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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.

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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.

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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.

________________________________

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.

________________________________

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).

 

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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.]

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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?

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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.

 

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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

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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?

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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”.

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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.

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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.

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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.

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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.

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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.

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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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Categories
Exam Questions Harvard Suggested Reading Syllabus

Harvard. Undergraduate International Trade. Enrollment, Readings, Exam. Harris, 1949

 

Seymour Harris was a Harvard man from his undergraduate years through his retirement from his alma mater. He served many terms as a government economic adviser and after Harvard moved on to be the chair of economics at the University of California, San Diego. This post provides a course description, enrollment data, reading list and examination questions for his winter semester course 1949-50 “International Trade”. An earlier post provides the outline the 1933 version of the course “International Trade and Tariff Policies”.

Seymour Edwin Harris was born September 8, 1897 in New York City. He received an A.B. in 1920 and a Ph.D. in 1926 from Harvard University. From 1922 to 1964, Dr. Harris taught economics at Harvard University, where he received a full professorship in 1954, and served as the chairman of the department of economics from 1955 to 1959. During World War II, Dr. Harris was involved in several wartime planning projects. From 1954 to 1956, Dr. Harris became chief economic advisor to Adlai Stevenson. He then served Senator John F. Kennedy in the same capacity and was chosen as a member of President Kennedy’s task force on the economy. In 1961, Dr. Harris was named as chief economic consultant to Douglas Dillon, Secretary of the Treasury. During the Kennedy administration. Dr. Harris, a proponent of Keynesian economics, was a member of Walter W. Heller’s New Frontiersmen, which persuaded President Kennedy that the stimulation of the economy was more important than a balanced budget and tax cuts and government spending could counter threats of a recession. In 1963, Dr. Harris became the chairman of the department of economics at the University of California at La Jolla. At the same time, he served as a chief economic advisor to the Johnson administration. [Source: John F. Kennedy Presidential Library, Finding Aid to the Papers of Seymour E. Harris]

Harris had quite a reputation for grinding out volumes of edited papers (written by others):  From a 1962 or 1963 student skit:  Professor Gerschenkron’s alleged advice for Matthew (the Evangelist): “I wanted Matthew to rewrite his paper for the Quarterly Journal and call it ‘Christ as a proto-Keynsian’ [sic] But no, he was a very strong-willed boy and he brought it out in a syposium [sic] edited by Seymour Harris, called the Bible, essays in honor of God.”

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Course Description

Economics 143a (formerly Economics 43a). International Trade

Half-course (fall term). Mon., Wed., and (at the pleasure of the instructor) Fri., at 12. Professor Harris.

This course deals with the theory and practice of foreign trade and capital movements, including the importance of foreign trade, the manner of increasing its amount, its relation to the domestic economy, the problem of exchange rates, exchange control, international organizations in their relation to trade and capital movements. Political, economic, and administrative aspects are considered also.

Source: Harvard University Archives. Box 6, Courses of Instruction (HUC 8500.16), Final Announcement of the Courses of Instruction Offered by the Faculty of Arts and Sciences for the Academic Year 1948-49, p. 75

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Course Enrollment

[Economics] 143a (formerly Economics 43a). International Trade. (F) Professor Harris.

Total 120: 9 Graduates, 46 Seniors, 36 Juniors, 11 Sophomores, 1 Freshman, 12 Radcliffe, 5 Others.

Source: Harvard University. Report of the President of Harvard College and Reports of Departments, 1949-1950, p. 43.

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Course Readings

Economics 143a
International Trade

  1. National Income and the Balance of Payments—4 weeks
    Relation of domestic policies and the balance of payments; the balance of payments of the United States and the United Kingdom; capital movements and reparations problems; dollar shortage and the E.R.P.
    Assignment

    1. *Harris; The European Recovery Program, pp. 1-120, 185-206, 272-276
    2. *Harrod; Are These Hardships Necessary? pp. 1-103
    3. United Nations; A Survey of the Economic Situation and Economic Prospects for Europe, pts. 2-5
  2. Regional Problems in the Balance of Payments—1 week
    No assignment.
  3. Industrialization and International Competition—1 week
    No assignment
  4. Monetary Aspects of International Trade—3 weeks
    Assignment

    1. Harris: The New Economics, pp. 246-293, 323-400
    2. *Ellsworth: International Economics, Part 1, Chs. 7, 9-11
  5. The Case for Free Trade and Obstacles to Trade—3 weeks
    Division of labor; comparative costs; tariffs and other obstacles; international commodity agreements and distribution of raw materials.
    Assignment
    Ellsworth, Part II, Chs. 1-5, 7-9
  6. The Problem of Allocation of Resources and Comparative Costs
    Assignment
    Ellsworth, Part I, Chs. 3-5

Reading Period Assignment—One of the Following:

  1. Staley: World Economic Development
  2. Buchanan and Lutz: Rebuilding the World Economy
  3. Marshall: Money, Credit, and Commerce, Pt. III
  4. Harris: Foreign Economic Policy for the United States

*To be bought.

Source:   :   Harvard University Archives. Syllabi, course outlines and reading lists in economics, 1895-2003. (HUC 8522.2.1), Box 4, Folder “Economics, 1949-50 (2 of 3)

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Course Final Examination

HARVARD UNIVERSITY
ECONOMICS 143a
International Trade

Spend forty-five minutes on each question. It is strongly suggested that you spend ten minutes assembling and organizing your thoughts before beginning each essay.

  1. Answer (a) or (b):
    1. It is a prerequisite for the establishment of interregional trade that relative prices would be different in one region from those in another if the regions were prevented from trading with one another. Why does this condition commonly occur, how does it lead to interregional trade, and in what way is that trade beneficial to the participating regions?
    2. Much of the theory of international trade attempts to explain how equilibrium in the balance of payments will be maintained by automatic tendencies. Present as fully as you can in the allotted time a classification and explanation of the forces working to frustrate these automatic tendencies and produce persistent dis
  2. Answer (a) or (b):
    1. Exchange depreciation has been resorted to in depression for reasons very different from those advanced for its use in periods of full employment. Compare and contrast the advantages and disadvantages of depreciation in these two situations, making use of specific illustrations.
    2. The incorporation of national income analysis into international trade theory has led economists to distinguish helpfully corrective international economic policies from so-called beggar-thy-neighbor policies. How would you make such a distinction, and how effectively can it be applied?
  3. Answer (a) or (b):
    1. Comment on the relevance of the domestic policies of ERP countries for the attainment of international equilibrium by 1952.
    2. Discuss the reciprocal trade agreements program of the United States with reference to (1) the general arguments for and against tariffs, and (2) the limitations of tariff policy as a means of achieving international economic equilibrium.
  4. Answer one of the following with reference to your reading period assignment:
    1. What basic changes in the world economic structure have resulted from two World Wars, and how do they obstruct the reestablishment of stable multilateral trade?
    2. On what conditions does Staley base his case that, for existing industrial areas, it is possible to make the advantages of the economic development of new areas far outweigh the disadvantages? Discuss these conditions critically.
    3. Diagnoses of the widespread “dollar problem” differ according to (1) the definition of equilibrium adopted, and (2) the particular country under discussion. Discuss both these sources of variation in analysis. (Treat either one at greater length than the other if you wish.)
    4. Marshall is noted for his development of the theory of international supply and demand (commonly called “reciprocal demand”) as the determining influence on the barter terms of trade. Develop this part of his theory, and comment on some aspect or aspects of its relevance to current problems discussed in this course.

Final. January, 1950.

 

Source: Harvard University, Faculty of Arts and Sciences. Papers Printed for Final Examinations; History, History of Religions, Government, Economics,…,Military Science, Naval Science. February, 1950.

Image Source: Seymour Harris in Harvard Class Album 1947.

 

Categories
Exam Questions Harvard

Harvard. Core Economic Theory. Enrollments and Exams. Taussig. 1911-14

 

 

 

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 ; and 1904-1909 have been posted as well.  

Sad backstory: The year gap in teaching that immediately preceeeded the years covered below was because Frank Taussig took a leave of absence in 1909-10 that he spent with his wife (Edith Thomas Guild, born 1861) in Saranac Lake, New York where she died on April 15, 1910.
Source: J. A. Schumpeter, A. H. Cole, and E. S. Mason “Frank William Taussig” in Quarterly Journal of Economics, vol. 44, No. 3 (May, 1941), p. 352.

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Enrollment Economics 2
1910-11

For Undergraduates and Graduates:—

[Economics] 2. Professor Taussig.— Economic Theory

Total 42: 16 Graduates, 15 Seniors, 5 Juniors, 2 Sophomores, 4 Others.

 

Source: Harvard University. Annual Reports of the President and Treasurer of Harvard College, 1910-11, p. 49.

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ECONOMICS 2
Mid-year Examination

Arrange your answers strictly in the order of the questions.

  1. Is there a vicious circle in F. A. Walker’s reasoning on the relation between wages and business profits?
  2. (a) “The railroads of the United States receive annually hundreds of millions for transporting passengers. These receipts come in day by day, yet the railroad company habitually pays its employees at the close of the week or the close of the month. Here we have a class of services where the employer receives the price of his product before he pays for the labor concerned in its production. . . . Hotel-keepers and, in less degree, boarding-house keepers collect their bills before they pay their cooks, chambermaids, and scullions. Nearly all the receipts of theatre, opera, and concert companies are obtained day by day, although their staff and troupes are borne on monthly or weekly pay-rolls.”
    (b) “In very primitive life the work spent on capital goods and that spent on consumers’ goods are not always synchronous, but organization and the acquirement of a permanent fund of capital make them so. Work to-day, and you eat to-day food that is the consequence of the working. In point of time the canoe-makers are fed as promptly as the fishermen, and this fact is duplicated in every part of the industrial system. . . . The synchronization of labor and its reward does not appear in the industry of primitive beginnings, but is the fruit of organization.”
    Explain what doctrine is attacked by these extracts; whether the reasoning is essentially the same in the two; whether you would accept it in either case; what authors you suppose to have written the passages.
  3. (a) “Most commodities render several different kinds of service at the same time. A thing of this kind is to be regarded as a bundle of distinct utilities, tied together by being embodied in a common material object.”
    (b) “A bundle, as a whole, is never a final unit of any one’s consumers wealth; but each element in it is a final utility to some class, and it is that class only whose mental estimate of it fixes its price. . . . There are, then, five prices in the canoe. Expressing the values of the five different services which the canoe renders, they are, respectively, twenty-five, twenty, fifteen, ten, and five dollars. The entire canoe, then, brings seventy-five dollars in the market.”
    (c) “In every such commodity there is a marginal utility, and this is the only that counts in fixing the price of it. Every commodity, except the poorest and cheapest that can be made, is, in effect, such a bundle of service-rendering elements as we have just described. The marginal element in the bundle has a direct influence on prices, but the other elements have none.”
    (d) “If the principle of final utility be applied to entire articles, it will give values that are, in most cases, many fold greater than are the actual values that the dealings of the market establish. . . . Goods of fine quality would then be, as a rule, many times dearer than they are.”
    Consider which of these statements, if any, you would accede to; and whether they are consistent with each other.
  4. A limited edition of Roosevelt’s “African Travels,” bound in pigskin, each copy inscribed by the author, is published at $20 a copy. What economic principles are illustrated?
  5. Explain the equilibrium of demand and supply, for short periods and for long, in case of a sharp decline in the demand for a commodity made with much fixed capital, under conditions of constant return.
  6. Is there quasi-rent, and if so, how do you measure it, in the following cases: —
    (a) A manufacturing plant, whose gross earnings more than cover prime costs, but do not suffice to cover supplementary costs.
    (b) A deep-water harbor site, provided with piers and docks, and let on a long lease at a rental bringing a liberal return on the expense for improvements.
    (c) A handsome dwelling, in a neighborhood deserted by fashion, whose rental is less than interest on the cost of the dwelling.
  7. (a) Suppose a tax to be levied at four per cent on the capital value (i.e. on the selling price as it was before the tax) of urban sites used for business purposes. What would be the effect on the rentals of the buildings on the sites, on the prices of things made or sold in the buildings, on the profits of tenants?
    (b) Suppose owners of urban real estate to be prohibited by law from collecting in rentals more than four per cent (net) on the cost of buildings alone; what would be the effect on the prices of things made or sold in the buildings, on the tenants, on the effective utilization of the property?

