and find anything more about E. M. Banks. The first issue was resolved quickly upon consulting a copy of the University of Pennsylvania catalogue for 1905-06 where it was easy to verify that the introductory economics course was indeed taught by Enoch Marvin Banks, Ph.D. and that the textbook for the course was Henry Rogers Seager’s Introduction to Economics (New York: Henry Holt, 1904). The second term examination for the course has been transcribed and posted below.

Once I found the unique name of Enoch Marvin Banks, it was easy to find a copy of his Columbia Ph.D. thesis at archive.org, The Economics of Land Tenure in Georgia [Ph.D. thesis in the Faculty of Political Science, Columbia University, published as in Studies in History, Economics and Public Law. Vol. XXIII, No. 1, 1905]. This once-in-a-universe name also made it simple for a Google search to lead me to his papers at Emory University where a short biography was to be found and a link to his obituary in the national publication of his Alpha Tau Omega fraternity (both provided below). It was then that I discovered that this Columbia Ph.D. economics alumnus deserves a star on a memorial wall for academic freedom in the United States. 

Given the competing political interpretations of having statues/memorials for Confederate leaders and generals in the United States today, I thought it appropriate to provide Banks’ article “A Semi-Centennial View of Secession” with its “shocking” thesis: “Viewing the great civil conflict…in the light of these principles and in the light of a broad historical philosophy, we are led irresistibly to the conclusion that the North was relatively in the right, while the South was relatively in the wrong. ” 

For much more about the reception and reactionary blowback to Banks’ article, see  Fred Arthur Bailey Free speech at the University of Florida: The Enoch Marvin Banks Case. The Florida Historical Quarterly, Vol. 71, No. 1 (Jul., 1992), pp. 1-17.

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Enoch M. Banks , Obituary
The Alpha Tau Omega Palm
March 1912

Enoch Marvin Banks, well known throughout the South as a writer on economics and history, died last night at the home of L. P. Bradley, after an illness of several months, and was buried today in Newnan. He was unmarried, and is survived by his mother and several brothers and sisters.

Professor Banks was born November 28, 1877, and would have been 34 years of age next week. He was a student at Emory College, Oxford, Ga., receiving his A. B. degree in 1897, and A. M. in 1900; studied at Columbia University for several years and was a graduate student of Economics, Sociology and History; acting professor of History and Economics at Emory College, 1902-03; fellow in Economics at Columbia University, 1904-05; received degree of Doctor of Philosophy at Columbia University, June, 1905; instructor in Economics. University of Pennsylvania, 1905-06; studied in Germany, 1906-07; professor of History and Economics, University of Florida, 1907-11. He was made a member of American Economic Association in 1902; a member of the American

Academy of Political and Social Science, 1906, and a member of Academy of Political Science, New York, 1910.

Among his most important published writings were the following: “The Passing of the Old South,” “The Labor Supply and the Labor Problems in the South,” “A Semi-Centennial View of Secession,” “A Plea for Educational Freedom and a Liberated Intellectual Life,” “The New Point of View in the New South.” — Atlanta Constitution, November 24, 1911.

 

Source:   The Alpha Tau Omega Palm Vol. 32, No. 1 (March, 1912), p. 144.

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Biographical note from Enoch Marvin Banks Papers at Emory University

“Enoch Marvin Banks (1877-1911), an Emory graduate and Professor of Southern Economics and History, was born in Newnan, Georgia. After briefly teaching at Emory and receiving his PhD from Columbia University, Banks began a professional career that included professorships at the University of Pennsylvania (1903-1906) and the University of Florida (1907-1911). Among his most important published works on the South’s economy was is “A Semi-Centennial View of Secession,” published in The Independent in February 1911 [pp. 299-303]. The article, which claimed that the South should admit wrongdoing for its past efforts to secede from the Union caused many Confederate societies to quickly call for Banks’ resignation from the University of Florida. Banks ultimately complied, writing a letter of resignation to the University, who accepted despite fears that they would be accused of denying free speech. After his resignation, Banks returned to Newnan, where he died only months later.”

 

Source: Finding Aide to Enoch Marvin Banks Papers, 1903-1911. Emory University, Stuart A. Rose Manuscript, Archives, and Rare Book Library (Atlanta, GA).

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 From the University of Pennsylvania Catalogue, 1905-06

 

  • Enoch Marvin Banks, Ph.D., Instructor of Economics
  • Economics 161.—Introduction. Seager’s Economics, lectures and special reports.
  • Economics 161 (2 hours, both terms) [Instructors listed:]   Banks and Howard

Source: From the Catalogue of the University of Pennsylvania, 1905-06.

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[Handwritten note:] E. M. Banks, Penn.

EXAMINATION IN ECONOMICS—161.
Second Term 1905-06.

  1. (1) State four theories of wages. (2) What effect on wages has each of the following (a) Increase of population, (b) increase of capital, (c) improvements in the methods of production. (3) Explain the real meaning of “cheap labor.” (4) Have wages tended up or down in the last fifty years—explain the tendency.
  2. (1) What determines the general rate of interest? (2) In what ways, if any, is the general rate of interest affected by (a) an inflated state of the currency, (b) an inflation of the currency? (3) Is the general rate of interest tending up or down—explain.
  3. (1) Explain the nature and chief source of competitive profits. (2) Why are they temporary and permanent at the same time? (3) What effect in the long run do such profits have on wages and interest?
  4. (1) Explain the principle of monopoly prices as compared with that of competitive prices. (2) What methods do trusts often employ in ousting their competitors? (3) Do consumers get substantial benefits from the trusts? If not, why not, and how may they do so?
  5. On what grounds did Henry George advocate the single tax? Criticise those grounds.
  6. (1) Why must a country normally import as much goods (in value) as it exports? (2) Explain England’s excess of imports and our excess of exports. (3) Give the strongest economic argument for protection. (4) Discuss the effect of protection on wages.

 

Source: Columbia University Archives. John Bates Clark Papers, Box 9, Folder 1 (Administrative Records and Course Materials, undated). Series II.4.

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A Semi-Centennial View of Secession
BY ENOCH MARVIN BANKS, Ph.D.

[The semi-centennial of Abraham Lincoln’s accession to the Presidency is also that of secession. The author of the following article is Professor of History and Economics in the University of Florida. He was born in Georgia in 1877, was graduated from Emory College, and has always lived in the South, except for the few years when he was studying at Columbia University and the University of Pennsylvania. He has frequently contributed articles to the magazines and reviews on Southern topics. — Editor.]

FIFTY years ago Abraham Lincoln was elected to the Presidency of the United States and secession was precipitated in the State of South Carolina. Before the inauguration of Lincoln six other Southern States had followed the example of South Carolina in passing secession ordinances and had co-operated with that State in forming a confederacy, with its temporary seat of government at Montgomery. Lincoln, upon assuming the duties of President, pronounced as distinctly in favor of the integrity of the Union as the seceding States had pronounced in favor of its dissolution. Since the two governments were thus holding and acting upon contradictory theories of the situation, it was inevitable that a clash should soon occur unless one side or the other should modify or surrender its position. The clash did occur, as is so well known, at Fort Sumter, when, upon the refusal of the National Government to evacuate, the fort was bombarded and reduced by order of the Confederate Government, Lincoln immediately issued a call for 75,000 volunteers, four other Southern States, rather than aid in a policy of coercion, joined the Confederacy, and thus was inaugurated the great and tragic civil struggle in American history.

Since the South was the prime mover in those stirring events, it seems a fitting thing for a Southerner who belongs to an entirely new generation and who has abounding faith in his section’s future as well as in his country’s destiny to write a short semi-centennial view of that movement, in the hope of being able to estimate in the calm light of history the wisdom of secession and the meaning of the great conflict which its trial precipitated. In a certain sense, to be sure, the wisdom of secession was tested and found wanting in the war itself; but there are those who urge that superiority of resources and numbers may triumph for a season over what is right and best in principle. Again, the writer is, of course, aware that historians from other sections of the country and from other parts of the world have passed judgment upon the Southern movement of the sixties, and their judgment has been on the whole unfavorable to its wisdom and righteousness. On the other hand, the people of the South have very naturally been inclined to repudiate such interpretations as arising from sectional prejudice or foreign ignorance, and while acquiescing in the results of the war, they instinctively feel that their fathers and grandfathers were willing to make the tremendous sacrifices that were actually made only in behalf of a righteous and altogether splendid cause.

To be sure, it is not the purpose of this paper to effect a direct alteration of this Southern conviction, since such pervasive popular convictions do not usually undergo great modification at the instance of a slight magazine article. Nevertheless, such an article may serve the purpose of showing that conditions are changing, and that the South is becoming more tolerant of a free discussion of its past and present policies. It is well known that this section is undergoing a remarkable expansion of industry and commerce and is greatly enlarging its educational facilities, and is thus paving the way for a liberated intellectual life. This new spirit of liberality toward opposing views when exprest with sincerity and befitting decorum is perhaps the greatest incipient triumph of the twentieth century South. Such a spirit is doing much toward making the section an integral part of the nation, and it will do more as the years go by toward making it, in hearty union and co-operation with other parts of a great nation, an important factor in the advancement of world civilization. A free estimate of our past and a frank realization and acknowledgment of its errors, where errors are found, will place us in position to assume the responsible duties that lie in the immediate and more distant future. In such a spirit of intellectual integrity and freedom this article is written.

Large movements in history usually involve some important principle of government, or liberty, or economics, or religion, or what not, and the triumph or defeat of the principle or principles, for there may be more than one, gives meaning to the movement. These larger aspects of a struggle are, of course, not always distinctly envisaged by those who take part in the struggle, since such participants are oftentimes impelled by more immediate interests and passions, and it is only with the passing of years that the real significance of the movement in relation to human progress is generally seen, tho, to be sure, there are usually some leaders who are gifted with a larger vision and foresee more or less distinctly the meaning of the movement they are directing.

It requires no very acute powers of analysis to see — and indeed it is generally recognized by students of American history — that two large principles were involved in secession and the Civil War. One was a question of political science and concerned the nature of our union. The war itself was prosecuted with avowed reference to this principle, the South taking one attitude toward it and the North taking the opposite attitude. The other question was antecedent to this, in that it operated to cause the two sections to take divergent attitudes on the question of the nature of our union — or, to speak more specifically, it caused the South to attach continued importance to the idea of State sovereignty, it caused eleven States of the South to attempt secession, as the State sovereignty theory declared they had a right to do, and it thus caused the Civil War itself. That fundamental cause of secession and the Civil War, acting as it did thru a long series of years, was the institution of negro slavery. These two questions, therefore — that of State sovereignty primarily and directly, and that of negro slavery secondarily and indirectly — were the supreme questions involved in the American Civil War. Was the attitude of the South in relation to these two questions right — in the highest and best sense of the term right?