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ECONOMICS 2
Final Examination
1910-1911

Arrange your nswers in the order of the questions

  1. Explain concisely the theories of wages (general wages) set forth by

A. Walker,
J. B. Clark,
A. Marshall,
E. Böhm-Bawerk,
Your instructor, —

and indicate what you consider the weakest point in each.

  1. Wherein is there similarity, wherein dissimilarity, between the views of Böhm-Bawerk and Clark on the productivity of Capital?
  2. Quasi-rent;
    derived utility;
    the incidence of taxes on building sites and on buildings, —
    among the trains of reasoning suggested by these phrases, which tend to support the doctrine that rent is a return essentially different from interest, which run counter to that doctrine?
  3. “That part of a man’s income which he owes to the possession of extraordinary natural abilities is a free boon to him; and from an abstract point of view bears some resemblance to the rent of other free gifts of nature, such as the inherent properties of land. But in reference to normal prices, it is to be classed rather with the profits derived by free settlers from the cultivation of new land, or again with the find of a pearl-fisher.” Why? or why not? Whose doctrine do you suppose this to be?
  4. “There is a constant tendency towards a position of normal equilibrium, in which the supply of each of these agents [of production] shall stand in such a relation to the demand for its services, as to give those who have provided the supply a sufficient reward for their efforts and services. If the economic conditions of the country remained stationary sufficiently long, this tendency would realize itself in such an adjustment of supply to demand, that both machines and human beings would earn generally an amount that corresponded fairly with their cost of rearing and training, conventional necessaries as well as those things which are strictly necessary being reckoned for.”
    Whom do you believe to be the writer of this passage? and do you infer that he holds value to be determined in the end by utility or by cost?
  5. Under what circumstances, if under any. —
    (1) Will the imposition of an import duty cause the domestic price of the taxed commodity to rise permanently by the amount of the duty.
    (2) Will it cause the price to rise permanently, but by an amount less than the duty;
    (3) Will it cause the price to fall;
    (4) Will it cause the prices of other commodities to fall?
  6. After the passage of the tariff act of 1890, a Bohemian firm of pearl button makers transferred their business to the United States, sending over the working people and erecting a factory in the U. S. Was this to the advantage of the people of the U. S.? If so, wherein? If not, why not?

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Enrollment Economics 2
1911-12

For Undergraduates and Graduates:—

[Economics] 2. Professor Taussig.— Economic Theory

Total 54: 23 Graduates, 11 Seniors, 16 Juniors, 2 Sophomores, 2 Others.

 

Source: Harvard University. Annual Reports of the President and Treasurer of Harvard College, 1911-12, p. 63.

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ECONOMICS 2
Mid-year Examination
1911-12

  1. Define concisely: —

(1) Consumer’s surplus,
(2) Producer’s surplus,
(3) Saver’s surplus.

Is Saver’s surplus analogous to the first or to the second?

  1. Suppose all persons to have the same income; would it be easier or more difficult to measure consumer’s surplus?
  2. (a) “It has sometimes been suggested that if all land were equally advantageous and all were occupied, the income derived from it would partake of the nature of a monopoly rent; but this seems to be an error.” Do you think it an error?
    (b) “Suppose, for instance, that all the meteoric stones in existence were equally hard and imperishable; and that they were all in the hands of a single authority; further, that this authority decided, not to make use of its monopolistic power to restrict production so as to raise the price of its services artificially, but to work each of the stones to the full extent it could be profitably worked (that is up to the margin of pressure so intensive that the resulting product could barely be marketed at a price which covered, with profits, its expenses without allowing anything for the use of the stone),” — would there be “rent”? would there be “monopoly rent”?
  3. “There are many infra-marginal savers. As to these, the appropriation of part of their income by the state would not lessen accumulation. The same principle is applicable as in the case of rent proper. A tax on rent falls definitely on the owner, and has no further effect on the supply or the utilization of the source of rent. From this point of view there may be ground for progressive taxation of large funded incomes.” Do you think this well-reasoned?
  4. Draw diagrams illustrating (1) the effects of a bounty on a commodity produced under conditions of increasing returns; (2) the effects of a tax on a commodity produced under the same conditions; and consider whether, taking account of consumer’s surplus, there is likely to be a net gain or loss in either case.
  5. Explain the distinction between external and internal economies; and consider wherein a tendency to increasing returns has different consequences according as it is due to external or to internal economies.
  6. Explain what is meant by “two-sided competition,” and the determination of price by the subjective valuations of marginal pairs; and consider the significance of the following passage: “In the present conditions of industry, most sales are made by men who are producers and merchants by profession. . . . For them, the subjective use-values of their own wares is for the most part nearly nil. . . . In sales by them, the limiting effect which, according to our theoretical formula, would be exercised by the valuation of the last seller, practically does not come into play.”
  7. Wherein is there resemblance, wherein difference, between Böhm-Bawerk’s analysis of “two-sided competition” and Marshall’s reasoning concerning the equilibrium of demand and supply?
  8. An eminent German economist has written: “As against Thornton, George, and the apostles of trade-unions, I believe that the wages-fund doctrine, rightly stated and rightly understood, is at bottom true; but I should add the qualification, to which Hermann called attention, that the payments by those who demand the finished goods from the source from which, in the long run, the capitalists are enabled to employ labor, or to maintain a demand for labor, from their wages-fund.”
    What do you say of the mode of dealing with the wages-fund doctrine involved in this qualification?

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ECONOMICS 2
Final Examination
1911-12

Arrange your answers strictly in the order of the questions.

  1. “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; it is not dependent on demand except to this extent, that if there were no demand for the labor of the trade at that wage, the trade would not exist. In other words the normal wage represents the expenses of production of the labor according to the ruling standard of comfort.”
    Does Cairnes reason on these suppositions? Does Marshall? Granting them, would you conclude that value in the end was determined by utility or by cost?
  2. Explain briefly (50 words under each head), in which of the following cases, if in any, you think there is reasoning in a circle:

(a) The residual theory of wages, as stated by Walker;
(b) The proposition that the value of commodities produced by a particular grade (non-competing group) of laborers depends on the rate of wages paid in that grade;
(c) The proposition that general wages depend on the marginal product of labor discounted at the current rate of interest.

  1. Does “quasi-rent” form a constituent part of supply-price? Does “supplementary cost” form a constituent part of supply-price?
  2. “‘Rent is not an element in price’ — such is the classical statement on the subject. It even expresses a view that is now prevalent. The expression itself, however, is vague. It seems to mean that the fact of rent plays no part in the adjustment of values, and that things would exchange for one another in exactly the ratios in which they now do, if there were no such thing as rent. 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 the 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 think?
  3. “Goodwill taken in its wider meaning comprises such things as established customary business relations, reputation for upright dealing, franchises and privileges, trademarks, brands, patent rights, copyrights, exclusive use of special processes guarded by law or by secrecy, exclusive control of particular sources of materials. All these items give a differential advantage to their owners, but they are of no aggregate advantage to the community. They are wealth to the individual concerned, — differential wealth; but they make no part of the wealth of nations.” Why? Or why not?
  4. “The workmen have a natural right to the value which their work, of itself and aside from the aid furnished by others, imparts to the material that is put into their hands, and when they sell their labor, they are really selling their part of the product of the mill. In like manner, paying interest is buying the share which capital contributes to the product. The owners of the capital have an original right to what the machines, the tools, the buildings, the land, and the raw materials, of themselves and apart from other contributions, put into the joint product.”
    Whom do you believe to be the writer of the passage? What would Böhm-Bawerk say to it? Veblen?
  5. “It is not true that the spinning of yarn in a factory, after allowance has been made for the wear-and-tear of the machinery, is the product of the labor of the operatives. It is the product of their labor, together with that of the employer and subordinate managers, and of the capital employed; and that capital itself is the product of labor and waiting: and therefore the spinning is the product of labor of many kinds, and of waiting. If we admit that it is the product of labor alone, and not of labor and waiting, we can no doubt be compelled by inexorable logic to admit that there is no justification for interest, the reward of waiting; for the conclusion is implied in the premises.”
    Whom do you think the writer of this passage? What would be said of the conclusions by Clark? By Böhm-Bawerk? What is your own view?
  6. “The English theory has it that the rate of wages is simply got by dividing the wage fund by the number of existing workers. This is entirely wrong. In any event the laborers get the wage fund wholly and entirely as wage: but that does not say wage for what time; for one year, or two years, or three years, or more. . . . The English Wage Fund theory has thus a core of truth, but it is wrapped up in a quite overpowering mass of error.”
    Explain what Böhm-Bawerk means; and give your opinion on the question involved.

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Enrollment Economics 11
1912-13

For Undergraduates and Graduates:—

[Economics] 11 (formerly 2). Professor Taussig.— Economic Theory

Total 31: 20 Graduates, 4 Seniors, 5 Juniors, 2 Others.

 

Source: Harvard University. Annual Reports of the President and Treasurer of Harvard College, 1912-13, p. 57.

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ECONOMICS 11
Mid-year Examination
1912-13

  1. “If there really were a national fund, the whole of which must necessarily be applied to the payment of wages, that fund could be no other than an aggregate of smaller similar funds possessed by the several individuals who compose the employing part of the nation. Does, then, any individual employer possess any such fund? Is there any specific portion of any individual’s capital which the owner must necessarily expend upon labor? . . . May he not spend more or less on his family and himself, according to his fancy — in the one case having more, in the other less, left for the conduct of his business? And of what is left, does he or can he determine beforehand how much shall be laid out on buildings, how much on materials, how much on labor? . . . It sounds like mockery or childishness to ask these questions, so obvious are the only answers that can possibly be given to them; yet it is only on the assumption that directly opposite answers must be given that the Wages-fund can for one moment stand.”
    What answers would Mill have given to such questions? What would be your own answer?
  2. “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 off goods in all stages of advancement is only kept intact, the cow-boy may have today the shoes that he virtually creates by his efforts. . . . 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 clothe the people.”
    “It is not necessary to the production of things that cannot be used as subsistence, or cannot be immediately utilized, that there should have been a previous production of the wealth required for the maintenance of the laborers while the production is going on. It is only necessary that there should be, somewhere within the circle of exchange, a contemporaneous production of sufficient subsistence for the laborers, and a willingness to exchange this subsistence for the thing on which the labor is being bestowed. . . . 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.”

Do you see any difference between the propositions stated in these extracts?
By whom do you think they were written?
Do you accept the conclusions?

  1. “Though there are few commodities which are at all times and for ever unsusceptible of increase of supply, any commodity whatever may be temporarily so; and with some commodities this is habitually the case. Agricultural produce, for example, cannot be increased in quantity before the next harvest; the quantity of corn already existing in the world is all that can be had for sometimes a year to come. During that interval corn is practically assimilated to things of which the quantity cannot be increased. In the case of most commodities, it requires a certain time to increase their quantity; and if the demand increases, then, until a corresponding supply can be brought forward, that is, until the supply can accommodate itself to the demand, the value will so rise as to accommodate the demand to the supply.”
    Wherein, if at all, is this way of dealing with the temporary equilibrium of demand and supply different from Marshall’s?
  2. Is it true that the first effect of increased demand for a commodity is to raise its supply price, and that the ultimate effect is to lower its supply price? If so, under what conditions in either case?
  3. Explain briefly: —

(a) internal economies,
(b) external economies,
(c) increased returns.

It has been said that the tendency to increase of effectiveness because of large-scale production should be distinguished from the tendency to increasing returns. Why, or why not?

  1. “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 investment of capital and labour by individuals for the sake of gain.”
    What is the third class? and why does it hold an intermediate position?
  2. Explain what Clark means by the “extensive margin of indifference” and the “intensive margin of indifference”; and give your opinion on the significance of the conception in both aspects.
  3. “That part of a man’s income which he owes to the possession of extraordinary natural abilities is a free boon to him; and from an abstract point of view bears some resemblance to the rent of other free gifts of nature, such as the inherent properties of land. But in reference to normal prices, it is to be classed rather with the profits derived by free settlers from the cultivation of new land, or again with the find of the pearl-fisher.”
    Why? or why not?

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ECONOMICS 11
Final Examination
1912-1913

[Arrange your answers strictly in the order of the questions]

  1. Explain the connection between

(a) the rent of mines;
(b) Carey’s doctrine that the total rent received by landowners is less than interest on the total investment for improving land;
(c) the earnings of barristers or opera-singers;
(d) the earnings of “successful” business men.

  1. “Men are not equal. . . . Those capable of organizing and leading industrial enterprise are in a minority, and are indeed few; hence they can put a price on their services which would be impossible if there were many. Their services are not worth more on this account, but they can get more for them. Because the community needs their services, and cannot perhaps get along without them, they can, if they like, put “famine prices” on the commodity (organizing and directing talent) which they have to sell; while, on the other hand, those who have only labor or physical skill, though they are just as necessary, are many, and hence can about as readily be taken advantage of as the others can take advantage.”
    What have you to say? Can the “famine prices” be justified?
  2. (a) “There are, in fact, few no-rent men in actual employment; and the reason for this is clear, since work involves a sacrifice, and it does not pay to incur the sacrifice unless the earnings be a positive quantity. In those times and places in which child labor has been employed, with little regard for the welfare of the victims, labor that was not at the no-rent point, but very near it, has been pressed into service. But, where the sacrifice entailed by labor is, in some way, neutralized by a benefit that work confers, labor which created literally nothing may sometimes be employed. Lunatics and prisoners may be kept at work, in order that they may secure fresh air and exercise, even though the amount of capital that they use, if it were withdrawn from their hands and turned into marginal capital, would produce as much as it does when it is used by them. In such a case the product imputable to their labor is nil.
    The existence of any no-rent labor enables us to make the rent formula general and to apply it to every concrete agent of production.”
    (b) “The productivity of any capital, whether human or external, will differ with the capital. Men differ in quality, i.e., in productive power, as truly as lands or other instruments differ. Some men have a high degree of earning power and some have not. Some men can work twice as fast as others. Some men can do higher grades of work than others. The result is that we find men classified as common manual laborers, skilled manual laborers, common mental workers, superintending workers, and enterprisers. Just as we can measure the rent of any land by the difference in productivity between that and the low-rent, or no-rent, land, in exactly the same way we can measure the difference in productivity between men. There is no grade of workmen called the “no-wages men,” but there would be such a grade if it were customary for their employer to pay for their cost of support (as the employer of land pays for its cost), so that only the excess above this cost were to be called wages.”
    Compare the two trains of reasoning; give your opinion; and state by what authors the passages were written.
  3. “If the proprietor of superior land were to say, ‘I will take no rent for it,’ this would not make wheat cheaper. The supply would not be changed; for the same quantity would be raised, the marginal amount raised on the no-rent land would be needed and would be bought at the former price, and all other parts of the supply would command the same rate. . . . It is a striking fact — but one hitherto much neglected — that similar conclusions apply to the product of every other agent” [capital and labor].
    Do similar conclusions apply? Who do you think is the author of this passage?
  4. What three grounds explain, according to Böhm-Bawerk, the preference for present goods over future? Which of them does he conclude to be the most important? State Fisher’s criticism; and give your own opinion on the controverted question.
  5. “In the present condition of industry, most sales are made by men who are producers and merchants by profession. . . . For them, the subjective use value of their own wares is, for the most part, very nearly nil. . . . In sales by them the limiting effect which, according to our theoretical formula, would be exerted by the valuation of the last seller, practically does not come into play.” — BÖHM-BAWERK.
    What is the “theoretical formula”? and what is the importance of the qualification here stated?
  6. In what sense are the terms “demand” and “increase of demand” used in the following passages: —

(a) “The democratization of society and the aping of the ways of the well-to-do by the lower classes have greatly increased the demand for silk fabrics.”
(b) “The lower price of sugar after 1890, when sugar was admitted free of duty, at once caused an increase of demand.”
(c) “The cheapening of a commodity may mean an increased demand such that the total sum spent on it will be as great as before, even greater than before.”

  1. Explain the essentials of Veblen’s theory of crises, and state wherein you think it most tenable, wherein least so.

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Course Announcement: Economics 11
1913-14

Primarily for Graduates
I
ECONOMIC THEORY AND METHOD

[Economics] 11. Economic Theory. Mon., Wed., Fri., at 2.30. Professor Taussig.

Course 11 is intended to acquaint the studeent with some of the later developments of economic thought, and at the same time to train him in the critical consideration of economic principles and the analysis of economic conditions. The exercises are accordingly conducted mainly by the discussion of selected passages from the leading writers; and in the discussion of selected passages from the leading writers; and in this discussion the students are expected to take an active part. The writings of J. S. Mill, Cairnes, F. A. Walker, Clark, Marshall, Böhm-Bawerk, and other recent authors, will be taken up. Attention will be given chiefly to the theory of exchange and distribution.

Source: Division of History, Government, and Economics 1913-14 in Official Register of Harvard University, Vol. X, No. 1, Part X (May 19, 1913), p. 65..

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Enrollment Economics 11
1913-14

For Undergraduates and Graduates:—

[Economics] 11. Professor Taussig.— Economic Theory

Total 39: 23 Graduates, 11 Seniors, 2 Juniors, 2 Others, 1 Radcliffe.

 

Source: Harvard University. Annual Reports of the President and Treasurer of Harvard College, 1913-14, p. 55.

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ECONOMICS 11
Mid-year Examination
1913-14

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

  1. “The distinction, then, between Capital and Not-capital, does not lie in the kind of commodities, but in the mind of the capitalist — in his will to employ them for one purpose rather than other; and all property, however ill adapted in itself for the use of labourers, is a part of capital, so soon as it, or the value to be received from it, is set apart for productive reinvestment. The sum of all the values so destined by their respective possessors composes the capital of the country.”
    What is to be said for this doctrine, what against it? By whom was it maintained?
  2. “Prices of commodities in great measure are fixed by supply and demand, but, except temporarily, they cannot be less than all costs, including wages and taxes, entering directly or indirectly into their production and distribution, together with some profit for the use of the capital employed. Hence an increase of the wages or cost of labor usually must be paid by consumers. A general increase of the wages of all labor would cause an equivalent increase of the price of nearly every product of labor and a general increase of the cost of living. The increased wages of the laborers then would not buy more than did their former wages and they would be no better off than before the increase. For this reason the economic welfare of the masses in the aggregate cannot be materially improved by the simple expedient of raising generally the wages of labor.”
    What would Ricardo say to this? J. S. Mill? Your own view?
  3. Marx’s doctrine, that value is embodied labor, has been said to be essentially the same as Ricardo’s doctrine that value rests on the labor given to producing an article. Why or why not?
  4. Suppose an increase in the demand for a commodity, in the schedule sense: —

(a) For short periods, under what conditions, if under any, would you expect supply price to rise? to fall?
(b) For long periods, under what conditions, if under any, would you expect supply price to rise? to fall?

Note whether your answer differs in any particular from that to be expected from Marshall.

  1. “The part played by the net product at the margin of production in the modern doctrine of distribution is apt to be misunderstood. In particular many able writers have supposed that it represents the marginal use of a thing as governing the value of the whole. It is not so; the doctrine says we must go to the margin to study the action of those forces which govern the value of the whole; and that is a very different affair.”
    Explain.
  2. “It has sometimes been argued that if all land were equally advantageous and all were occupied, the income derived from it would not be a true rent, but a monopoly rent.”
    Under what conditions, if under any, would there be true rent in such a case? Under what conditions, if under any, would there be a monopoly rent?
  3. “The derived supply price [of one of a group of things having a joint supply price] is found by a rule that it must equal the excess of the supply price for the whole process of production over the sum of the demand prices of all the other joint products.”
    Explain, illustrating by diagram.
    State the corresponding rule for the derived demand price of one of a group of commodities for which there is a joint demand.
  4. (a) “In hundreds and thousands of suburban homes the question is asked every day, “How much milk shall we take in today, ma’am?” or “How much bread?” and the housewife knows without consideration that if she ordered one loaf of bread and one pint of milk, the marginal significance of bread and milk would be higher than their price, and if she said six loaves and five quarts of milk, the marginal loaf and pint would not be worth their price. Such orders, therefore, never enter into her head. But she deliberates, perhaps, whether she will want three loaves of bread or four, or three loaves and a twist, or three white loaves and a half-loaf of brown, and whether she shall take three quarts of milk or a pint more or less. Thus, whatever the terms on which alternatives are offered to us may be, we detect in conscious action at the margin of consideration the principles which are unconsciously at work in the whole distribution of our resources.”
    Do you find anything to criticize in this?
    (b) “When the supply (of a given commodity) is limited, the diminishing utility of each increment will be arrested at a point below which the consumer will prefer to abandon the use of an increment for something else. The margin here is a margin of indifference between an increment of one commodity and an increment of another commodity. Since these increments are not necessarily the same, the margin of indifference may be reached at a point where the tenth increment of one commodity balances the twentieth of another, where, in other words, the marginal utility of the first commodity is twice that of the second.”
    Explain what you think is meant; and give your opinion on the conclusion stated in the last clause of the final sentence.
  5. “An English ruler who looks upon himself as the minister of the race he rules (say in India) is bound to take care that he impresses their energies in no work that is not worth the labor that is spent on it; or, to translate the sentiment into plainer language, that he engages in nothing that will not produce an income sufficient to defray the interest on its cost.”
    Would Marshall question this principle? On what grounds, if at all? Would you?

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ECONOMICS 11
Final Examination
1913-14

Arrange your answers in the order of the questions.
Answer all questions.