The ablest defense of the South’s position on State sovereignty is perhaps to be found in Alexander H. Stephens’s “Constitutional View of the War Between the States.” Moreover, Stephens’s attitude on the eve of secession demonstrated a breadth of statesmanship on his part that was only too rare in that emergency. He made a clear distinction between secession as an inherent constitutional right and secession as a policy to be put into operation in 1860, defending with considerable acumen, along lines marked out by Calhoun, the right of a State to secede under the Constitution of 1789, but combating the notion that the existing evils in the Union at that time justified a resort to so drastic a remedy. In his great union speech delivered before the Legislature of Georgia just after the election of Lincoln, he deliberately declared and urged that the South was not suffering in the Union, and that the section was not likely to suffer under the administration of Lincoln. Moreover, he calmly told his fellow countrymen that in case they withdrew from the Union without greater provocation than then existed, the verdict of history would be made up against them. Every careful student of our history can appreciate the wisdom, the statesmanship and the patriotism of this speech, as well as the courage and correctness of Stephens’s attitude in opposing secession a little later in the Georgia convention. I venture to think that if the lower South had possessed a few more leaders of Stephens’s ability and influence, secession would not have been precipitated by the election of Lincoln, except possibly in the case of one State. Indeed, such States as Virginia and North Carolina, altho believing in the right of secession, had the wisdom to defeat the secessionist movement until after the outbreak of hostilities, when they were called upon to aid in ”coercing” their sister Southern States.

It is beyond the scope of this article to discuss in detail the circumstances and grievances which convinced the people of the South, contrary to the better judgment of Stephens and some others, that they could no longer remain with honor and safety in the Union. It is sufficient to say that the two sections had divergent economic systems, and that the institution of slavery, which was the South’s peculiar economic heritage, was the prime factor in begetting grievances, There arose a disposition on the part of the North, which in some instances took an aggressive form, to discredit the institution of slavery on moral and religious as well as economic grounds. The severe criticisms of the institution that were thus made, particularly after 1830, naturally aroused a feeling of resentment in the South against those who would interfere in a matter with which, from a Southern viewpoint, they had no direct concern. Since the people of the South were on the defensive with regard to slavery, and since they were Southerners also, they became peculiarly restive under the adverse criticism that was directed against their institution, and sensitive to a degree that prepared the soil for a rich harvest of supposed grievances.

Moreover, since slavery was legalized and regulated by the State governments and not by the National Government, and since any enlargement of the powers of the latter might operate, thru the increasing preponderance of Northern and Western influence in that Government, to interfere with the institution of slavery at the time of the admission of new States or otherwise, the South was led to attach exaggerated importance to the doctrine of State rights, and to revive a political science that was becoming obsolete. Since it was recognized North as well as South that the National Government could not directly molest slavery in the States where it already existed, the warmest debates in Congress concerned the powers of the National Government over slavery in the Western Territories, the debates over this question being particularly acrimonious from the time of the war with Mexico down to 1860. The momentous election of that year centered upon that issue.

The extreme Southern party, in harmony with the famous Dred Scott opinion, had advanced to the position that neither Congress nor the Territorial Legislature itself could debar slavery from a Territory, and that slavery could be abolished by the people of a Territory only after the Territory had passed into Statehood. This view declared slavery legal in all the national domain and declared Congress altogether impotent in the matter — in other words, only a State in our system of government could make and unmake slaves, and where States did not exist to exercise that function our public law would presume slavery to exist and assume the protection of such property. On the other hand, the extreme Northern attitude, as exprest in the Republican party, was the exact opposite of the ultra Southern position on the vital question of slavery in the Territories. The party of Lincoln held that Congress under the Constitution had complete powers of government in the Territories, and that it should exercise these powers in behalf of freedom. Lincoln upon several occasions very tersely exprest the difference between the sections on this question in this wise: “We of the North think slavery is wrong and should be restricted, while you of the South think slavery is right and should be extended,” having reference, of course, to the restriction and extension in the Territories. It is a great popular error on the part of the people of the South to suppose that it was in the program of the party of Lincoln to directly interfere with the institution of slavery in the States where it existed. The Republican party recognized and declared it had no right to do that, and Lincoln hesitated long before deciding that the exigencies of war warranted a resort to the emancipation proclamation,

Those opposed to the extension of slavery won in the election of 1860. The South interpreting this as the beginning of the decline of her dominance of the National Government, in a series of impetuous acts which the wisdom of Stephens and others could not restrain, repudiated that Government and inaugurated one of her own. Students of history can easily see the reasonableness and the correctness of the Republican attitude on the main issue in dispute in the election of 1860, and it is a matter of regret that the Southern leaders of that day were unable to see its wisdom in the light of a true philosophy of progress. However, in passing judgment upon their action we should recognize that we have the advantage of perspective and that they were in large measure the victims of circumstances not altogether of their own making. Moreover, the notion of an evolutionary order of things in morals, in governments and in all manner of social institutions is an idea that was by no means as familiar to them as it is to us of the twentieth century.

The institution of slavery was becoming an anachronism in the nineteenth century. Other nations, such as England and France, had entered upon policies of emancipation in the early decades of the century, and the Northern position on the subject was merely in harmony with the dictates of an advancing civilization. Southern leaders, under the influence of apparent pecuniary and social interests, failed to understand this tendency, and to enter upon the work of formulating plans for harmonizing its policies with the currents of world progress. Moreover, being nettled as they were by outside pressure and in many cases undue criticism, they more and more concentrated their efforts in support of an antiquated order of things in morals and economy, and finally waged a four years’ war with unsurpassed heroism and devotion in support of an equally antiquated order of things in government. Such in epitome is the tragedy of the South’s past, and the tragedy of her present is that she does not yet fully realize it!

So far our discussion has mainly concerned the wisdom of secession regarded as a matter of practical politics, with no particular reference to the question of its legal, validity under the Constitution of the United States. We have reached the conclusion that calm history will not justify, however much it may explain, the secessionist movement of the sixties — a conclusion which, as we have seen, accords in the main with the position of Stephens on the eve of the secession of Georgia. Stephens, however, ardently advocated the right of a State to secede under the Constitution of 1789, and we may infer that he regarded a union of States severally sovereign to be the best form of union. Most intelligent Southerners would now concede that for our country a confederacy with the recognized right of secession is not the best form of union. On the other hand, they would entirely agree with Stephens and with the great body of his fellow Southerners of the sixties in claiming that the right of secession was then inherent in the nature of our Union. If indeed the right of secession existed, we may safely conclude that the counter right of resisting secession by force of arms did not exist — a conclusion which would place the North in the wrong in waging the war, even tho the South may have acted precipitately and unwisely, and therefore wrongly, in resorting to secession without greater provocation.

The dilemma just suggested may easily be avoided by placing the argument upon a plane distinctly higher than one concerned with the merely legal questions involved in conceiving our Union to be the static outcome of a contract between independent sovereign States. Indeed, we may well admit that our Union was generally regarded at the time of its formation and for some decades thereafter as a union of sovereign States. At any rate, it was a union made possible at the time thru compromises — the greatest of which had reference to the relative importance of national and State authority. The Union thus established upon the basis of compromises was in reality a great victory for the integrating’ forces moving in modern times in the direction of nationalism. Moreover, it was to be expected that as the interests of the people of the several States became more and more interdependent and harmonious a spirit of nationalism would increasingly pervade the Union and assert its potency, unless some disintegrating influence should thwart its development. The normal integrating influences worked in the direction of national integrity in all parts of the Union except the South, where the institution of negro slavery operated as the main influence to counteract its development. When, however, the particularistic spirit attempted in 1861 to put into practice its principle of separatism In order to defend the South’s cherished institution, the spirit of nationalism in other sections of the country had grown strong enough to assert its validity.

It was as much the function of the statesmen of 1860 to interpret the nature of our Union in the light of what it ought to be as it was the duty of our fathers in 1787 to act in harmony with the demands of progress in their day. Right and wrong are neither absolute nor static conceptions, but on the contrary they are decidedly relative and dynamic descriptions of conduct — conduct being right or wrong according to the degree in which it tends to promote or retard human welfare. Those who consciously and sincerely align themselves with the forces working for the best interests of an advancing civilization are in the right in the highest and best sense of the term right, while those who align themselves with causes less beneficent in their fruitage are relatively in the wrong, tho their sincerity, devotion and otherwise elevated type of character may command a lasting measure of admiration.

Viewing the great civil conflict, the semi-centennial of whose inauguration this year marks, in the light of these principles and in the light of a broad historical philosophy, we are led irresistibly to the conclusion that the North was relatively in the right, while the South was relatively in the wrong. Lincoln for the North became the champion of the principle of national integrity and declared the time ripe for a vindication of its validity; Davis for the South became the champion of the principle of particularism as exprest in State sovereignty and declared the time ripe for its vindication. The one advocated a principle of political organization in harmony with the age in which he lived and in accord with the teachings of history; the other advocated a principle out of harmony with his age and discredited by the history of Europe during the past thousand years. The one was a statesman of the highest order, deserving to be ranked with such of his European contemporaries as Cavour and Bismarck ; the other was a statesman of a distinctly inferior order in comparison, since the cause which he championed with so much ability, heroism and devotion ran counter to the true course of political and social progress.

Gainesville, Florida.

 

Source:   The Independent , Vol. 70, No. 3245 (New York, February 9, 1911), pp. 299- 303.

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Editorial from The Independent: Free Speech Supprest

In The Independent of February 9 there appeared an article by Enoch M. Banks, of Southern birth and training, Professor of History and Economics in the University of Florida. His subject was “A Semi-Centennial View of Secession.” He defended the appearance of an article, whose conclusions were not in agreement with the views which led to the attempt at secession, by saying

“The South is becoming more tolerant of a free discussion if its past and present policies . . . and is paving the way for a liberated intellectual life. This new spirit of liberality toward opposing views when exprest with sincerity as befitting decorum is perhaps the greatest incipient triumph of the twentieth century South.”

In that article he recognized negro slavery as the occasion for the war and that its defense required adhesion to the doctrine of State sovereignty. As to both State sovereignty and slavery, he admitted that the attitude of the South was a mistaken one.

Was that a conclusion proper to be held by one who is a teacher in a Southern university? Beyond question, yes. It is proper that in a Southern or Northern university both views might be held. So far as one is wrong there will be other teachers to correct it. Were his conclusions such as could with prudence be publicly proclaimed by one holding such a position as teacher? Professor Banks thought so, and took the risk. But he has found that the risk has severed his connection with the University of Florida. He has been compelled to resign.

Professor Banks’s article in The Independent came under the notice of a man of some local fame — we believe he had once been a Presidential elector, and he was a fluent political orator — we forget his name; it is not a nomen praeclarum — but he wrote a letter to us denouncing the professor and his views. We did not think it worth printing and sent a courteous reply. That made him angry. He declared he would expose and denounce Professor Banks and The Independent in every journal in Florida and the South. He kept his word. He waved the tattered, but sacred, flag of the Confederacy, appealed to the pious sentiments of Sons and Daughters, and demanded the removal of the traitorous professor from the chair where he was teaching treason to the youth of Florida. And he did it. The journals published his fulminations. Florida was stirred with worked up passion. The professor’s resignation was demanded; there were threats that the legislature would withdraw or reduce its appropriation. Professor Banks saw that his presence was endangering the financial support of the university and he gave in his resignation to the president and it was accepted with regrets. Liberty of speech was denied. The victim was sacrificed.

And yet Professor Banks was not mistaken. The South is becoming more tolerant of free discussion.” There is “a new spirit of liberality toward opposing views.” But if somewhat existent it is not prevalent, as he has found to his disappointment. It will not do, at least in the Gulf States, for a man who would keep a position of public service to dare to say that slavery was wrong, that it was time Nationalism should supplant State Sovereignty, and that the war for secession was not the most glorious, altho unsuccessful, struggle of modern times. Not yet is it allowed for a man to express opinions of his own. He must shout with the mass or go.

It is a sad condition of things, but they are improving. The Atlanta Constitution actively defended Professor Banks’s liberty of speech. We trust he will find a place in some other Southern institution and not be compelled to seek a freer civilization. He is a loyal Southerner. He loves his section as it never occurs to a Northern man to love his section. Ostracised from Florida, he may be welcome in other Southern States; but we should have liked it if the thousands of Northern men who have settled in Florida had flooded the State journals with letters in defense of free speech, and had themselves illustrated it. The press should not be left wholly to the noisy and noisome orators and writers who would glorify, and would, if they could, restore, an old bad past. Professor Banks spoke truly and bravely; we need a multitude of others in the South who will speak their mind and support each other, and fight for freedom now, as fifty years ago their less wise ancestors fought for slavery. The day of victory is coming, and the chance and duty to speak and act for it is urgent. What said John Milton when he defended himself for fighting for a righteous but imperiled cause. He pictured to himself the Church triumphant over her foes, liberty of thought and speech achieved in Church and State, and how would he then feel if he had taken no part in the glad free victory? He would have ever after said to himself:

“Slothful and ever to be set light by, the Church has now overcome her late distresses after the unwearied labors of many of her true servants that stood up in her defense; thou also wouldst take upon thee to share amongst them of their joy: but wherefore thou? Where canst thou show any word or deed of thine which might have hastened her peace? Whatever thou dost now talk, or write, or look, is but the alms of other men’s prudence and zeal. Dare not now to say or do anything better than thy former sloth and infancy: or if thou darest, thou dost impudently to make a thrifty purchase of boldness to thyself out of the painful merits of other men; what before was thy sin is now thy duty, to be abject and worthless.”

Professor Banks dared to speak; will not many others speak, according to their ability, and hasten the liberty and the better day now sure to come to the South, and save themselves in the future glad day from the shameful memory of cowardly silence?

 

Source:   The Independent , Vol. 70, No. 3254 (New York, April 13, 1911), pp. 807-8.

_________________________

The Dismissal of Professor Banks
BY JAMES W. GARNER, Ph.D.

[We are especially glad to print this letter to The Independent from the Professor of Political Science of the University of Illinois. The author is not only one of the most distinguished economists of America, but he is as loyal a Southerner as Professor Banks, whose recent dismissal from the University of Florida is a disgrace to the university and the State. — Editor.]

As a Southerner, born and reared in the lower South, I want to endorse unqualifiedly the spirit of your recent editorial on the suppression of free speech in connection with the enforced resignation of Dr. E. M. Banks from the University of Florida. That a university professor with the high character and accomplishments of Dr. Banks should, in this enlightened age and country, be compelled by the pressure of local public opinion to resign his chair on account of his views on secession and State sovereignty seems almost incredible. What a miserable spectacle the case presents! What must be the judgment of the outside world concerning a condition of civilization in which such narrowness and intolerance exist? It is difficult to believe that any considerable proportion of the intelligent and fair-minded people of Florida really approve of such a wrong.

The man who claims the credit for driving Professor Banks from the university is the same person who recently, as a member of the Florida Legislature, threatened impeachment proceedings against Governor Gilchrist for recommending that Lincoln’s birthday be made a holiday in the State, and thus compelled him to withdraw the recommendation. He belongs to the class of small politicians with which parts of the South are still unhappily afflicted, whose chief stock in trade is their ability to exploit the negro question and the issue of white supremacy, which, as everybody but themselves knows, is no longer a real issue. Happily with each passing year the number of Southern politicians who live on dead issues and whose methods consist in appealing to the passions and prejudices of the past is growing smaller and the time is not distant when they will be without followers.

The people of Florida will no doubt be able to find men for their university professorships who believe or who profess to believe in the sovereignty of the States and who will be ready as occasion requires to defend the constitutional and moral right of secession, but it will be a sad day for the State when the announcement goes forth that no others will be tolerated. Dr. Banks is right and The Independent is right in saving that the South is becoming more tolerant of discussion, more liberal in its economic and political thinking and more national in its views of public policy, and Senator Beard and his kind can no more prevent advance along these lines than they can turn back the clock of ages or reverse the downward flow of the Mississippi. Such petty and shameful treatment as has been accorded Professor Banks will only hasten the movement.

Urbana, Ill.

 

Source: The Independent Vol. 70, No. 3256 (New York, April 27, 1911), p. 900.

_________________________

The Dismissal of Professor Banks
BY ANDREW SLEDD

[This discussion of the removal of Professor Banks from the University of Florida for an article he wrote in The Independent is written by the former president of the university, who was himself forced to resign for a somewhat similar cause. It will throw light upon the unfortunate conditions which limit educational freedom in the South. Mr. Sledd is now president of the Southern University at Greensboro, Ala. This whole case is attracting wide attention in the South and we suggest that the economists of the country take the matter up as they did in the case of Professor Ross. — Editor.]

I was president of the University of Florida for several years, and in 1907 asked Professor Banks, whom I had known personally and most favorably before that time, to take the chair of History in that institution. He accepted; and, as man, scholar and teacher, more than justified my highest expectations. His training was admirable; his personality delightful; his character of the highest; and he has both the gifts and the graces of an inspiring and finished teacher. I regarded the institution as peculiarly fortunate in having him upon its faculty; and this feeling grew steadily stronger with increasing knowledge of the man and his work.

In 1909, despite the unanimous and cordial support of the Board of Control of the institution, I was forced to resign the presidency. The charge against me was that the attendance upon the institution did not increase with sufficient rapidity under my administration. Upon my resignation, Professor Banks handed in his resignation, on the stated ground that he did not care longer to be connected with an institution where such, things were possible. The present president of the University and the chairman of the board, joined their persuasion with mine; and Professor Banks agreed to withdraw his resignation, and continued in his place.

In February of the current year Professor Banks sent me a copy of his article in The Independent; and I immediately foresaw the consequences. My own experience, as well as general observation, led me to know what he had to expect. And yet, as he says in a personal letter, which I take the liberty of quoting without waiting to ask his permission:

That article was written in all good faith and with an earnest desire to make some contribution toward promoting a liberated intellectual life here in the South. I am disposed to think that our political leaders, teachers, preachers, editors, and others in positions of more or less influence, made a serious and grievous mistake in the generation prior to the Civil War in not setting in motion influences that would have paved the way for the gradual removal of slavery from our country without the loss of so many lives, without the expenditure of so much treasure, without the bitterness of reconstruction, and without the subsequent pension burden! [Professor Banks might almost have had in mind Theodore Parker’s words, uttered four years before war broke out : “Had our educated men done their duty, we should not now be in the ghastly condition we bewail.”] Now, if I censure them in a sense for failing to measure up to the demands of the age in which they lived, can I excuse myself from making the attempt, to the extent of my ability and equipment, to set in motion influences in my limited sphere that would tend to liberate our minds and thus prepare the way for the solution of the present problems of our civilization and progress, problems indeed which are hardly less urgent and difficult than were those of our fathers prior to the sixties?

But this mental attitude is quite incomprehensible to some of our people, who follow the Saduceean motto, “Sever not thyself from the majority”; and so Professor Banks fell under their censure. When the censure became strident, and coupled with a demand for his removal, he tendered his resignation and it was accepted; and be becomes but another illustration of the proposition that “every step of progress that the world has made has been from scaffold to scaffold and from stake to stake.”

The authorities of the University were in a dilemma — a double dilemma, in fact. As the situation stands in Florida, the Board of Control is appointed by the Governor and is itself subject to the control of the State Board of Education, which is composed of five public officials elected by the people. The board of Control faced the dilemma of maintaining Professor Banks at the imminent risk of losing appropriations and patronage for the institution. Appropriations and large enrollments are very real things and furnish a common and conspicuous measure of institutional efficiency and progress. But freedom of speech and teaching is vague, a sort of academic myth concocted by impractical and visionary men and failures. If the Board of Control had said (which would have been true): “We can maintain this institution upon the Federal funds which it receives, independent of the state appropriation,” its decision would have been subject to review and possible reversal by the State Board of education. And then, in reaching its conclusions, the State Board of Education would have had to face the added possibility of a failure of re-election at the hands of the people. In other words. Professor Banks and freedom of teaching in the university had to be weighed against possible loss of appropriations and patronage, and political office for the members of the State Board of Education.

I do not know how the Board of Control would have stood, had it been in authority independent of the Board of Education. I believe that the Board of Control under which I served, of which the present junior Senator from Florida, Mr. Bryan, was chairman, would have accepted a recommendation from the president of the University to sustain Professor Banks. But I equally believe that, had they made such a decision, it would have been promptly reversed by the State Board of Education, under the influence of the three considerations which I have just mentioned.

Under the circumstances, it is not surprising that Professor Banks had to resign his place, he was the victim of two evils, neither of whih is confined to Florida or to the South. The one is direct political control and political interference in the affairs of the State University. This has resulted in many difficulties in many places in our country. The other is a wrong ideal of what constitutes a great institution. If size and wealth are taken as the standard, all other considerations must naturally give way to these. Not only is Professor Banks a victim of this standard, but probably no other one thing has done as much to degrade our educational institutions and impair their educational efficiency.

But Professor Banks has this great consolation, that his treatment and the public discussion of it forwards the cause for which he stands. The blood of the martyrs is the seed of the Church; and I doubt if Professor Banks by a year’s quiet work could have done as much as he has now done “to make his contribution toward promoting a liberated’ intellectual life here in the South.” He suffers; but because of his suffering his cause is nearer to its certain triumph. And in that knowledge Professor Banks will rest content.

And the University of Florida has suffered a humiliating defeat on a great moral issue.

Greensboro, Ala.

 

Source: The Independent Vol. 70, No. 3260 (New York, May 25, 1911), pp. 1113-4.

Image Source: Portrait of Enoch Marvin Banks, A.M., Ph.D.; Professor of History and Economics  from University of Florida, The Seminole, 1911, p. 15.

 

Categories
Exam Questions Harvard

Harvard. Graduate Core Economic Theory Examinations. Mostly Taussig, some Young, 1920-22

 

 

Examination questions spanning just over a half-century can be found in Frank Taussig’s personal scrapbook of cut-and-pasted semester examinations for his entire Harvard career. Until Schumpeter took over the core economic theory course from Taussig in 1935, Taussig’s course covering economic theory and its history was a part of almost every properly educated Harvard economist’s basic training. Taussig’s exam questions have been previously posted for the academic years 1886/87 through 1889/90 along with enrollment data for the course;  material for this course (including semesters when taught with/by other instructors) from 1890/91 through 1893/94; 1897-1900 ; 1904-1909 ; 1911-14 ; 1915-1917; 1918-1919 have been posted as well.  