  1. “What about the ‘supply curve’ that usually figures as a determinant of price, coördinate with the demand curve? I say it boldly and baldly: there is no such thing. When we are speaking of a marketable commodity, what is usually called the supply curve is in reality the demand curve of those who possess the commodity; for it shows the exact place which every successive unit of the commodity holds in their relative scale of estimate.”
    Is this criticism just if directed to (1) the temporary equilibrium of supply and demand, as analyzed by Marshall for a grain market; (2) the “price zone determined by marginal pairs,” as analyzed by Böhm-Bawerk; (3) the long period equilibrium of supply and demand, as analyzed by Marshall.
  2. “The rent of land is no unique fact, but simply the chief species of a large genus of economic phenomena; and the theory of rent is no isolated economic doctrine, but merely one of the chief applications of a particular corollary from the general theory of demand and supply.”
    Explain this statement of Marshall’s; mention other species which he assigns to the large genus; and consider wherein, if at all, the general doctrine differs from that of Clark, and from that of Böhm-Bawerk.
  3. “As is true of good will and credit extensions generally, so with respect to the good will and credit strength of these greater business men: it affords a differential advantage and gives a differential gain. In the traffic of corporation finance this differential gain is thrown immediately into the form of capital and so added to the nominal capitalized wealth of the community. . . . This capitalization of the gains arising from a differential advantage results in a large ‘saving’ and increase of capital.”
    Does this resemble in essentials Walker’s doctrine? If so, wherein? If not, why not?
    In what sense, if in any, is it true that the differential gains lead to an increase of capital?
  4. “It may be conceded that if a certain class of people were marked out from their birth as having special gifts for some particular occupation, and for no other, so that they would be sure to seek out that occupation in any case, then the earnings which such men would get might be left out of account as exceptional, when we are considering the chances of success or failure for ordinary persons.”
    Consider whether, given the premise, the conclusion here stated would follow; what the bearing of the reasoning is on Walker’s theory of business profit; what Marshall would say of premise and conclusion.
  5. In what sense, if in any, is a “productivity” theory of wages put forth by Walker? by Clark? by your instructor?
  6. “All apital goods — tools, machines, and the like — were explained [by the economists of the British School] as merely so much stored-up labor, or as the stored-up wages paid for it; the capitalist, as a laborer gone to seed; and thereby the product of capital as indirectly the product of the earlier wage-paid labor; interest being thus mere indirect wages. It was implied in this that the interest payments are for mere wear-out of the principal invested, and that the sum of all the interest payments upon a given investment can normally or regularly equal only the original capital sum invested in wages; and that sometime a given capital investment must cease its career of earning interest.”
    Consider whether this was the doctrine of the British economists; whether it is the doctrine of Böhm-Bawerk; of your instructor; and give your own opinion.
  7. “In the main, the way in which the increase of savings can find escape from its difficulties is through the parallel advance in the arts, calling for more and more elaborate forms of capital. . . . Given continued improvements calling for more and more elaborate plant, — more of time-consuming and roundabout applications of labor, — than savings can heap up, and a return will be secured by the owner of capital.”
    What are the “difficulties” here referred to? What should be said of this way of escape by Böhm-Bawerk? by your instructor? by Veblen?

 

Sources:

Harvard University Examinations, Papers Set for Final Examinations in History, History of Science, Government, Economics, Philosophy, Psychology, Social Ethics, Education, Fine Arts, Music in Harvard College, June 1913, pp. 50-53.
Harvard University Examinations, Papers Set for Final Examinations in History, History of Science, Government, Economics, Philosophy, Psychology, Social Ethics, Education, Fine Arts, Music in Harvard College, June 1914, pp. 51-52.
Harvard University Archives. Prof. F. W. Taussig, Examination Papers in Economics 1882-1935 (Scrapbook).

Image Source:  Frank W. Taussig in Harvard Class Album, 1915.

Categories
Exam Questions Swarthmore Undergraduate

Swarthmore. External Examiner Richard Musgrave’s Economic Theory Exam, 1946

 

 

Harvard economics alumnus Wolfgang Stolper (Ph.D. 1938) was able to leverage his friendships and connections from graduate school to obtain a flow of external examiners for Swarthmore College’s honors examinations in economics. For today’s post I have transcribed the examination questions in economic theory provided by Richard Musgrave (Harvard Ph.D., 1937).

The 1943 honors examination questions of Paul Samuelson have been posted earlier.

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SWARTHMORE COLLEGE

Honors Examination
Richard A. Musgrave
Federal Reserve Board
Washington, D. C.

June 11, 1946
2:00-5:00 p.m.

ECONOMIC THEORY

Answer 4 questions, one from each part. All questions have equal weight.

Part I

There are some basic tools and concepts of economic analysis which can be applied to the solution of a variety of economic problems. Demonstrate this for any one of the following three tools, choosing such illustrations as you consider most significant:

(1) Indifference curves
(2) Tendency toward equilibrium
(3) Multiplier principle

Indicate both merits and shortcomings of your tool.

Part II

(1) Explain the shape of short and long run cost curves for the individual firm and show their relationship to the industry’s cost schedule.

(2) “From the social point of view perfect competition is always superior to monopolistic competition, monopoly or oligopoly.” Discuss.

(3) Discuss price determination under duopoly.

(4) Show briefly the effects on a firm’s price and output of any three of these changes:

(a) An increase in wage rates
(b) A progressive tax on profits
(c) A fall in demand
(d) A flat tax on unit of output. Show how the results will depend upon the prevailing state of competition.

Part III

(1) Compare the economic determination of (a) distribution of income and (b) factor prices in a free market economy and in a centrally planned economy.

(2) “The theory of distribution based on the concept of marginal productivity provides the economist with an adequate answer to the solution of wage disputes”. Do you agree?

(3) Discuss the difference, if any, between interest and profits and state the major factors which determine either return.

(4) Discuss the economic pros and cons of a more equal distribution of income, allowing for all major aspects of the question.

Part IV

(1) Suppose that a rapid development of atomic energy during the next 10 years will lead to a drastic reduction in the cost of power and a replacement of coal and electricity. What would be some of the economic consequences?

(2) Discuss the major factors determining the level of income and employment. You may illustrate with reference to a future year, say 1950.

(3) “As long as flexible costs and prices are assured, it is indeed impossible that overproduction or unemployment should prevail. The doctrine of under-employment equilibrium advanced by Keynes and others is based on the assumption of price rigidity.” Do you agree?

(4) “The capitalist society is inherently unstable. It may be likened to a bicycle rider who can maintain his balance only by moving ahead at a rapid rate.” Explain and discuss.

 

Source: Duke University. David M. Rubenstein Rare Book and Manuscript Library. Economists’ Papers Archive. Wolfgang Stolper’s Papers. Box 22, Folder 1.

Image Source:Richard A. Musgrave portrait from the University of Michigan Faculty History Project.

Categories
Exam Questions Harvard

Harvard. Core economic theory. Enrollments and final exams. Taussig, 1904-1909

 

 

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  and also for 1897-1900 have been posted as well.  

For the academic years 1900/01 through 1902/03 the course was taught by Thomas Nixon Carver. Taussig was on a leave of absence for the academic year 1902-03 [Source: Harvard University Catalogue 1902/1903, p. 297.] Taussig himself wrote that he was “compelled by ill health to withdraw from teaching” (1901-03). [Chapter IX Economics (1871-1929) by The Development of Harvard University since the Inauguration of President Eliot, 1869-1929 Cambridge: Harvard University Press, 1930. p. 191].  Schumpeter wrote “We speak of nervous breakdown in such cases, which indeed are more frequent in the academic profession than one would infer from the general conditions of a professor’s life. He took leave and went abroad for two years, relaxing completely and spending one winter at Meran in the Austrian Alps, another on the Italian Riviera, and the summer between (1902) in Switzerland. Catastrophe was thus avoided, and in the fall of 1903 he was able to resume his teaching and the editorship of the Quarterly Journal.” [ Joseph A. Schumpeter, Chapter 7 Frank William Taussig (1859-1940) in Ten Great Economists from Marx to Keynes. p. 206.]

During the first term of 1903/04 Taussig taught the core economic theory course and Carver taught the second term.  Beginning 1904/05 Taussig taught the course by himself again.

 

 

 

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Enrollment Economics 2
1900-01

For Undergraduates and Graduates:—

[Economics] 2. Asst. Professor Carver.— Economic Theory in the Nineteenth Century.

Total 45: 6 Graduates, 15 Seniors, 16 Juniors, 5 Sophomores, 3 Other.

Source: Harvard University. Annual Reports of the President and Treasurer of Harvard College, 1900-01, p. 64.

Link to reading list for the course:

https://www.irwincollier.com/harvard-economics-economics-2-carver-1900-01/

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 Enrollment Economics 2
1901-02

For Undergraduates and Graduates:—

[Economics] 2. Asst. Professor Carver.— Economic Theory.

Total 32: 5 Graduates, 6 Seniors, 17 Juniors, 2 Sophomores, 2 Other.

Source: Harvard University. Annual Reports of the President and Treasurer of Harvard College, 1901-02, p. 77.

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Course Description Economics 2
1902-03
[Carver and Taussig actually first shared the course during the following year]

For Undergraduates and Graduates

[Economics] 2. Economic Theory. Mon., Wed., Fri., at 2.30. Professors Taussig and Carver.

Course 2 is intended to acquaint the student with some of the later developments of economic thought, and at the same time to train him in the critical consideration of economic principles and the analysis of economic conditions. The exercises are accordingly 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. Lectures are given at intervals outlining the present condition of economic theory and some of the problems which call for theoretical solution. Theories of value, diminishing returns, rent, wages, interest, profits, the incidence of taxation, the value of money, international trade, and monopoly price, will be discussed. Marshall’s Principles of Economics, Böhm-Bawerk’s Positive Theory of Capital, Taussig’s Wages and Capital, and Clark’s Distribution of Wealth will be read and criticised.

Course 2 is open to students who have passed satisfactorily in Course 1.

Source:   Harvard University. The University Publications, New Series, No. 55. Faculty of Arts and Sciences, Division of History and Political Science comprising the Departments of History and Government and Economics, 1902-03. Cambridge, Mass. (June 14, 1902), pp. 40-41.

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Enrollment Economics 2
1902-03

For Undergraduates and Graduates:—

[Economics] 2. Asst. Professor Carver.— Economic Theory.

Total 25: 5 Graduates, 8 Seniors, 7 Juniors, 3 Sophomores, 2 Other.

Source: Harvard University. Annual Reports of the President and Treasurer of Harvard College, 1902-03, p. 67.

 ___________________________

 Enrollment Economics 2
1903-04

For Undergraduates and Graduates:—

[Economics] 2. Professors Taussig and Carver.— Economic Theory.

Total 23: 9 Graduates, 4 Seniors, 7 Juniors, 1 Sophomores, 2 Other.

Source: Harvard University. Annual Reports of the President and Treasurer of Harvard College, 1903-04, p. 66.

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HARVARD UNIVERSITY
ECONOMICS 2
[Mid-Year. 1904]

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

  1. Do you conceive wages to be determined in amount by capital, or to be paid from capital, in these cases:—
    1. a railway which collects its receipts before pay-day comes around;
    2. a farmer who pays his laborers after the crop has been harvested and sold;
    3. a workingmen’s society for coöperative production which makes advances to members from week to week, and adds a final payment when the season’s or year’s operations have been concluded?
  2. State carefully how you conceive Walker to define the “no-profits” line; how he distinguishes between business profits and wages; and whether there is a vicious circle in his reasoning as to the residual element in distribution.
  3. Suppose a tax to be levied on a commodity subject to the law of diminishing returns, and the proceeds to be used for a bounty on a commodity produced under conditions of increasing return, — how would the welfare of the community presumably be affected?
    Assume now that the first commodity is an article of comfort, the second an article of luxury, — would your conclusion be different?
    Reverse the assumption, and suppose the first commodity to be one of luxury, the second one of comfort, — would your conclusion be still different?
  4. “We might as reasonably dispute whether it is the upper blade of a pair of scissors or the lower that cuts a piece of paper, as whether value is governed by utility or cost of production. It is true that when one blade is held still, and the cutting is effected by moving the other, we may say with careless brevity that the cutting is done by the second; but the statement is not strictly accurate, and is to be excused only so long as it claims to be merely a popular and not a strictly scientific account of what actually happens.”
    Explain, with reference to commodities produced under the conditions of

monopoly;
constant returns;
increasing returns.

  1. Explain prime cost, total cost, supplementary cost; and consider their relation to quasi-rent.
  2. Would Marshall say that there was true rent in the case of, —

a very profitable silver mine;
a valuable site in a town like Pullman;
a successful business man.

Why or why not in each case?