This post provides the examination questions and enrollments for the academic years 1919/20 through 1921/22. There are two points worthy of note regarding the 1921-22 academic year. The first is that a complete set of student notes have been edited and published by Marianne Johnson and Warren J. Samuels and a link to the relevant webpage at Research in the History of Economic Thought and Methodology is provided below. The second point is that further archival material confirms that the course was indeed taught by Frank W. Taussig and Allyn A. Young in 1921/22.

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Student notes for Economics 11 from 1921-22 have been transcribed and published

“According to the Official Register of Harvard University, Vol. XVII, December 20, 1921, No. 51, Frank William Taussig was the only instructor of record for Economic Theory (EC 11). The initial notes seem to confirm that what is reproduced here is solely Taussig’s teaching, with frequent mention of his views recorded (e.g., “Taussig says”). However, in the ‘Supplementary Notes,’ attributed to both Taussig and Allyn A. Young, frequent mention is made of Young’s views. Whether these notes are from lecture, recitation, or are Hexter’s personal notes is unknown.”

 Source:  Marianne Johnson and Warren J. Samuels (eds.) Maurice Beck Hexter’s Notes from Harvard University, 1921-22. Economic Theory by Taussig, Young, and Carver at Harvard. Research in the History of Economic Thought and Methodology, Vol. 28-C, Part II. 2010.

 

Additional Information from the Archives.

In the third edition of Announcement of the Courses of Instruction Offfered by the Faculty of Arts and Sciences for the Academic Year, 1921-22 (p. 110), both Professors Taussig and Young were announced as the instructors for Economics 11.

Taussig’s scrapbook of his examination questions (the source for the other examinations except for the second semester of 1921/22) does not include the year-end final examination for Economics 11 that semester. The June 1922 examination questions are however available in the Harvard University Archive’s collection of final examination papers and match the content of Baxter’s Supplementary Notes for Young so it appears a reasonable presumption that Taussig was responsible for the first semester exam and Young was responsible for the second semester exam in 1921/22.

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Course Enrollment
1919-20

[Economics] 11. Professor Taussig.—Economic Theory

Total 47: 36 Graduates, 2 Graduate Business, 3 Seniors, 5 Radcliffe, 1 Other

Source: Harvard University. Reports of the President and Treasurer of Harvard College, 1919-20, p. 90.

 

 

1919-20
HARVARD UNIVERSITY

ECONOMICS 11
Mid-year. 1920.

Arrange your answers in the order of the questions.

  1. “On the ranches of Montana cattle are breeding, among the forests of Pennsylvania hides are tanning, in the mills of Brockton shoes are finishing; and, if the series of goods in all stages of advancement is only kept intact, the cowboy may have today the shoes that he virtually creates by his effort. . . With sheep in the pastures, wool in the mills, cloth in the tailoring shops, and ready-made garments on the retailers’ counters, the labor of the people can, as it were, instantaneously cloth the people.”
    Do you agree? Whom do you believe to be the writer of the passage?
  2. What element in distribution was regarded as “residual” by F. A. Walker? By Ricardo? By Mill?
  3. Can Mill’s conclusions regarding the effects of free trade in corn on wages and laborers’ welfare, be reconciled with Ricardo’s teachings?
  4. State the objections which have been made to the doctrine of consumer’s surplus on the score of

(a) inequalities in income;
(b) articles catering to the love of distinction;
(c) the latent assumption that, while the price of the given article   changes, other articles remain the same in price.

Can these objections be met in such way as to leave the doctrine still significant?

  1. Explain in what sense the term “increase of demand” is used when it is said that an increase of demand may cause increasing returns (diminishing cost); and in what sense when it is said that an increase of demand is a result of diminishing cost.
  2. “We might as reasonably dispute whether it is the upper or the under blade of a pair of scissors that cuts a piece of paper, as whether value is governed by utility or cost of production.”
    Explain, illustrate, qualify.
  3. Under what conditions, if under any, is the demand curve positively inclined?
    Under what conditions, if under any, is the supply curve negatively inclined?
  4. A factory building yields a net rental, over all expenses and taxes, of $10,000 a year. The land on which it stands, if let as a site not built on, would yield $5,000 a year. The cost of the building was $100,000; the rate of interest is 5%.
    What is the nature of the return (rental), according to Marshall? In your own opinion?
    Suppose the net rental to decline to $6,000 a year; would your answers be the same?

 

1919-20
HARVARD UNIVERSITY

ECONOMICS 11
Final. 1920.

  1. Explain briefly:

Joint Demand,
Derived Supply Price,
Law of Substitution.

  1. “The United States already possesses a much larger population than Great Britain, a population moreover, as a whole, on a somewhat higher level of comfort, and therefore furnishing a more intense ‘effectual demand.’ Even supposing the same amount of concentration of capital, relatively, to be brought about in Great Britain as in America, the average size of concerns would be less than in the United States, because the market to be divided is smaller. As a result the cost of production in America per unit would necessarily be less.” Do you agree?
  2. “When the artisan or professional man has once obtained the skill required for his work, a part of his earnings are for the future really a quasi-rent of the capital and labor invested in fitting him for his work, in obtaining his start in life, his business connections, and generally his opportunity for turning his faculties to good account; and only the remainder of his income is true earnings of effort. But this remainder is generally a large part of the whole. And here lies the contrast. For when a similar analysis is made of the profits of the business man, the proportions are found to be different: in his case the greater part is quasi-rent.”
    Is this distinction tenable? And is quasi-rent not to be regarded as true earnings of effort?
  3. “At the present day, in those parts of England where custom and sentiment count for least, and free competition and enterprise for most in the bargaining for the use of land, it is commonly understood that the landlord supplies, and in some measure maintains, those improvements which are slowly made and slowly worn out. That being done, he requires of his tenant the whole producer’s surplus which the land thus equipped is estimated to afford in a year of normal harvests and normal prices. . . . In other words, that part of the income derived from the land which the landlord obtains, is governed, for all periods of moderate length, mainly by the market for the produce, with but little reference to the cost of providing the various agents employed in raising it; and it therefore is of the nature of a rent. . . The more fully therefore the distinctively English features of land tenure are developed, the more nearly is it true that the line of division between the tenant’s and the landlord’s share coincides with the deepest and most important line of cleavage in economic theory.”
    What is the line of cleavage here described by Marshall? And do you consider it the deepest and most important?
  4. “The last three chapters examined the relation in which cost of production stands to the income derived from the ownership of the ‘original powers’ of land and other free gifts of nature, and also to that which is directly due to the investment of private capital. There is a third class holding an intermediate position between these two, which consists of those incomes, or rather those parts of incomes, which are the indirect result of the general progress of society, rather than the direct result of the investment of capital and labor by individuals for the sake of gain.”
    Explain what is the third class; and what is the relation of cost of production to income in each of the three classes.
  5. Do the earnings of great business ability represent a “cost” according to Walker? Marshall? Fetter?
  6. Explain what Hobson means by economic cost and by human cost; and which kind of cost he believes to be incurred in connection with (a) economic rent, (b) the savings of the working classes, (c) the earnings of exceptional ability.
  7. “We have in the theories of usance and of rent all that is essential and fundamental to theories of labor-value and of wages. Man’s services and wealth’s uses move in parallel lines and are of parallel nature in contributing to the securing of income. Human actions directed toward some desired end constitute a usance of human beings; they are valuable services just as the work of domestic animals, the uses of tools, and the motions of machinery are valuable uses of wealth. These valuable services, partly rendered directly to persons and partly embodied in goods, constitute labor-incomes, comparable to the usance of wealth, the wealth-incomes.”
    What would Fisher say to this? Hobson? What is your own view?
  8. Wherein is there resemblance, wherein difference, between the views of Fetter and of Clark as regards:

(a) Waiting and abstinence,
(b) The productivity of capital,
(c) Interest.

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Course Enrollment
1920-21

[Economics] 11. Professor Taussig.—Economic Theory

Total 39: 26 Graduates, 1 Graduate Business, 1 Senior, 10 Radcliffe, 1 Other.

Source: Harvard University. Reports of the President and Treasurer of Harvard College, 1920-21, p. 96.

 

1920-21
HARVARD UNIVERSITY

ECONOMICS 11
Mid-Year. 1921.

Arrange your answers in the order of the questions

  1. “Adam Smith says ‘that the difference between the real and the nominal price of commodities and labour is not a matter of mere speculation, but may sometimes be of considerable use in practice.’ I agree with him; but the real price of labour and commodities is no more to be ascertained by their price in goods, Adam Smith’s real measure, than by their price in gold and silver, his nominal measure. The labourer is only paid a really high price for his labour when”, —
    Complete the closing sentence, as you conceive that Ricardo would have completed it. Explain also how Ricardo would ascertain the real price of commodities, and how Adam Smith would have done so.
  2. “The fundamental truth, that in all economic reasoning must be firmly grasped and never let go, is that society in its most highly developed form is but an elaboration of society in its rudest beginnings, and that principles obvious in the simpler relations of men are merely disguised and not abrogated or reversed by the more intricate relations that result from the division of labor and the use of complex tools and methods.”
    — H. George.
    “The minor premise [in Ricardo’s reasoning on value and prices] is the assumption that it is natural that in a tribe of savages things should exchange in proportion to the labor required to produce them. The major premise is, that what is natural in the earliest must be natural in the most advanced states of society.” — Cliffe-Leslie.
    Can it be said that Ricardo’s method of reasoning on value is substantially different from George’s on wages? If so, wherein?
  3. Compare concisely the treatment by (a) Ricardo, (b) J. S. Mill, (c) Cairnes, of the differences of wages in different employments, and the relation between such differences and the values of commodities.
  4. “Mr. Longe puts the case of a capitalist who, by taking advantage of the necessities of his workmen, effects a reduction in their wages, and succeeds in withdrawing so much, call it £1000, from the Wages-fund; and ask how is the sum, thus withdrawn, to be restored to the fund? On Mr. Longe’s principles the answer is single, — ‘by being spent on commodities’; for it may be assumed that the sum so withdrawn will, in any case, not be hoarded. . . . The answer, therefore, to the case put by Mr. Longe is easy on his principles; and I am disposed to flatter myself that the reader who has gone with me in the foregoing discussion will not have much difficulty in replying to it upon mine.”
    What is the answer on Cairnes’ principles? Would Mill have given the same answer?
  5. Is Cairnes’ doctrine concerning the causes determining the rate of profits the same as Mill’s? as Ricardo’s?
  6. What does Mill mean by the equation of supply and demand; what does Marshall mean by the equilibrium of supply and demand?
    Which method of analysis is preferable, if either, in case of (a) wheat after a very abundant harvest; (b) an increase in the demand for a commodity made with much fixed plant under competitive conditions; (c) a patented article.
  7. (a) “In regard to production in general, a dominant difference between machines and land is that the supply of land is fixed (though in a new country, the supply of land utilized in man’s service may be increased); while the supply of machines may be increased without limit. For if no great invention renders his machines obsolete, while there is a steady demand for the things made by them, they will be constantly on sale at about their cost of production; and his machines will generally yield him normal profits on that cost of production, with deductions corresponding to their wear and tear.”
    (b) “The deepest and most important line of cleavage in economic theory . . . is the distinction between the quasi-rents which do not, and the profits which do, directly enter into the normal supply prices of produce for periods of moderate length.”
    Are these two statements consistent with each other?
  8. Explain:

internal economies,
external economies,
law of increasing return,
successive costs curve.

  1. It has been argued that a protective duty is advantageous in that, by causing the domestic output to be greater, it brings into operation the tendency to increasing returns and thus causes prices to become lower. Is the argument sound?

 

1920-21
HARVARD UNIVERSITY

ECONOMICS 11
Final. 1921

Arrange your answers in the order of the questions. One question may be omitted.

  1. It has been maintained that Walker’s analysis of the relation between business profits and wages involves reasoning in a circle. In answer it has been said that in speaking of “wages” as the residual constituent, wages at large are had in mind; whereas when defining the no-profits men, the wages of a particular limited class are referred to. Do you believe that, with this explanation, there is circular reasoning? without it?
  2. “The simplest and clearest mode of stating the theory of general wages is, in my judgment, to say that wages are determined by the discounted marginal product of labor. Let attention be given to the two elements in this somewhat cumbrous formula: ‘margin’ and ‘discount.’. . .
    “It has been assumed [in intervening passages, here omitted] that the discounting takes place at the current rate of interest. Here we must be on our guard against reasoning in a circle. In previous chapters, interest has been accounted for, in part at least, by the fact that there is a ‘productivity’ of capital; it results from the application of labor in more productive ways. If this were the whole of the theory of interest, we should reason in a circle in saying that wages are determined by a process of discount.”
    Would the reasoning appear to be open to the charge? and if so, how can it be met?
  3. “In the classical political economy, the relation of the rate of interest to distribution was entirely misconceived. Distribution was erroneously regarded as a separation of the income of society into ‘interest, rent, wages, and profits.’ By ‘interest’ of course was meant, not the rate of interest, but the rate of interest multiplied by the value of the capital ‘yielding interest.’ But we have seen that the value of the capital is found by taking the income which it yields and capitalizing it by means of the rate of interest. To reverse this process, and obtain the income by multiplying the capital by the rate of interest, is proceeding in a circle.”
    Was there such a circle in the classical reasoning, e.g., as you find it in Mill? Whom do you suppose to be the writer of this passage?
  4. “Each capital good, before it is sold or worn out, produces a sum of value that enables the owner of the good to purchase or make another good of the same character, which in its turn possesses the power of replacing itself by a successor of equal value. The capital goods of this year are, therefore, not merely the successors in time of those of last year, now mostly destroyed; they are, economically, the offspring of the capital goods of the earlier period, and they have the same power of replacing themselves with other goods having the power of self-replacement.
    “It is, of course, to be understood that this self-replacement is neither automatic nor inevitable. We may say that under certain conditions a particular capital good will add something to the total product of an industry, but not enough to keep itself in repair and replace itself when worn out. Under other conditions a capital good will just do this; under still other conditions a capital good will add to the product of an establishment not only enough for its own repair and replacement, but a surplus besides. . . . Intelligent action on the part of the owner of such goods is essential to the truth of this proposition; but such action may generally be taken for granted.”
    What do you say? Whom do you suppose to be the author of the passage? [Hand-written note: A. S. Johnson]
  5. State the reasoning by which Clark supports the proposition that interest is the specific product of capital; and the grounds on which Böhm-Bawerk dissents from that proposition.
  6. Would Marshall admit that “there is an element of true rent in the composite product that is commonly called wages, an element of true earnings in what is commonly called rent”? Your own view?
  7. “The ‘law of distribution’ which emerges is that every owner of any factor of production ‘tends to receive as remuneration’ exactly what it is ‘worth.’ Now this ‘law’ is doubly defective. Its first defect arises from the fact that economic science assigns no other meaning to the ‘worth’ or ‘value’ of anything than what it actually gets in the market. To say, therefore, that anybody ‘gets what he is worth,’ is merely an identical proposition, and conveys no knowledge.”
    Is this criticism of “marginalism” valid?
  8. “If the peers and millionaires who are now preaching the duty of production to miners and dock laborers desire that more wealth, not more waste, should be produced, the simplest way in which they can achieve their aim is to transfer to the public their whole incomes over (say) $5000 a year, in order that it may be spent in setting to work, not gardeners, chauffeurs, domestic servants, and shopkeepers in the West End of London, but builders, mechanics, and teachers.”
    Explain what you conceive to be meant by “waste” and “wealth” in this passage; what Hobson might be expected to say to it; and what is your own view.

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Course Enrollment 1921-22 not published

The Annual Report of the President and the Treasurer of Harvard College 1921-22 does not include enrollment statistics by course for some reason.

Source: http://pds.lib.harvard.edu/pds/view/427018645?n=1&s=4&printThumbnails=no&oldpds

 

Course Description
1921-22

 

[Economics] 11. Economic Theory. Mon., Wed., Fri., at 2.30. Professors TAUSSIG and YOUNG.

Course 11 is intended to acquaint the student with the development of economic thought since the beginning of the nineteenth century, and at the same time to train him in the critical consideration of economic principles. The exercises are conducted mainly by the discussion of selected passages from the leading writers; and in this discussion the students are expected to take an active part. Attention will be given to the writings of Ricardo and J. S. Mill, and to representative modern economists.

Source: Division of History, Government, and Economics, 1921-22. Official Register of Harvard University, Vol. XVIII, No. 20 (April 21, 1921), p. 68.

 

1921-22
HARVARD UNIVERSITY

ECONOMICS 11
Mid-Year. 1922.

Arrange your answers strictly in the order of the questions.

  1. Does Walker’s analysis of the relation between wages and business profits involve reasoning in a circle?
    Suppose that the “no profits” business man were defined by Walker in the same terms as those used by Marshall in describing the representative firm; would your answer be different?
  1. “We might find, for example, that though the absolute quantity of commodities had been doubled, they were the produce of precisely the former quantity of labor. Of every hundred hats, coats, and quarters of corn produced, if
The labourers had before

25

The landlords

25

And the capitalists

50

100

And if, after these commodities were double the quantity,
of every 100

The labourers had only

22

The landlords

22

And the capitalists

56

100

In that case I should say that wages and rent had fallen and profits risen; though, in consequence of the abundance of commodities, the quantity paid to the labourer and landlord would have increased in the proportion of 25 to 44.”
What is the precise ground on which Ricardo would say that under these conditions wages and rent had fallen, profits risen?

  1. (a) “The cause of profit is that labor produces more than is required for its support.”
    (b) “The capitalist may be assumed to make all the advances and receive all the produce. His profit consists in the excess of the produce above the advances.”
    (c) “We thus arrive at the conclusion of Ricardo and others, that the rate of profits depends on wages; rising as wages fall, and falling as wages rise. In adopting, however, this doctrine, I must insist upon a most necessary alteration in its wording. Instead of saying that profits depend on wages, let us say (what Ricardo really meant) that they depend on the cost of labour.”
    Consider which of these statements of Mill’s, if any, is in strict accord with Ricardo’s doctrines.
  2. It has been said, —

(a) that rent is due to the niggardliness of nature, not to her bounty;
(b) that the law of diminishing returns refers to the quantity of produce obtained from land, not to its value;
(c) that intensive cultivation is profitable only when the prices of agricultural products are high;
(d) that if all land were equally advantageous and all were occupied, the income derived from it would partake of the nature of a monopoly return.

Which of these statements would you accept, which reject?

  1. “The latent influence by which the values of things are made to conform in the long run to the cost of production is the variation that would otherwise take place in the supply of the commodity. The supply would be increased if the thing continued to sell above the ratio of its cost of production, and would be diminished if it fell below that ratio. But we must not therefore suppose it to be necessary that the supply should actually be either diminished or increased. . . . Many persons suppose that . . . the value cannot fall through a diminution of the cost of production, unless the supply is permanently increased; nor rise, unless the supply is permanently diminished. But this is not the fact; there is no need that there should be any actual alteration of supply; and when there is, the alteration, if permanent, is not the cause, but the consequence of the alteration in value.”
    What would you expect J. S. Mill to say to this? Marshall? your instructor?
  2. (a) England’s agriculture in case of a war not expected to last long;
    (b) the gradual accretion in the value of land settled by pioneers;
    (c) the earning power of farm-buildings;
    (d) the incidence of a tax on printing presses.
    What link of connection do you find in Marshall’s discussion of these several topics?
  3. Explain, with the utmost brevity and precision of which you are capable:

diminishing returns,
increasing returns,
increase of demand,
standard of living.

  1. It is suggested that a protective duty, by enlarging the total output of a given product within a country, brings into play increasing returns and thereby leads to prices of the product lower than would have been in effect but for the duty. Do you agree?
    Canadian manufacturers maintain that the larger total output of the competing manufacturers in the United States enables the Americans to conduct on a larger scale the operation of their plants and thereby enables them to produce at lower cost than the Canadians. Are there good grounds for the contention?

 

ECONOMICS 11
Final. 1922.
[Questions presumably by A. A. Young and not F. W. Taussig]

  1. “In all countries, and all times, profits depend on the quantity of labor requisite to provide necessaries for the laborers, on that land or with that capital which yields no rent. The effects then of accumulation will be different in different countries, and will depend chiefly on the fertility of the land.”
    What other of Ricardo’s doctrines are implied in the foregoing statement?
  2. “Let us consider whether, and in what cases, the property of those who live on the interest of what they possess, without being personally engaged in production, can be regarded as capital. It is not so called in common language, and, with reference to the individual, not improperly. All funds from which the possessor derives an income, which income he can use without sinking and dissipating the fund itself, are to him equivalent to capital. But to transfer hastily and inconsiderately to the general point of view propositions which are true of the individual has been a source of innumerable errors in political economy. In the present instance, that which is virtually capital to the individual, is or is not capital to the nation, according as the fund which by the supposition he has not dissipated, has or has not been dissipated by somebody else.”—J.S. Mill
  3. In what way, according to Taussig, are nations and non-competing groups of laborers analogous? According to Cairnes?
  4. Are business profits wages or a return on capital, or neither? What would Ricardo say? Marshall? Walker? Taussig? Knight? Your opinion?
  5. Define concisely consumers’ surplus, increasing returns, quasi-rent, uncertainty (as distinguished from risk).
  6. Marshall holds that “a business man working with borrowed capital is at a disadvantage in some trades.” In what sort, and why?
  7. “In the statements that are current, it is said that the final increments of different commodities purchased for consumption at the same cost are, with certain allowances, of the same utility to the purchaser. With the last hundred dollars of the year’s income, the man in the illustration will buy some particular things that he did not have before, and he will add quantitatively to his supply of things of which he has already had a certain amount. If each distinct article on the list costs a dollar, they are all supposed to be of equal utility; but their degrees of utility are, in fact, very unequal. If the modern theory of value, as it is commonly stated, were literally true, most articles of high quality would sell for three times as much as they actually bring. It is well, at this point in the discussion, to make the needed correction of the law of value, inasmuch as group incomes depend on that law, and inasmuch as the distinction on which the correction rests is of cardinal importance in connection with wages and interest.”
    To whom do you attribute the foregoing opinion? What is the “needed correction in the law of value”?
  8. On what grounds does Davenport include land with capital and on what grounds does Marshall exclude it?