  1. Suppose it were provided by law that the rent of premises used for wholesale or retail trading should not exceed interest on the cost of the buildings (with due allowance for depreciation and the like), what would be the effects on landlords and tenants, and on the prices of the articles sold?
  2. “A rich man abstains from the consumption of his superfluous wealth, and is scarcely conscious, perhaps quite unconscious, of having suffered any deprivation whatever. On the other hand, the same or a much smaller amount of wealth reserved from personal consumption by an artisan or a small tradesman will frequently demand the most rigorous self-denial….And it is similar with labor. The laborious effort fitted to produce a given result does not represent the same sacrifice for different people: it is one thing for the strong, another for the weak; one for the trained workman, another for the raw beginner. This being so, the questions arises — How are such differences to be dealt with in computing cost of production? The answer must be that the sacrifices to be taken account of, and which govern exchange value, are not those undergone by A, B, or C, but the average sacrifices undergone by the class of laborers or capitalists to which the producers of the commodity belong.”— Cairnes. Would you accede to this conclusion as to capitalists? as to laborers?

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 Enrollment Economics 2
1904-05

For Undergraduates and Graduates:—

[Economics] 2. Professor Taussig.— Economic Theory.

Total 22: 6 Graduates, 2 Seniors, 11 Juniors, 1 Sophomores, 2 Other.

Source: Harvard University. Annual Reports of the President and Treasurer of Harvard College, 1904-05, p. 74. 

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Course Description Economics 2
1904-05

[Economics] 2. Economic Theory. Mon., Wed., Fri., at 2.30. Professor Taussig.

Course 2 is intended to acquaint the student with some of the later developments of economic thought, and at the same time to train him in the critical consideration of economic principles and the analysis of economic conditions. The exercises are accordingly 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. Lectures are given at intervals outlining the present condition of economic theory and some of the problems which call for theoretical solution. Theories of value, diminishing returns, rent, wages, interest, profits, the incidence of taxation, and monopoly price, will be discussed. Marshall’s Principles of Economics, Clark’s Distribution of Wealth, and selections from the writings of Walker, Cairnes, and others, will be read and discussed.
Course 2 is open to students who have passed satisfactorily in Course 1.

Source: Harvard University. Faculty of Arts and Sciences. Division of History and Political Science Comprising the Departments of History and Government and Economics, 1904-05 (May 16, 1904), pp. 38-39.

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ECONOMICS 2.
[Mid-Year 1905]

Arrange your answers strictly in the order of the questions.

  1. “The United States government collects its postal revenues day by day, yet postpones the payment of its clerks and carriers to the end of the month. To descend to the other end of the scale of dignity, hotel keepers and, in a less degree, boarding-house keepers, collect their bills before they pay their cooks, chambermaids, and scullions. Nearly all the receipts of theatre, opera, and concert companies are obtained day by day, although their staffs and troupes are borne on monthly or weekly pay-rolls.”
    “I have before me a considerable collection of accounts from the books of farmers as late as 1851. These show the hands charged with advances of the most miscellaneous character. . . . In general, the amount of such advances does not exceed one-third, and it rarely reaches one-half of the stipulated wages of the year. It is idle to speak of wages thus paid as coming out of capital.”
    In your view, is there a payment of wages out of capital, partial or whole, in these cases?
  2. “On the relation between the money funds or proceeds held by the immediate employer, and the food, clothes and enjoyments, constituting the community’s real circulating capital, he [J. S. Mill] gave ambiguous and unsatisfactory statements, from which only a sympathetic interpreter could patch up a consistent and tenable doctrine.”
    Explain the grounds on which this judgment of Mill rests; and consider whether your judgment on F. A. Walker, on the same point, would be more favorable or less.
    “Under the conditions which prevail so preponderantly in the modern industrial world, the true residual sharer, certainly in the first instance, is the active capitalist, the business man. . . . The hired laborer gets his fixed wages, the investor his stipulated income; the managing business man takes the rest.”
    Does this view seem to you sound? and, whether sound or not, does it seem to you necessarily inconsistent with Walker’s view as to the place of business profits in the theory of distribution?
  3. Consider in what manner the doctrine of consumer’s rent is affected by (1) differences in the incomes of individuals and of classes; (2) the satisfactions derived from articles of necessity; (3) those derived from articles of luxury and display.
  4. Mill’s statement of the equation of supply and demand, and Marshall’s analysis of the temporary equilibrium of supply and demand, — wherein different, how reconcilable?
  5. Explain briefly: producer’s surplus, rent, monopoly rent, quasi rent, prime cost, supplementary cost.
  6. “The so-called rent of buildings, exclusive of ground-rent, is not governed at all by the economic law of rent, but by the principles which regulate the interest of capital.” F. A. Walker.
    Would Marshall accede to this view? If so, why? If not, why not? Your own view?
  7. “Independently of any change in the suitability of the prevailing crops and methods of cultivation for special soils, there is a constant tendency towards equality in the value of different soils. In the absence of any special cause to the contrary, the growth of population and the wealth will make the poorer soils gain on the richer.”
    Explain (1) why there is this tendency towards equality; (2) whether it is inconsistent with the doctrine of difference in the “original and indestructible powers” of the soil; (3) what is its bearing on the proposal to appropriate through taxation the rent of agricultural land.
  8. Suppose that in a given industry, with an increase of output, there was continuing gain in the way of internal economics; what result would ensue in the organization and scale of production? Suppose there was continuing gain, but solely in external economies, what result would ensue? Suppose that a gradual increase in demand [and output] were to “increase gradually the size and efficiency of the representative firm; and to increase the economies, both internal and external, which are at its disposal,” — what then?
    Consider (1) the short-period and the long-period effects of an increase of demand for a commodity subject to the law of diminishing returns; (2) the short-period and the long-period effects of a decrease in demand for a commodity subject to the law of increasing returns.

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Harvard University

ECONOMICS 2
[Final 1905]

  1. Suppose ordinary manual laborers to become very few, other workers and other factors in production remaining the same; what consequences would ensue as to the production of wealth, and as to the earnings of such laborers and of other workers?
  2. Suppose persons having in high degree the qualities needed for business management to become very numerous, other things still remaining the same; what consequences would ensue as to the production of wealth, and as to the earnings of such managers and of other workers?
  3. Suppose the quantity of capital to be very greatly increased, the other factors of production remaining the same; what consequences would ensue as to the production of wealth, as to the returns to capital, and as to the earnings of the other factors?
  4. (a) “Let us suppose that every one owns whatever capital he uses . . . and is not only of equal capacity, but of equal willingness to work, and does in fact work equally hard; also that all work is unskilled, — or rather, unspecialized in this sense, that if any two people were to change occupations, each would do as much and as good work as the other had done.”
    (b) “Let us suppose that labor is not of one industrial grade, but of several; that parents always bring up their children to an occupation of their own grade; that they have a free choice within that grade, but not outside it. Let us suppose, further, that the increase of population in each grade is governed by other than economic causes; it may be fixed, or may be influenced by changes in custom, in moral opinion, etc.”
    State what causes would govern relative wages under each of these suppositions.
  5. State which of the suppositions just described is believed to be in accord with the actual conditions of modern societies by Cairnes, by Marshall, by Seager; and give your own view.
  6. Compare Marshall’s conclusions as to the causes which govern earnings of management with Walker’s and with Seager’s; and give your own conclusion.
  7. The advantages and disadvantages of the English system of land tenure; and the qualifications which must be remembered when applying to it the Ricardian analysis.
  8. Set forth briefly what questions of principle should receive most attention in an exposition for elementary students of (a) foreign trade; (b) money; (c) labor problems; (d) railway problems.
    [Discuss two only of these topics]

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 Enrollment Economics 2
1905-06

For Undergraduates and Graduates:—

[Economics] 2. Professor Taussig.— Principles of Economics (second course).

Total 34: 13 Graduates, 7 Seniors, 5 Juniors, 8 Sophomores, 1 Other.

Source: Harvard University. Annual Reports of the President and Treasurer of Harvard College, 1905-06, p. 72.

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ECONOMICS 2
[Midyear 1906]

Answer nine questions.
Arrange your answers strictly in the order of the questions.

  1. “(a) The draughtsman, who, shut up in some dingy office on the banks of the Thames, is drawing the plans for a great marine engine, is in reality devoting his labor to the production of bread and meat as truly as though he were garnering the grain in California or swinging a lariat on a La Plata pampa; (b) he is as truly making his own clothing as though he were shearing sheep in Australia or weaving cloth in Paisley, and just as effectually producing the claret he drinks at dinner as though he gathered the grapes on the banks of the Garonne.” Consider whether there is any difference between the two statements here quoted, and to which, if to either, you could accede.
  2. “(a) The ordinary bargain between labor 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 toward being ready for immediate consumption. (b) But while this is true of most employees, it is not true of those who finish the processes 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. (c) And if we take one season 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.”
    What do you say of the several statements in this passage?
  3. Walker’s reasoning as to the relation of wages to profits, and of profits to wages: is there a vicious circle?
  4. Are high wages in a particular employment (or group of employments) to be regarded as effects or causes of the value of the commodities made by the laborers who receive the high wages? What is Cairnes’s view? Your own?
  5. “Mill allows that when land capable of yielding rent in agriculture is applied to some other purpose, the rent which would have been yielded in agriculture is an element in the cost of production of other commodities. But wherefore this distinction between agriculture and other branches of industry? Why does not the same principle apply between two different modes of agricultural employment?” What would be your answer?
  6. Consider in what way, if at all, the principle of quasi-rent is applicable to the operations of (1) a bank; (2) a railway; (3) a building erected for business purposes on an urban site.
  7. Suppose it were provided by law that the rental paid by tenants in buildings erected on urban sites should not exceed interest at current rates on the capital invested in the buildings (allowance being made depreciation, insurance, taxes, and the like); what would be the result for the owners of land and buildings, for tenants, and for the purchasers of things made or sold in the buildings?
  8. Explain (briefly) total utility; marginal utility; consumer’s surplus; the application of the principle of consumer’s surplus to the utilities derived from commodities produced with increasing and with diminishing returns.
  9. A recent writer discussing the principle of marginal utility with reference to a wayfarer supposed to possess a stock of apples, remarks that, — “if in the case of five apples, the marginal utility of each is five units of satisfaction, that of the stock will be five times five, or twenty-five; but if in the case of eight apples, the marginal utility of each falls to three, that of the stock will be eight times three, or twenty-four. Yet the total utility of eight apples is certainly more than that of five.” What do you say?
  10. How serviceable do you consider Marshall’s device of a “representative firm” for the study of the effect of changes in supply and demand?

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ECONOMICS 2
[Final 1906]

Arrange your answers strictly in the order of the questions.

I
Answer three questions.

  1. “There is a constant tendency towards a position of normal equilibrium, in which the supply of each of the agents of production shall stand in such a relation to the demand for its services, as to give to those who have provided the supply a sufficient reward for their efforts and sacrifices. If the economic conditions of the country remained stationary sufficiently long, this tendency would realize itself in such an adjustment of supply to demand, that both machines and human beings would earn generally an amount that corresponded fairly with their cost of rearing and training, conventional necessaries as well as those things which are strictly necessary being reckoned for.”
    Whom do you believe to be the writer of this passage? and what do you think his conclusion as to non-competing groups?
  2. “A rich man abstains from the consumption of his superfluous wealth, and is scarcely conscious, perhaps quite unconscious, of having suffered any deprivation whatever. On the other hand, the same or a much smaller amount of wealth reserved from personal consumption by an artisan or a small tradesman will frequently demand the most rigorous self-denial. . . . And it is similar with labor. The laborious effort fitted to produce a given result does not represent the same sacrifice for different people: it is one thing for the strong, another for the weak; one for the trained workman, another for the raw beginner. This being so, the question arises: How are such differences to be dealt with in computing cost of production? The answer must be that the sacrifices to be taken account of, and which govern exchange value, are not those undergone by A, B, or C, but the average sacrifices undergone by the class of laborers or capitalists to which the producers of the commodity belong.” — Cairnes.
    Would you accede to this conclusion as to capitalists? as to laborers?
  3. It is true that “the rent of rare natural ability may be regarded as a specially important element in the incomes of business men . . . and of exceptionally successful barristers, and writers, and painters, and singers, and jockeys”?
    What is Walker’s view? Marshall’s? your own?
  4. “The sudden appropriation by the State of any incomes from property, the private ownership of which had once been recognized by would destroy security and shock the foundations of society. But if from the first the State had retained these rents in its hands, the vigour of industry and accumulation need not have been impaired; and nothing at all like this can be said of the incomes derived from property made by man (quasi-rents).”
    Explain and consider how far, if at all, the principles stated are applicable to the rent or royalty of mines.