Sources:

Harvard University Archives. Prof. F. W. Taussig, Examination Papers in Economics 1882-1935(Scrapbook).

Harvard University Archives. Examination Papers, 1922 (HUC 7000.28, 64 of 284), Papers Set for Examinations: History, Church History,…,Government, Economics, Philosophy,…, Social Ethics, Education (June 1922).

Image Source:  Harvard Class Album:  Taussig (1915), Young (1925).

 

Categories
Exam Questions Harvard

Harvard. Introductory Economics. Exam questions, 1959-60

 

 

In 1948-49 Economics 1 replaced Economics A as the introductory course at Harvard. Really quite striking from today’s perspective are the economic history and history of economics questions from the first term and the Soviet planning questions in the second terms. You really have to be an old comparative economics researcher (or native Russian speaker) to know what “Blat” was.  [See J. Berliner, ‘Blat is higher than Stalin’, Problems of Communism, 3(1), 1954.]

__________________________

1959-60
HARVARD UNIVERSITY
ECONOMICS 1
Hour Examination.
October 30, 1959

  1. (10 minutes) Discuss briefly.
    1. Law of diminishing returns.
    2. “Favorable balance of trade.”
    3. English “enclosures.”
    4. Mercantilism
  2. (20 minutes)
    “The concept of a price system is as foreign to the economics of manorialism as the medieval doctrine of usury would be to the money markets of the modern world.”
  3. (20 minutes)
    How did the classical economists attempt to prove that there were economic gains in free trade? By what means did they translate their argument from “real” to “monetary” terms?

__________________________

1959-60
HARVARD UNIVERSITY
ECONOMICS I
Midyear Examination.
January 1960.

(Three hours)

Answer all questions

  1. (45 minutes)
    “The victory of the ‘classical economics’ over mercantilist doctrine in England, was more than anything else, an indication of the appropriateness of the new analysis to the conditions of the Industrial Revolution.”
    Discuss critically, with reference to the following:

    1. an analysis of the “classical” doctrines of growth and distribution;
    2. the areas of conflict between “classical” and mercantilist ideology;
    3. the degree of relevance of the “classical economics” to conditions in the late 18th and early 19th century England.
  2. a) Define briefly the following terms: (15 minutes)

1. The demand curve for a product
2. elasticity
3. marginal cost
4. market control or power
5. workable competition

b) Utilizing these and any other relevant concepts, discuss: (60 minutes)

1.  Price and output policy of the firm under pure competition, oligopoly, and monopoly;
2.  Government intervention in the market as exemplified in U.S. agricultural programs and proposals;
3.  The use of government anti-trust policies in improving the functioning of the market system in a less than perfectly competitive economy such as that of the U.S. today.

  1. (60 minutes) The Logic of Say’s Law (supply creates its own demand) led many economists for over 100 years to the conclusion that a general glut was impossible.
    1. How does modern macroeconomic analysis attempt to demonstrate the possibility of a general glut or depression?
    2. Can this modern analysis be used to explain the opposite situation of general excess demand? If so, how?
    3. What explanation can you give of the Great Depression by applying this analysis to specific developments in the late 1920’s and early 1930’s?
    4. What fiscal measures would you have suggested to cure the depression? Explain carefully your reason for each proposal.

 

__________________________

Economics I
Midyear Examination Make-up
April 22,1960

(Time: Three hours. Answer ALL questions.)

Question I (60 minutes)

“Markets, whether they be exchanges between primitive tribes where objects are dropped casually on the ground, or the exciting traveling affairs of the Middle Ages, are not the same as ‘the modern market system’.”

  1. What are the major economic differences between a medieval market and a modern market mechanism?
  2. How did the Mercantilist and the classical economists differ in their concepts of the role of the state with respect to the market mechanism and its operation?
  3. To what extent was the “Industrial Revolution” in England related to particular developments in the evolution of a market system?

 

Question 2 (60 minutes)

Briefly but clearly distinguish between the following pairs of concepts:

  1. marginal propensity to consume and elasticity of demand
  2. national income and national expenditure
  3. savings and investment
  4. market equilibrium and market control
  5. marginal productivity and economic rent
  6. normal profit and monopoly profit
  7. countervailing power and collective bargaining
  8. transfer payments and factor payments
  9. differentiated product and free entry
  10. perfect competition and workable competition

 

Question 3 (60 minutes)

Compare the characteristics of market structures as seen by Adam Smith with those distinguished by modern economic analysis, in relation to the following:

  1. The specific types of market structure which have developed, and the nature of the control of the individual firm with respect to its price, output, and profit.
  2. The case for intervention, by the present-day U.S. government, in
    1. particular industrial markets
    2. the agricultural market
    3. the labor market.

PLEASE RETURN THIS EXAMINATION PAPER WITH YOUR TEST BLUEBOOK

__________________________

ECONOMICS I
Section 4H [or 4II?]

Hour Examination
April 29, 1960

Answer:

Question 1;
Question 2, or Question 3; and
Question 4, or Question 5, or Question 6. A TOTAL OF THREE

  1. Comment briefly on:
    1. International Monetary Fund
    2. the marginal propensity to import and the foreign trade multiplier
    3. Gosplan
    4. Blat
    5. balance of payments deficit
    6. Soviet turnover tax
  2. Western Germany has in the past been a persistent creditor country. It has been suggested that the resulting imbalance should be remedied by an appreciation of the D-Mark.
    1. Under what circumstances would this policy decision have effective results?
    2. What set of circumstances would make such a decision undesirable?
  3. “Playing the rules of the gold standard involves a loss of freedom to monetary and fiscal authorities.” Explain.
  4. “Although prices may be used in both a planned economy and a price-directed economy, the sharpest distinction between the two can be expressed in terms of the role of prices.” Discuss.
  5. a. What is the essence of central planning? Which are the principal administrative authorities responsible for the various steps in planning in the Soviet Union?
    b. What are the principal sources of inefficiency of Soviet planning?
  6. What are some accelerating and some retarding factors affecting future Soviet Growth?

__________________________

1959-60
HARVARD UNIVERSITY
ECONOMICS 1
Final Examination.
May 25, 1960.

(Three hours)
Answer all questions

  1. (30 minutes)
    Explain what is meant by “the problem of creeping inflation.” What is the scope, and what are the limitations, of Federal Reserve policy in its attempt to meet this problem? Are there reasons for believing that mild inflation might be desirable in some respects?
  2. (30 minutes)
    The President’s Report of January 1959 gave the general fiscal objective and expectation of the Federal Government, for the fiscal year 1958-59, as a balanced budget at a level of $77 billion.
    The President’s Report of January 1960 reported that, for the fiscal year 1958-59, the Federal Government had run a deficit of approximately $12.4 billion, tax receipts being $68.3 billion and expenditures being $80.7 billion.

    1. Give a critical analysis of the major factors which tend to make budgetary planning, and fiscal policy, difficult in general, and give an account of some of the influences which threw out the predictions for the 1958-59 period in particular.
    2. What general effect, in your judgment, did the fiscal operations of government have in this period? To what extent was this effect related to deliberate policy decisions taken during the period?
  3. (30 minutes)
    The major alternatives open to the public authorities of a country experiencing a balance of payments deficit include: (a) devaluation, (b) internal deflationary policy, (c) the imposition of tariffs and import quotas.
    What are the principal economic effects associated with each of the above policies? Do you consider any of these policies appropriate for the United States in meeting its present balance of payments difficulties? Explain your answer.
  4. (45 minutes)
    In terms of achieving a rapid rate of growth of priority sectors of its economy, the U.S.S.R. has obtained what, to western economists, is a remarkable degree of success. Most of these economists, however, would distinguish this achievement from “economic efficiency.”

    1. Indicate possible sources of inefficient resource use in the Soviet system, both at the level of the firm and at the level of the higher planning authorities.
    2. Discuss the role of prices in the Soviet system in relation to the problem of an efficient allocation of resources.
  5. (45 minutes)
    “Most of mankind is caught in a vicious circle, in which poverty prevents growth and lack of growth causes poverty. Only by simultaneous, dramatic expansion of all branches of economic activity can an underdeveloped country hope to break out of this vicious circle.”
    Discuss the following, with illustrations taken from one or more underdeveloped countries:

    1. the process by which poverty and lack of growth inter-act to create a vicious circle,
    2. the validity of the contention that, to be effective, growth must be “balanced.”

 

 

Source: Harvard University Archives. Department of Economics. Course reading lists, syllabi, and exams 1913-1992 (UA V 349.295.6). Economics 1-Ec 10 exams. Box 1 of 2, Folder “Economics I, Exams 1939-1962”.

Categories
Exam Questions Harvard

Harvard. Core Economic Theory. Bullock and Carver, 1917/18 and 1918/19

 

While Frank Taussig was off serving the country as the chairman of the United States Tariff Commission, his advanced economic theory course (Economics 11) was jointly taught by his colleagues Charles Bullock and Thomas Nixon Carver. The Harvard Archives collection of final examinations only has the June final examinations that are transcribed below, i.e., the first semester examinations from January have not been included (at least for now). It is also not clear whether the course was jointly taught both semesters or whether each colleague took a semester.  The semester by semester exams for this course up to these years can be found in a series of earlier posts. Here is the most recent of the posts for Economics 11 à la Taussig up to the first term of 1916.

______________________

COURSE DESCRIPTION
(Identical for 1917/18 and 1918/19)

Primarily for Graduates
I
ECONOMIC THEORY AND METHODS

[Economics] 11. Economic Theory. Mon., Wed., Fri., at 2.30. Professors Carver and Bullock

Course 11 is intended to acquaint the student with the development of economic thought since the beginning of the nineteenth century, and at the same time to train him in the critical consideration of economic principles. The exercises are conducted mainly by the discussion of selected passages from the leading writers; and in this discussion the students are expected to take an active part. Special attention will be given to the writings of Ricardo, J.S. Mill, Cairnes, and among modern economists to F.A. Walker, Clark, Marshall, and Böhm-Bawerk.

 

Source: Official Register of Harvard University (Vol. XV, No. 23), May 10, 1918. Division of History, Government, and Economics 1918-19, p. 63.

______________________

Course Enrollment
1917-18

[Economics] 11. Professors Carver and Bullock.—Economic Theory

Total 11: 8 Graduates, 2 Graduate Business, 1 Radcliffe

 

Source: Harvard University. Reports of the President and Treasurer of Harvard College, 1917-1918, p. 54.

______________________

Final examination
(Second semester 1917-18)
ECONOMICS 11

 

  1. What elements in the economic system of Adam Smith were derived from previous systems of economic thought?
  2. What were the principal new contributions which were made by the Wealth of Nations?
  3. Trace the history of theories of business profits in the writings of Smith, Ricardo, Mill, Walker, and Marshall.
  4. Compare the theories of value presented by Smith, Ricardo, and Mill.
  5. What ideas concerning the probably future of the laboring classes were entertained by Smith, Ricardo, and Mill?
  6. Compare Smith’s views concerning rent with those of Ricardo, and then compare Mill’s statement of the theory of rent with Ricardo’s statement.
  7. What old and what new elements are found in the economic theories of Mill?
  8. From your own point of view, criticize Mill’s theory of value.

 

Source:   Harvard University Archives. Examination Papers 1918 (HU 7000.28, 60). Harvard University Examinations. Papers Set for Final Examinations in History, History of Religions, History of Science, Government, Economics,…, Fine Arts, Music in Harvard College, June, 1918, pp. 49-50.

______________________

Course Enrollment
1918-19

[Economics] 11. Professors Carver and Bullock.—Economic Theory

Total 7: 6 Civ., 1 Mil.

II, III. Total 11: 9 Graduates, 1 Senior, 1 Other.

 

Source: Harvard University. Reports of the President and Treasurer of Harvard College, 1918-1919, p. 52.

______________________

Final examination
(Second semester 1918-19)
ECONOMICS 11

Omit any one question

  1. Compare Smith’s views concerning the importance of different industries with those of the Mercantilists.
  2. What elements in the economic thought of Adam Smith were derived from earlier writers?
  3. What were Smith’s distinctive contributions to economic thought?
  4. Compare Smith’s theory of value with that of Ricardo.
  5. Compare Smith’s theory of distribution with that of Ricardo.
  6. Compare Mill’s theories of production and distribution with those of Ricardo and Smith.
  7. Give an account of the historical development of the law of diminishing returns.
  8. Compare Smith’s and Ricardo’s theories of international trade.

 

Source:   Harvard University Archives. Examination Papers 1919 (HU 7000.28, 61). Harvard University Examinations. Papers Set for Final Examinations in History, History of Science, Government, Economics,…, Fine Arts, Music in Harvard College, June, 1919, pp. 29-30.

 

 

 

 

 

Categories
Exam Questions Harvard

Harvard. Core Advanced Economic Theory. Taussig (and Day), 1915-1917

 

 

Examination questions spanning just over a half-century can be found in Frank Taussig’s personal scrapbook of cut-and-pasted semester examinations for his entire Harvard career. Until Schumpeter took over the core economic theory course from Taussig in 1935, Taussig’s course covering economic theory and its history was a part of almost every properly educated Harvard economist’s basic training. Taussig’s exam questions were posted for the academic years 1886/87 through 1889/90 along with enrollment data for the course;  material from 1890/91 through 1893/94; 1897-1900 ; 1904-1909 ; 1911-14 have been posted as well.  

The course was taught by Taussig up through the Winter term of 1916/17. Early in 1917 Taussig was appointed chairman of the newly created United States Tariff Commission. He also was appointed a member of the Advisory Committee on the Peace (sub-committee on tariffs and commercial treaties) and he went to Europe for the economic sessions of the peace negotiations. His resignation from the Tariff Commission was  effective August 1, 1919 after which he returned to Harvard.

U.S. Tariff Commission Reports under Taussig 1917-1919:

First Annual Report (Fiscal Year ended June 30, 1917)
Second Annual Report (Fiscal Year ended June 30, 1918)
Third Annual Report (1919). 

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1914-15
HARVARD UNIVERSITY

ECONOMICS 11
Mid-year Examination
[F. W. Taussig]

Arrange your answers in the order of the questions.

  1. “Given machinery, raw materials, and a year’s subsistence for 1000 laborers, does it make no difference with the annual product whether those laborers are Englishmen or East Indians?
    . . . The differences in the industrial quality of distinct communities of laborers are so great as to prohibit us from making use of capital to determine the amount that can be expended in any year or series of years in the purchase of labor.”
    Under what further suppositions, if under any, does this hypothetical case tell in favor of those holding that wages are paid from a wages fund? Under what suppositions, if under any, in favor of those holding views like Walker’s?
  2. (a)“The labourer is only paid a really high price for his labour when his wages will purchase the produce of a great deal of labour.”
    (b) “If I have to hire a labourer for a week, and instead of ten shillings I pay him eight, no variation having taken place in the value of money, the labourer can probably obtain more food and necessaries with his eight shillings than he before obtained for ten.”
    Explain concisely what Ricardo meant.
  3. What, according to Ricardo, would be the effects of a general rise of wages on profits? on the prices of commodities? on rents? the well-being of laborers?
  4. “The component elements of Cost of Production have been set forth in the first part of this enquiry. The principal of them, and so much the principal as to be nearly the sole, we found to be Labour. What the production of a thing costs to its producer, or its series of producers, is the labour expended in producing it. If we consider as the producer the capitalist who makes the advances, the word Labour may be replaced by the word Wages: what the produce costs to him, is the wages which he has had to pay.”   J.S. Mill.
    What would Ricardo say to the proposed substitution [of “Wages” for “Labour”]? Cairnes? Marshall?
  5. “Suppose that society is divided into a number of horizontal grades, each of which is recruited from the children of its own members, and each of which has its own standard of comfort, and increases in number rapidly when the earnings to be got in it rise above, and shrinks rapidly when they fall below that standard. Suppose, then, that parents can bring up their children to any trade in their own grade, but cannot easily raise them above it and will not consent to sink them below it. . . .
    On these suppositions the normal wage in any trade is that which is sufficient to enable a laborer, who has normal regularity of employment, to support himself and a family of normal size according to the standard of comfort that is normal in the grade to which his trade belongs. In other words the normal wage represents the expenses of production of the labor according to the ruling standard of comfort.” Marshall.
    On these suppositions, would value depend in the last analysis on cost or utility?
  6. (a)“Were it not for the tendency [to diminishing returns] every farmer could save nearly the whole of his rent by giving up all but a small piece of his land, and bestowing all his labor and capital on that. If all the labor and capital which he would in that case apply to it gave as good a return in proportion as that he now applies to it, he would get from that plot as large a produce as he now gets from his whole farm; and he would make a net gain of all his rent save that of the little plot that he retained.”
    (b) “The return to additional labour and capital [applied to land] diminishes sooner or later; the return is here measured by the quantity of the produce, not by its value.”
    (c) “Ricardo, and the economists of his time generally were too hasty in deducing this inference [tendency to increased pressure] from the law of diminishing return; and they did not allow enough for the increase of strength that comes from organization. But in fact every farmer is aided by the presence of neighbours, whether agriculturists or townspeople. . . . If the neighbouring market town expands into a large industrial centre, all his produce is worth more; some things which he used to throw away fetch a good price. He finds new openings in dairy farming and market gardening, and with a larger range of produce he makes use of rotations that keep his land always active without denuding it of any one of the elements that are necessary for its fertility.”
    Have you any criticisms or qualifications to suggest on these passages from Marshall?
  7. “When the artisan or professional man has once obtained the skill required for his work, a part of his earnings are for the future really a quasi-rent. The remainder of his income is true earnings of effort. But this remainder is generally a large part of the whole. And herein lies the contrast. When a similar analysis is made of the profits of the undertaker of business, the proportions are found to be different: in this case nearly all is quasi-rent.”
    Explain what you believe to be Marshall’s meaning, and why he considers undertaker’s profits not to be “true earnings of effort.”

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1914-15
HARVARD UNIVERSITY

ECONOMICS 11
Final Examination
[F. W. Taussig]

Arrange your answers in the order of the questions.

  1. Explain briefly what Walker meant by the “no-profits” business man; what Marshall means by the “representative firm”; what your instructor means by the “marginal product of labor.” How are the three related?
  2. Explain briefly whether anything in the nature of a producer’s surplus or a consumer’s surplus appears as regards (a) instruments made by man and the return secured by their owners; (b) unskilled labor and the wages paid for it; (c) business management and business profits.
  3. “ Wages are paid by the ordinary employer as the equivalent of the discounted future benefits which the laborer’s work will bring him — the employer — and the rate he is willing to pay is equal to the marginal desirability of the laborer’s services measured in present money. We wish to emphasize the fact that the employer’s valuation is (1) marginal, and (2) discounted. The employer pays for all his workmen’s services on the basis of the services least desirable to him, just as the purchaser of coal buys it all on the basis of the ton least desirable to him; he watches the ‘marginal’ benefits he gets exactly as does the purchaser of coal. At a given rate of wages he ‘buys labor’ up to the point where the last or marginal man’s work is barely worth paying for. . . . If, say, he decides on one hundred men as the number he will employ, this is because the hundredth or marginal man he employs is believed to be barely worth his wages, while the man just beyond this margin, the one hundred and first man, is not taken on because the additional work he would do is believed to be not quite worth his wages.”
    Does this seem to you in essentials like the doctrine of Clark? of your instructor?
    [Hand-written note: The author is I. Fisher.]
  4. An urban site is leased at a ground rental of $2,000 a year; a building is erected on it costing $50,000; the current rate of interest is 4%.
    Suppose the net rental of the property (after deduction of expenses and taxes) to be $8,000. What is the nature of this return, according to J. S. Mill? Marshall? Clark?
    Suppose the net rental to be $3,000; answer the same questions.
  5. “That capital is productive has often been questioned, but no one would deny that tools and other materials of production are useful; yet these two propositions mean exactly the same when correctly understood. Capital consists primarily of tools and other materials of production, and such things are useful only in so far as they add something to the product of the community. Find out how much can be produced without any particular tool or machine, and then how much can be produced with it, and in the difference you have the measure of its productiveness.”
    What would Böhm-Bawerk say to this? What is your own view?
    [Hand-written note: The author is Carver.]
  6. “ Wages bear the same relation to man’s services that rent does to the material uses of wealth. . . . While rent is the value of the uses of things, wages is the value of the services of men. . . . The resemblance is very close between rent and wages.”
    “The principles governing the rate of wages are, in a general way, similar to those governing the rate of rent. The rate of a man’s wages per unit of time is the product of the price per piece of the work he turns out multiplied by the rate of output. His productivity depends on technical conditions, including his size, strength, skill, and cleverness.”
    Explain what is meant by “rent” in these passages and by what writers it is used in this sense; and give your opinion on the resemblance between such “rent” and wages.
    [Hand-written note: The authors are Fetter and Fisher, respectively.]
  7. Böhm-Bawerk remarks that the theory which he has put forward bears “a certain resemblance” to the wages fund theory of the older English school, but differs from it in various ways, one of which is “the most important” What are the points of resemblance? and what is this most important difference?
  8. “While the slowness of Nature is a sufficient cause for interest, her productivity is an additional cause. . . . Nature is reproductive and tends to multiply. Growing crops and animals make it possible to endow the future more richly than the present. By waiting, man can obtain from the forest or farm more than he can by premature cutting or the exhaustion of the soil. In other words, not only the slowness of Nature, but also her productivity or growth, has a strong tendency to keep up the rate of interest. Nature offers man, as one of her optional income-streams, the possibility of great future abundance at trifling present sacrifice. This option acts as a bribe to man to sacrifice present income for future, and this tends to make present income scarce and future income abundant, and hence also to create in his mind a preference for a unit of present over a unit of future income.”
    What would Böhm-Bawerk say to this? What is your own view?
    Whom do you believe to be the writer of the passage?
    [Hand-written note: The author is I. Fisher]

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1915-16
HARVARD UNIVERSITY

ECONOMICS 11
Mid-year Examination
[F. W. Taussig]

Arrange your answers strictly in the order of the questions.