 

II
Answer two questions.

  1. “Abstinence is confined to the genesis of true capital; none of it is involved in maintaining an endless series of capital goods, and there is no abstinence in a static state.”
    What are the grounds on which this doctrine rests? and what is your own view?
  2. “The whole question whether goods are advanced by one class of persons to another, in order to tide over an interval of waiting, clearly has reference, not to the relations of capitalists in general to laborers in general, but to the relations of certain sub-groups to other sub-groups in the producing series.”
    Explain; and give your own opinion.
  3. “In the same sense in which the interest on artificial capital and the rent of land are not elements in price, wages have no effect on price. If good workers were to relinquish their claims against employers and work for nothing, the price of goods would still conform to their marginal utility. . . . In the same inaccurate sense in which it may be said that the rent of land is not an element in price, the rents of tools, etc., and those of men themselves, or interest and wages, are not elements in price. It makes no difference who gets them.”
    Explain what is the doctrine here summarily stated, and the grounds on which you accept it or reject it.

 

III
Answer both questions.

  1. (a) Is a high rate of money wages and advantage to a country? If so, wherein? if not, why not?
    (b) Is a high rate of money wages an obstacle to the successful conduct of industry in competition with countries where money wages are low?
  2. What do say to the plan of so adjusting duties on imports as to equalize the “labor cost” of imported and domestic commodities, through the levy of duties which will just offset the higher wages paid by the American employer?

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 Enrollment Economics 2
1906-07

For Undergraduates and Graduates:—

[Economics] 2. Professor Taussig.— Principles of Economics (second course).

Total 33: 12 Graduates, 6 Seniors, 9 Juniors, 2 Sophomores, 4 Other.

Source: Harvard University. Annual Reports of the President and Treasurer of Harvard College, 1906-07, p. 70.

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ECONOMICS 2
[Mid-Year 1907]

Arrange your answers strictly 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 cow-boy may have to-day the shoes that he virtually creates by his efforts . . . 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 clothe the people.”
    What would be said as to this by Walker? by Marshall? by the instructor in the course? What is your own view?
  2. Explain what Cairnes means by “cost of production,” and what his conclusion is as to the relation between cost of production and value.
  3. Explain what Marshall means by (1) prime cost, (2) supplementary cost, (3) total cost; what his general conclusion is as to the relation between cost and value; and wherein, if at all, his conclusion differs from Cairnes’s.
  4. Is there quasi-rent, in Marshall’s view, in times of activity, when profits are above the normal range? If so, how would he measure it?
    Is there quasi-rent, in Marshall’s view, in times of depression? If so, how would he measure it?
  5. “It may be conceded that if a certain class of people were marked out from their birth as having special gifts for some particular occupation, and for no other, so that they would be sure to seek that occupation in any case, then the earnings which such men would get might be left out of account as exceptional, when we were considering the chances of success or failure for ordinary persons.”
    Does Marshall concede this much? and what is the bearing of his conclusion (affirmative or negative) on his reasoning as to business profits?
  6. Suppose it were provided by law that the rental paid by tenants in buildings used for business on urban sites should not exceed interest on the amount invested in the buildings alone (allowance being made for repairs, depreciation, insurance, taxes, and the like); what would be the result for the owners of land and buildings, for tenants, and for the purchasers of things made and sold in the buildings?
  7. “A rich man abstains from the consumption of his superfluous wealth, and is scarcely conscious, perhaps quite unconscious, of having suffered any deprivation whatever. On the other hand, the same or a much smaller amount of wealth reserved from personal consumption by an artisan or a small tradesman will frequently demand the most rigorous self-denial. . . . And it is similar with labor. The laborious effort fitted to produce a given result does not represent the same sacrifice for different people: it is one thing for the strong, another for the weak; one for the trained workman, another for the raw beginner. This being so, the question arises: How are such differences to be dealt with in computing cost of production? The answer must be that the sacrifices to be taken account of, and which govern exchange value, are not those undergone by A, B, or C, but the average sacrifices undergone by the class of laborers or capitalists to which the producers of the commodity belong.” — Cairnes.
    Would you accede to this conclusion as to capitalists? as to laborers?
  8. There is prima facie reason for believing that the aggregate satisfaction, so far from being already a maximum, could be much increased by collective action in promoting the production and consumption of things in regard to which the law of increasing return acts with especial force.”
    Why and how?

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ECONOMICS 2
[Final 1907]

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

  1. “The rate of interest is limited and determined by the productiveness of the last extension of process economically permissible, and of the further extension not permissible. . . . Assuming that these two marginal limits are very near each other, one of them may be left out of account without any serious inaccuracy, and the law may be simply formulated thus: the rate of interest is determined by the surplus return of the last permissible extension of production.” — Böhm-Bawerk.
    “The addition to the product caused by the last unit of capital fixes the rate of interest. Every unit of capital can secure for its owner what the last unit produces, and it can secure no more.” — Clark.
    In what essential do these two doctrines differ?
  2. The conclusions of (1) Clark (2) Böhm-Bawerk (3) Marshall, as to the relation between “abstinence” and the accumulation of capital.
  3. “In pure theory one might even measure wages in the concrete way in which we are measuring the product of instruments; for he might apply the rent formula to men of different personal qualities…. The existence of any no-rent labor enables us to make the rent formula general and to apply it to every concrete agent of production.” Explain what Clark here means; and wherein his doctrine differs from or resembles Walker’s doctrine as to the no-profits business man, and Marshall’s “quasi-rent of labor.”
  4. “Is there any capital that is simply ‘a fund for the maintenance of labor’? Is it true, as Adam Smith said, and as a hundred others have repeated, that the natural way to originate capital is to heap up food enough to live on for a long period, and then, during that period, to make something useful, like a boat, a hut, or a tool? Is stored food the original capital?” How would this question be answered by Böhm-Bawerk? By Clark? What is your own view?
  5. Explain the three grounds on which Böhm-Bawerk bases the superiority of present goods over future, and give your opinion as to their relative importance.
  6. “In the present condition of industry, most sales are made by men who are producers and merchants by profession. . . . For them, the subjective use-values of their own wares, is for the most part nearly nil. . . . In sales by them, the limiting effect which, according to our theoretical formula, would be exerted by the valuation of the last seller, practically does not come into play.” — Böhm-Bawerk. Explain; and consider the consequences as to the formula that price is determined by the valuations of marginal pairs.
  7. “In every case the difference between the price at which the similar foreign article might have been previously purchased and that at which the domestic manufacture can be sold with a reasonable profit, is to the whole extent of that manufacture a loss to the community. That difference is equal, or nearly equal, on each yard of cloth, to the duty laid on a yard of the similar foreign article, whenever that duty is not too high to prevent partial foreign importations: it is less per yard than the duty, when this is higher than is necessary for the encouragement of the domestic manufacture, and becomes prohibitory; but in this case, the whole amount consumed being of domestic manufacture, the aggregate public loss is greater than when the duty admitted is of foreign competition.” Explain; and give your grounds for accepting or rejecting these conclusions.
  8. State concisely what you consider to be the strongest argument which can now be advanced in favor of restrictive duties in (1) Great Britain, (2) Germany, (3) the United States.

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Enrollment Economics 2
1907-08

For Undergraduates and Graduates:—

[Economics] 2. Professor Taussig.— Principles of Economics (advanced course).

Total 32: 12 Graduates, 3 Seniors, 13 Juniors, 3 Sophomores, 1 Other.

Source: Harvard University. Annual Reports of the President and Treasurer of Harvard College, 1907-08, p. 66.

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ECONOMICS 2
[Mid-Year 1908]

Arrange your answers strictly in the order of the questions.

  1. “It is not necessary to the production of things that cannot be used as subsistence, or cannot be immediately utilized, that there should have been a previous production of the wealth required for the maintenance of the laborers while the production is going on. It is only necessary that there should be, somewhere within the circle of exchange, a contemporaneous production of sufficient subsistence for the laborers and a willingness to exchange this subsistence for the thing on which the labor is being bestowed. 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.”
    Whom do you believe to be the author of this passage? and what is your opinion of the doctrine stated in it?
  2. Walker’s reasoning as to the relation of wages to business profits and of business profits to wages; is there a vicious circle?
  3. “If we are accurately to express what takes place in simple types of industry, we shall say, not that ‘the whole produce of industry goes to the laborer,’ but that the whole produce of industry goes to the independent man who is both laborer and capitalist.”
    “The absurdity of making the occasional squatter dictate the amount of every laborer’s pay is patent on the face of the illustration.”
    What doctrines are here alluded to? and what is their relation to Clark’s doctrine of the “Zone of indifference.”
  4. In what way, if at all, does Marshall modify the theory of rent as to (a) agricultural land in a new country; (b) agricultural land which has been long used in an old country; (c) urban sites in towns like Pullman; (d) buildings of permanent character in old towns? (Answer concisely.)
  5. Suppose a tax at the rate of 4% on the capital value to be imposed on all urban real property (both land and buildings used for business purposes); what would be the effect on the prices of goods made or sold on the premises? On the rentals of the premises when leased? Would your answers be different if the tax were imposed on the sites alone?
  6. “The middle and especially the professional classes have always denied themselves much in order to invest capital in the education of their children; while a great part of the wages of the working classes is invested in the physical health and strength of their children. The older economists took too little account of the fact that human faculties are as important a means of production as any other kind of capital; and we may conclude, in opposition to them, that any change in the distribution of wealth which gives more to the wage receivers and less to the capitalists is likely, other things being equal, to hasten the increase of material production, and that it will not perceptibly retard the storing-up of material wealth.”
    “There are many kinds of work which can be done as efficiently by an uneducated as by an educated workman: and the higher branches of education are of little direct use except to employers and foremen and a comparatively small number of artisans. . . . . We must look in another direction for a part, perhaps the greater part, of the immediate economic gain which the nation may derive from an improvement in the general and technical education of the mass of the people.”
    Explain what is meant; and consider whether there is any inconsistency between the two passages.
  7. “A ratio between demand and supply is only intelligible if by demand we mean the quantity demanded, and if the ratio intended is that between the quantity demanded and the quantity supplied. But again, the quantity demanded is not a fixed quantity, even at the same time and place; it varies according to the value; if the thing is cheap, there is usually a demand for more of it than when it is dear. The demand, therefore, partly depends on the value. But it was before laid down that the value depends on the demand. From this contradiction how shall we extricate ourselves? How solve the paradox, of two things, each depending upon the other?”
    Who is the writer of this passage? What is the solution of the paradox (a) in your own opinion, (b) in Marshall’s treatment of the subject?
  8. What do you understand Marshall’s conclusion to be as to the doctrine of non-competing groups?

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ECONOMICS 2
[Final 1908]

Arrange your answers strictly in the order of the questions.

  1. “Economists have learned to recognize diversity of nature in those composite things to which the names of rent, profits, wages, etc., are given in popular language; they have learnt 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, and so on.” Is this true, in your opinion, as to wages? as to rent? What would be Marshall’s opinion?
  2. What reasoning does Clark apply on the suppositions (1) that landlords forego rent, (2) that capitalists forego interest, (3) that laborers forego wages? How far do you accept the reasoning, how far not?
  3. “Most commodities render several different kinds of service at the same time. A thing of this kind is to be regarded as a bundle of distinct utilities. . . . If the principle of final utility be applied to entire articles [i.e. that is, to such bundles of utilities], it will give values that are, in most cases, many fold greater than are the actual values that the dealings of the market establish.”
    What do you say as to these propositions?
  4. Explain the grounds in which Böhm-Bawerk arranges tabulations like the following, and indicate the conclusions which he draws from them.

A Month’s labor Available in 1888 Yields:

For the Period. Units of Product. True Mar-ginal Utility of Unit. MarginalUtility Reduced in Perspective. Value of Entire Product.
1888 100 5. 5. 500
1889 200 4. 3.8 760
1890 280 3.3 3. 840
1891 350 2.5 2.2 770
  1. “The doctrine of the invariable gain from using present goods as a means of spreading labor advantageously over time, has a clear resemblance to the doctrine of a ‘productivity’ of capital.” What two doctrines are here referred to? Is there such resemblance between them, or substantial difference?
  2. “Workmen and capital goods not only coöperate, but compete. Lifting may be done by capital goods in the form of elevators, cranes, etc., requiring only human guidance, or by workmen laboriously climbing ladders with loads on their backs.”
    “The increased competition of capital in general for employment is of a different character from the competition of machinery for employment in a given trade. The latter may push a particular kind of labor out of employment altogether; the former cannot displace labor in general, for it must cause an increased employment of the makers of those things which are used as capital. And in fact, the substitution of capital for labor is really the substitution of labor combined with much waiting, in the place of labor combined with little waiting.”
    Are the statements in these passages consistent? Whom do you guess to be their authors? Which, if either, would Böhm-Bawerk accept?
  3. What grounds are there for saying that duties on imports are borne in part or in whole by the producers in the foreign country? Would you distinguish in this regard between revenue duties and protective duties?
    What grounds are there for saying that duties on imports are borne in part or in whole by consumers in the foreign country? Would you distinguish in this regard between revenue duties and protective duties?
  4. Suppose Country A (say Japan) to be able to bring all commodities to market at lower expenses of production than Country B (say the United States); what consequences would ensue from unfettered trade between the two?

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Enrollment Economics 2
1908-09

For Undergraduates and Graduates:—

[Economics] 2. Professor Taussig.— Economic Theory

Total 34: 5 Graduates, 13 Seniors, 7 Juniors, 7 Sophomores, 2 Other.

Source: Harvard University. Annual Reports of the President and Treasurer of Harvard College, 1908-09, p. 67.

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ECONOMICS 2
[Mid-Year 1909]

Arrange your answers strictly 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? Certainly if one quarter of what has been adduced under the head of the efficiency of labor be valid, the differences in the product of industry arising out of differences in the industrial qualities 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.” Explain the conclusions which Walker draws from this illustrative case; and give your own.
  2. “No business man would admit that his capital was consumed by the wear and tear of machinery, and was periodically replaced by saving. The wearing away of particular material embodiments of capital is automatically repaired by a process which is not saving, in the industrial or economic sense.” Do you agree? and whom do you believe to be the author of the passage?
  3. “We must distinguish between the total utility and the marginal utility of the stock. the total utility of a stock is obtained by adding the utility of each additional apple to that of its predecessor. It will accordingly grow until the point of satiety has been reached. Ten apples possess more total utility than five. The marginal utility of the stock, however, is always equal to the marginal utility of the final unit multiplied by the number of units. . . . If in the case of five apples the marginal utility of each is five units of satisfaction, that of the stock will be five times five, or twenty-five; but if in the case of eight apples the marginal utility of each falls to three, that of the stock will be eight times three, or twenty-four. Yet the total utility of eight apples is certainly more than that of five.” What do you say to this way of dealing with marginal utility and total utility?
  4. “Though there are few commodities which are at all times and for ever unsusceptible of increase of supply, any commodity whatever may be temporarily so; and with some commodities this is habitually the case. Agricultural produce, for example, cannot be increased in quantity before the next harvest; the quantity of corn already existing in the world is all that can be had for sometimes a year to come. During the interval, corn is practically assimilated to things of which the quantity cannot be increased. In the case of most commodities, it requires a certain time to increase their quantity; and if the demand increases, then until a corresponding supply can be brought forward, that is, until the supply can accommodate itself to the demand, the value will so rise as to accommodate the demand to the supply.” What would Marshall say to this reasoning? Mill? What is your own view?
  5. “If the principle of final utility be applied to certain articles, it will give values that are, in most cases, many fold greater than are the actual values that the dealings of the market establish. . . . Goods of fine quality would then be, as a rule, many times dearer than they are.” What doctrine is here referred to? and do you think that the conclusion as to goods of fine quality follows?
  6. Do you believe that there is, —

No-rent land used for agricultural purposes;
No-rent land used as an urban site;
A zone of indifference as to “capital goods”;
A no-profits zone as to business management?

  1. Suppose a tax of 50 per cent. to be imposed on the rental value of urban sites (buildings and improvements being disregarded); what would be the effect on the rentals of the sites when leased, what on the prices of goods made or sold in them?
    Suppose a tax of 50 per cent. to be imposed on the rental values of buildings placed on urban sites (the sites being disregarded); what would be the effect on the rentals of the buildings when leased, what on the prices of goods made or sold in them?
  2. “If the proprietor of superior land were to say, ‘I will take no rent for it,’ this would not make wheat cheaper. The supply would not be changed; for the same quantity would be raised, the marginal amount raised on the no-rent land would be needed and would be bought at the former price, and all other parts of the supply would command the same rate. . . . It is a striking fact — but one hitherto much neglected — that similar conclusions apply to the product of every other agent. . . . If the capitalist says, ‘I will take none of this interest,’ the earnings of the instruments simply remain in the hands of the entrepreneur. . . . The entrepreneur will now keep the rent that the capitalist makes over to him, but the value of the goods produced will not be changed. . . . Exactly this can, however, be shown to be true of wages. In the same sense in which the interest on artificial capital and the rent of land are not elements in price, wages have no effect on price. If good workers were to relinquish their claims against their employers and work for nothing, the price of the goods would still conform to their marginal utility.” Do you think the analogy between the three cases — as to land, instruments, labor — holds good? If so, why? If not, why not?

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ECONOMICS 2
[Final 1909]

Arrange your answers strictly in the order of the questions.

  1. “Natura non facit saltum.” How is this motto, which appears on the title-page of Marshall’s Principles of Economics, applicable to his treatment of the temporary and the normal equilibrium of demand and supply; of business profits and wages; of non-competing groups?
  2. What contribution of permanent value did Cairnes make to the theory of value?
  3. “Wages are determined by the residual product of labor.”
    “Wages are determined by the specific product of labor.” “Wages are determined by the discounted marginal product of labor.” Explain what doctrines are described by these phrases; what writers hold the doctrines; and how far, if at all, they differ in essentials.
  4. Is there “quasi-rent” in such cases as these: —

(a) The population of a town is declining; dwellings in it command a rental which is less than interest at current rates on what it would cost to replace the dwellings.
(b) The earnings of an artisan or professional man who has once obtained the skill required for his work.
(c) The profits of business men.

  1. “Net rent is, then, nothing more than interest regarded from another point of view: it is an aggregate of lump sums, each of which represents the net earnings of some instrument. It is identical in amount with interest, and it becomes interest the moment that we reduce it to a fraction of the value of the instruments that earn it.” What writer maintains this doctrine? What would Marshall say of it? What is your own opinion?
  2. Explain what is meant by the “technical superiority of present goods.”
  3. “Wasteful expenditure on a scale adequate to offset the surplus productivity of modern industry is nearly out of the question. Private initiative cannot carry the waste of goods and services so nearly to the point required by the business situation. . . . Something more to the point can be done, and indeed is being done, by the civilized governments in the way of effectual waste, through armaments, public edifices, courtly and diplomatic establishments, and the like. . . . . But however extraordinary this public waste of substance latterly has been, it is altogether inadequate to offset the surplus productivity of the machine industry.”
    “Barring accidents and untoward cultural agencies from outside of politics, business, or religion, there is nothing in the logic of the modern situation that should stop the cumulative war expenditures short of industrial collapse and universal bankruptcy.”
    Explain the doctrines referred to in these extracts, give your opinion as to whether they are sound, or consistent with each other.
  4. “Duties on importation may, then, be divided into two classes: those which have the effect of encouraging some particular branch of domestic industry and those which have not. The former are purely mischievous, both to the country imposing them, and to those with whom it trades. . . . . A protection duty can never be a source of gain, but always and necessarily of loss, to the country imposing it, just so far as it is efficacious to its end. A non-protecting duty, on the contrary, would in most cases be a source of gain to the country imposing it.”
    Would you admit that a non-protecting duty is commonly a source of gain, and that this gain is never secured by a protecting duty?

 

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

Image Source:   Frank W. Taussig, Harvard Album 1906.

Categories
Exam Questions Harvard

Harvard. History of Economic Theory. Final exam questions, Taussig, 1897-1900

 

 

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 every properly educated Harvard economist’s basic training. In an earlier posting you will find Taussig’s exam questions for the academic years 1886/87 through 1889/90 along with enrollment data for this course;  analogous material from 1890/91 through 1893/94 has also been posted.

Note: Taussig did not teach Economics 2 1894/95 and 1895/96. Instead it was taught by William James Ashley, A.M., Professor of Economic History and Silas Marcus Macvane, Ph.D., McLean Professor of Ancient and Modern History.  Taussig was on leave from Harvard 1894-95 [Harvard University, Annual Reports of the President and Treasurer of Harvard College, 1894-95, p. 76.]

_______________________

Course Enrollment
1894-95

For Graduates and Undergraduates:—

[Economics] 2. Professors Ashley and Macvane. — Economic Theory from Adam Smith to the Present Time. — Selections from Adam Smith and Ricardo. — Modern Writers. — Lectures. 3 hours.

Total 34: 9 Graduates, 14 Seniors, 6 Juniors, 1 Sophomore, 4 Others.

Source:   Harvard University, Annual Reports of the President and Treasurer of Harvard College, 1894-95, p. 62.

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Course Enrollment
1895-96

For Graduates and Undergraduates:—

[Economics] 2. Professors Ashley and Macvane. — Economic Theory from Adam Smith to the present time. — Selections from Adam Smith and Ricardo. — Modern Writers. — Lectures. 3 hours.

Total 37: 5 Graduates, 14 Seniors, 7 Juniors, 4 Sophomore, 7 Others.

Source:   Harvard University, Annual Reports of the President and Treasurer of Harvard College, 1895-96, p. 63.

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Course Enrollment
1896-97

For Graduates and Undergraduates:—

[Economics] 2. Professor Taussig. — Economic Theory from the Middle of the Nineteenth Century to the Present Time. — English Writers. — The Austrian School. 3 hours.

Total 42: 12 Graduates, 12 Seniors, 13 Juniors, 2 Sophomores, 3 Other.

Source:   Harvard University, Annual Reports of the President and Treasurer of Harvard College, 1896-97, p. 65.

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1896-97.
ECONOMICS 2.
[Mid-Year. 1897.]