  1. On what grounds is it contended that there is a circle in Walker’s reasoning on the relation between wages and business profits? What is your opinion on this rejoinder: that Walker, in speaking of the causes determining wages, has in mind the general rate of wages, whereas in speaking of profits he has in mind the wages of a particular grade of labor?
  2. According to Ricardo, neither profits of capital nor rent of land are contained in the price of exchangeable commodities, but labor only.” — Thünen.
    Is there justification for this interpretation of Ricardo?
  3. “Instead of saying that profits depend on wages, let us say (what Ricardo really meant) that they depend on the cost of labour. . . . The cost of labour is, in the language of mathematics, a function of three variables: the efficiency of labor; the wages of labour (meaning thereby the real reward of the labourer); and the greater or less cost at which the articles composing that real reward can be produced or procured.”   — J. S. Mill.
    Is this what Ricardo really meant? Why the different form of statement by Mill? What comment have you to make on Mill’s statement?
  4. State resemblances and differences in the methods of analysis, and in the conclusions reached, between (a) the temporary equilibrium of supply and demand (e.g. in a grain market), as explained by Marshall; (b) “two-sided competition,” as explained by Böhm-Bawerk; (c) equilibrium under barter, as explained by Marshall.
  5. Explain concisely what is meant in the Austrian terminology by “value,” “subjective value,” “subjective exchange value,” “objective exchange value.”
    Does the introduction of “subjective exchange value” into the analysis of two-sided competition lead to reasoning in a circle?
  6. “Suppose a poor man receives every day two pieces of bread, while one is enough to allay the pangs of positive hunger, what value will one of the two pieces of bread have for him? The answer is easy enough. If he gives away the piece of bread, he will lose, and if he keeps it he will secure, provision for that degree of want which makes itself felt whenever positive hunger has been allayed. We may call this the second degree of utility. One of two entirely similar goods is, therefore, equal in value to the second degree in the scale of utility of that particular class of goods. . . . Not only has one of two goods the value of the second degree of utility, but either of them has it, whichever one may choose. And three pieces have together three times the value of the third degree of utility, and four pieces have four times the value of the fourth degree. In a word, the value of a supply of similar goods is equal to the sum of the items multiplied by the marginal utility.” — Wieser.
    Do you think this analysis tenable? and do you think it inconsistent with the doctrine of total utility and consumer’s surplus?
  7. “If the modern theory of value, as it is commonly stated, were literally true, most articles of high quality would sell for three times as much as they actually bring.” What leads Clark to this conclusion? and do you accept it?

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1915-16
HARVARD UNIVERSITY

ECONOMICS 11
Final Examination
[F. W. Taussig]

Arrange your answers strictly in the order of the questions. Allow time for careful revision of your answers.

  1. “The productivity of capital is, like that of land and labor, subject to the principle of marginal productivity, which is, as we have seen, a part of the general law of diminishing returns. Increase the number of instruments of a given kind in any industrial establishment, leaving everything else in the establishment the same as before , and you will probably increase the total product of the establishment somewhat, but you will not increase the product as much as you have the instruments in question. Introduce a few more looms into a cotton factory without increasing the labor or the other forms of machinery, and you will add a certain small amount to the total output. . . . That which is true of looms in this particular is also true of ploughs on a farm, of locomotives on a railway, of floor space in a store, and of every other form of capital used in industry.” Is this in accord with Clark’s view? Böhm-Bawerk’s? Marshall’s? Your own?
  2. What is the significance of the principle of quasi-rent for
    1. the “single tax” proposal;
    2. Clark’s doctrine concerning the specific product of capital;
    3. the theory of business profits.
  3. Explain what writers use the following terms and in what senses: Composite quasi-rent; usance; implicit interest; joint demand.
  4. On Cairnes’ reasoning, are high wages of a particular group of laborers the cause of the result of high value (price) of the commodities made by them? On the reasoning of the Austrian school, what is the relation between cost and value? Consider differences or resemblances between the two trains of reasoning.
  5. “This ‘exploitation of interest’ consists virtually of two propositions: first, that the value of any product usually exceeds its cost of production; and, secondly, that the value of any product ought to be exactly equal to its cost of production. The first of these propositions is true, but the second is false. Economists have usually pursued a wrong method in answering the socialists, for they have attacked the first proposition instead of the second. The socialist is quite right in his contention that the value of the product exceeds the cost. In fact, this proposition is fundamental in the whole theory of capital and interest. Ricardo here, as in many other places in economics, has been partly right and partly wrong. He was one of the first to fall into the fallacy that the value of the product was normally equal to its cost, but he also noted certain apparent ‘exceptions,’ as for instance, that wine increased in value with years.” Is this a just statement of Ricardo’s view? Of the views of economists generally? In what sense is it true, in in any, that value usually exceeds cost?
  6. Explain carefully what Böhm-Bawerk means by
    1. social capital;
    2. the general subsistence fund;
    3. the average production period;
    4. usurious interest.
  7. In what way does he analyze the relation between (b) and (c)?
  8. Suppose ability of the highest kind in the organization and management of industry became as common as ability to do unskilled manual labor is now; what consequences would you expect as regards the national dividend? the remuneration of the business manager and of the unskilled laborer? Would you consider the readjusted scale of remuneration more or less equitable that that now obtaining?
  9. What grounds are there for maintaining or denying that “profits” are (a) essentially a differential gain, (b) ordinarily capitalized as “common stock,” (c) secured through “pecuniary,” not “industrial” activity? What method of investigation would you suggest as the best for answering these questions?

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Course Enrollment
1916-17

[Economics] 11. Asst. Professor Day.—Economic Theory

Total 28: 21 Graduates, 2 Seniors, 1 Junior, 1 Radcliffe, 3 Others

Source: Harvard University. Reports of the President and Treasurer of Harvard College, 1916-1917, p. 57.

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1916-17
HARVARD UNIVERSITY

ECONOMICS 11
Midyear Examination
[F. W. Taussig]

Arrange your answers strictly in the order of the questions.

  1. “Is it not true, in any normal condition of things, that consumption is supported by contemporaneous production?
    . . . Just as the subsistence of the laborers who built the Pyramids was drawn not from a previously hoarded stock, but from the constantly recurring crops of the Nile Valley; just as a modern government when it undertakes a great work of years does not appropriate to it wealth already produced, but wealth yet to be produced, which is taken from producers in taxes as the work progresses; so is it that the subsistence of the laborers engaged in production which does not directly yield subsistence, comes from the production of subsistence in which others are simultaneously engaged.”
    Consider, as regards contemporaneous production in general and also as regards the example of the Pyramids.
  2. “Our [British] commodities would not sell abroad for more or less in consequence of a free trade and a cheap price of corn; but the cost of production to our manufacturers would be very different if the price of corn was eighty or was sixty shillings per quarter; and consequently profits would be augmented by all the cost saved in the production of exported commodities.” — Ricardo.
    Explain what Ricardo meant here by “cost of production”; why he thought cost would be different in consequence of free trade in corn; and whether he believed cost (in this sense) to be the regulator of value.
  3. In what sense is the term “demand” used by Mill when speaking of (a) the equation of demand and supply, (b) demand and supply in relation to labor, (c) the demand for money?
  4. “The one universal rule to which the demand curve conforms is that it is inclined negatively throughout the whole of its length.” Can you mention exceptions as regards the demand curve for short periods? for long periods? In what sense is the term “demand” here used?
  5. It has been said that Marshall’s discussion of demand and utility is “an elementary analysis of an almost purely formal kind.” Does this seem to you a just comment?
  6. Explain “subjective value” and “subjective exchange value.” Under what conditions is subjective value to sellers of substantial influence in the determination of “objective exchange value”? Under what conditions, if under any, is subjective exchange value effective in such determination?
  7. “He [Longe] puts the case of a capitalist who, by taking advantage of the necessities of his workmen, effects a reduction in their wages, and succeeds in withdrawing so much, call it £1000, from the wages-fund; and asks how is the sum, thus withdrawn, to be restored to the fund? On Mr. Longe’s principles the answer is simple — ‘by being spent on commodities;’ for it may be assumed that the sum so withdrawn will, in any case, not be hoarded. . . . And I am disposed to flatter myself that the reader who has gone with me in the foregoing discussion will not have much difficulty in replying to it [the question] upon mine.”
    What is the answer on Cairnes’s principles? and is this the answer to be expected on the basis of a wages-fund doctrine?
  8. Explain in what way the relation between cost and value is analyzed by Cairnes and by the Austrian School. Would Cairnes’s analysis differ in essentials from the Austrian, if he were to assume complete mobility of labor? What significance do the Austrians attach to mobility of labor?

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1916-17
HARVARD UNIVERSITY

ECONOMICS 11
Final Examination
[E. E. Day]

  1. “The ultimate determinant of value…is marginal utility, not cost in the sense of labor of effort.” What would Marshall say of this? Böhm-Bawerk? Taussig?
  2. “The forces which make for Increasing Return are not of the same order as those that make for Diminishing Return…The two ‘laws’ are in no sense coordinate….The two ‘laws’ hold united, not divided, sway over industry.” Comment critically.
  3. Suppose the Federal government imposes a tax of 10 cents a bushel on all wheat grown in the United States. Upon whom will the burden of the tax fall? What conditions determine the final incidence of the tax? Illustrate, where possible, by diagram.
  4. “Rent forms no part of the expenses of production….Rent is not one of the factors bearing on price, but is the result of price.” Carefully analyze this contention.
  5. “The differences in the productive power of men due to their heredity or social position give to certain individuals the same kind of an advantage over others that the owner of a corner lot in the center of a city has over one in the suburbs. If the income from a corner lot is a surplus and can therefore be described as unearned, the income of a man of better heredity, education or opportunity must also be regarded as a surplus income and therefore unearned.” Discuss this statement with reference to your general theory of distribution.
  6. Contrast briefly the definitions of “capital” advanced by (a) Böhm-Bawerk; (b) Clark; (c) Taussig; (d) Fetter; (e) Veblen.
  7. Discuss the place of abstinence (or the sacrifice of saving) in the interest theories of (a) Böhm-Bawerk, (b) Clark; (c) Fetter; (d) Taussig.
  8. “In previous chapters, interest has been accounted for, in part at least, by the fact that there is productivity of capital; it results from the application of labor in more productive ways. If this were the whole of the theory of interest, we should reason in a circle in saying that wages are determined by a process of discount.” Do you agree as to the circle? Why or why not?

Source: Harvard University Archives. Examination Papers (HUC 7000.28, vol. 59). Harvard University Examinations. Papers Set for Final Examinations in History, History of Religions, History of Science, Government, Economics,…, Fine Arts, Music in Harvard College, June 1917. p. 61.

Image Source: Frank Taussig’s 1919 passport application.

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