  1. “According to Ricardo, the exchange value of commodities contains neither return to capital nor rent, but simply labor.” Why? or why not?
  2. Sketch concisely the development of the general theory of value at the hands of Ricardo, Mill, Cairnes.
  3. “Skill, as skill, produces no effect on value; in other words, commodities do not under any circumstances exchange for each other in proportion to the degree of skill bestowed on them. Skill, though in itself inoperative on value, nevertheless affects it indirectly in two distinct ways; first, where competition is effective among producers, through the cost which must be undergone in acquiring the skill; . . . and secondly, in the absence of competition, through the principle of monopoly.” — Cairnes.
    Explain and illustrate.
  4. “If there really was a national fund the whole of which must necessarily be applied to the payment of wages, that fund could be no other than an aggregate of smaller similar funds possessed by the several individuals who compose the employing part of the nation. Does, then, any individual employer, possess any such fund? Is there any specific portion of any individual’s capital which the owner must necessarily expend upon labour? . . . May he not spend more or less on his family and himself, according to his fancy, — in the one case having more, in the other less, left for the conduct of his business? And of what is left, does he or can he determine beforehand how much shall be laid out on buildings, how much on materials, how much on labour? . . . Be it observed, fixity of definiteness is the very essence of the supposed wages-fund. No one denies that some amount or other must within any given period be disbursed in the form of wages. The only question is, whether that amount be determinate or indeterminate.” — Thornton, On Labour.
    State carefully, and consider critically, the answers Cairnes made to these questions.
  5. Would you accede to the statement that “President Walker’s theory is, in reality, not a theory of manager’s earnings at all, but a theory of differences in manager’s earnings”?
  6. “For an understanding of the machinery by which distribution is accomplished, the classification of sources of income should thus be different from that to be adopted for an explanation of the fundamental causes.” — Taussig.
    Wherein different?
  7. Explain what is meant by Consumer’s Rent; and consider how its significance is affected by inequalities in wealth.
  8. “As a rule, the poorer soils rise in value relatively to the richer, as the pressure of population increases.” — Marshall. Why?

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1896-97.
ECONOMICS 2.
[Final. 1897.]

  1. Do you believe that a permanent gain for the theory of wages has been made by Walker’s discussion of that subject? If so, wherein? if not, why not?
  2. Does Marshall’s analysis of the different grades of labor, and of the barriers between them, differ in essentials from Cairnes’s? from Mill’s?
  3. Explain what “quasi-rent” is, wherein it differs from true rent, wherein resembles true rent; and state whether the conception seems to you a helpful one, deserving to be permanently embodied in economic theory.
  4. What do you conceive the difference to be between what Walker calls “current product,” Marshall “the national dividend,” and the instructor in the course “real income”?
  5. On what grounds does Marshall maintain that “the extra income earned by natural abilities may be regarded as a rent, when we are considering the sources of the income of individuals, but not with reference to the normal earnings of a trade”? What is your own opinion?
  6. “The attribute of normal value implies systematic and continuous production.” CAIRNES. Would Böhm-Bawerk accede to this proposition? Why, or why not? Give your own opinion.
  7. Explain what Böhm-Bawerk means by (subjective) “value”; and consider his analysis of the relation between value and cost.
  8. Enumerate the grounds on which Böhm-Bawerk maintains that “present goods have greater value than future goods of like kind and quantity”; consider to which of these grounds he gives most attention; and give your opinion as to the justice of this emphasis.

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Course Enrollment
1897-98

For Undergraduates and Graduates:—

[Economics] 2. Professor Taussig. — Economic Theory in the Nineteenth Century. 3 hours.

Total 32: 9 Graduates, 9 Seniors, 11 Juniors, 3 Sophomores.

Source:   Harvard University, Annual Reports of the President and Treasurer of Harvard College, 1897-98, p. 77.

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Detailed Course Description
1897-98

*2. Economic Theory in the Nineteenth Century. Mon., Wed., Fri., at 2.30. Professor Taussig.     (V)

Course 2 is designed to acquaint the student with the history of economic thought during the nineteenth century, and to give him at the same time training in the critical consideration of economic principles. The exercises are accordingly conducted mainly by the discussion of selected passages from the important writers; and in this discussion students are expected to take an active part. Lectures are given at intervals, tracing the general movement of economic thought and describing its literature. Special attention will be given to the theory of distribution.

The course opens with an examination of Ricardo’s doctrines, selections from Ricardo’s writings being read and discussed. These will then be compared with the appropriate chapters in Mill’s Principles of Political Economy, and further with passages in Cairnes’ Leading Principles. The theory of wages, and the related theory of business profits, will then be followed in the writings of F. A. Walker, Sidgwick, and Marshall, and a general survey made of the present stage of economic theory in England and the United States. The development on the continent of Europe will be traced chiefly in lectures; but toward the close of the year a critical examination will be made of the doctrines of the modern Austrian school.

Course 2 is taken with advantage in the next year after Course 1 [Outlines of Economics taught by Professor Frank Taussig, Assistant Professor Edward Cummings and Dr. John Cummings]; but Course 15 [The History and Literature of Economics to the Close of the Eighteenth Century taught by Professor William James Ashley] may also be taken with advantage after Course 1, and then followed by Course 2, or taken contemporaneously with it.

Source:  Harvard University, Faculty of Arts and Sciences, Division of History and Political Science, 1897-98, p. 34.

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1897-98.
ECONOMICS 2.
[Mid-year. 1898.]

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

  1. According to Ricardo, what is the effect, if any, of a rise in the price of food on wages? on profits? on the prices of commodities?
  2. “Ricardo expresses himself as if the quantity of labor 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 labor but wages, and since wages may be greater or less, the quantity of labor being the same; it would seem that the value of the product cannot be determined solely by the quantity of labor, but by the quantity together with the remuneration; and that values must depend on wages.” — Mill.
    What do you conceive Ricardo would have said to this?
  3. “We have therefore remarked that the difficulty of passing from one class of employments to a class greatly superior, has hitherto caused the wages of all those classes of laborers who are separated from one another by any very marked barrier, to depend more than might be supposed upon the increase of population of each class, considered separately; and that the inequalities in the remuneration of labor are much greater than could exist if the competition of the laboring people generally could be brought practically to bear on each particular employment. It follows from this that wages in each particular employment do not rise or fall simultaneously, but are, for short and sometimes even for long periods, nearly independent of each other. All such disparities evidently alter the relative costs of production of different commodities, and will therefore be completely represented in the natural or average value.” — Mill.
    What has Cairnes added to this?
  4. “He [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 asks how is this sum, thus withdrawn, to be restored to the fund? . . . The answer to the case put by Mr. Longe is easy on his own 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 on mine.” — Cairnes.
    Give the reply.
  5. “Fixity or definiteness is the very essence of the supposed wages-fund. No one denies that some amount or other must within a given period be disbursed in the form of wages. The only question is whether that amount be determinate or indeterminate.” — Thornton.
    What is Cairnes’s answer to the question put in this passage?
  6. What would you expect the relation of imports to exports to be in a country whose inhabitants had for a long time been borrowing, and were still borrowing, from the inhabitants of other countries?
  7. Are general high wages an obstacle to a country’s exporting?
  8. “Granted a certain store of provisions, of tools, and of materials for production, sufficient, say, for 1000 laborers, those who hold the wage-fund theory assert that the same rate of wages (meaning thereby the actual amount of necessaries, comforts, and luxuries received by the laborer) would prevail whether these laborers be Englishmen or East Indians. . . . On the contrary, it is not true that the present economical quality of the laborers, as a whole, is an element in ascertaining the aggregate amount that can now be paid in wages; that as wages are paid out of the product, and as the product will be greater or smaller by reason of the workman’s sobriety, industry, and intelligence, or his want of these qualities, so wages may and should be higher or lower accordingly?”
    Give your opinion.
  9. What do you conceive to be the “no profits class of employers” in President Walker’s theory of distribution?

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1897-98.
ECONOMICS 2.
[Final. 1898.]

The answer to one question may be omitted.

  1. The analysis of capital in its relation to labor and wages at the hands of Ricardo and of Böhm-Bawerk, — wherein the same? wherein different?
  2. The contributions of permanent worth for economic theory by Cairnes? by F.A. Walker? [Consider one.]
  3. The position of Carey and Bastiat in the development of economic theory.
  4. “If the efficiency of labor could be suddenly doubled, whilst the capital of the country remained stationary, there would be a great and immediate rise in real wages. The supplies of capital already in existence would be distributed among the laborers more rapidly than would otherwise be the case, and the increased efficiency of labor would soon make good the diminished supplies. The fact is that an increase in the efficiency of labor would bring about an increase in the supply of capital.” — Marshall. Why? or why not?
  5. “The capital of the employer is by no means the real source of the wages even of the workmen employed by him. It is only the intermediate reservoir from which wages are paid out, until the purchasers of the commodities produced by that labor make good the advance and thereby encourage the undertaker to purchase additional labor.” W. Roscher.
    What do you say to this?
  6. “If the rate of profit falls, the laborer gets more nearly the whole amount of the product. But if the rate of wages falls, we have a corresponding fall in prices and little change in the relative shares of labor and capital.” Hadley.
    Why, or why not, in either case?
  7. “In the present condition of industry, most sales are made by men who are producers or merchants by profession, and who hold an amount of commodities entirely beyond any needs of their own. Consequently, for them the subjective use-value of their own wares is, for the most part, very nearly nil; and the figure which they put on their own valuation almost sinks to zero.” Explain the bearing of this remark on the theory of value as developed by Böhm-Bawerk.
  8. What, according to Böhm-Bawerk, is the explanation of interest derived from “durable consumption goods”? And what is your own view?
  9. How far do you conceive that there is a “productivity” of capital, serving to explain the existence of interest, and the rate?

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Course Description and Enrollment
1898-99

For Undergraduates and Graduates:—

[Economics] 2. Professor Taussig. — Economic Theory in the Nineteenth Century. Discussion of selected paassages from leading writers. The history of theory. Lectures and recitations (3 hours).

Total 67: 5 Graduates, 27 Seniors, 22 Juniors, 3 Sophomores, 10 Others.

Source:   Harvard University, Annual Reports of the President and Treasurer of Harvard College, 1898-99, p. 72.

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1898-99.
ECONOMICS 2.
[Mid-Year. 1899.]

  1. Are the high wages earned by some kinds of skilled laborers cause or effect of high prices of commodities made by them?
  2. Many Americans annually visit European countries, and there spend freely. Supposing this to be the only cause, beside the imports and exports of merchandise, affecting the international trade of the United States, what would you expect the usual relation of its imports and exports to be? and what the usual flow of specie to or from the country?
  3. “What a nation is interested in is, not in having its prices high or low, but in having its gold cheap — understanding by cheapness not low value, but low cost — a small sacrifice of ease and comfort; and it generally happens that cheap gold is accompanied by a high scale of prices.”
    How does a country gain from having its gold cheap? and why need cheap gold not be accompanied by a high scale of prices?
  4. “The distinction, then, between capital and non-capital does not lie in the kind of commodities, but in the mind of the capitalist — in his will to employ them for one purpose rather than another; and all property, however ill adapted in itself for the use of laborers, is a part of capital, so soon as it, or the value to be received from it, is set apart for productive reinvestment.” Is this true?
  5. “The multitudes who compose the working class are too numerous and too widely scattered to combine at all, much more to combine effectually. If they could do so, they might doubtless succeed in diminishing the hours of labor, and obtaining the same wages for less work. But if they aimed at obtaining actually higher wages than the rate fixed by demand and supply — the rate which distributed the whole circulating capital of the country among the working population — this could only be accomplished by keeping a part of their number permanently out of employment. . . . The workpeople collectively would be no better off than before, having to support the same numbers out of the same aggregate wages.”
    Whom do you suppose to be the writer of this passage? What would Cairnes say to it? Professor Taussig?
  6. “If the efficiency of labor could be suddenly doubled, whilst the capital of the country remained stationary, there would be a great and immediate rise in real wages. The supplies of capital already in existence would be distributed among the laborers more rapidly than would otherwise be the case, and the increased efficiency of labor would soon make good the diminished supplies. The fact is that an increase in the efficiency of labor would bring about an increase in the supply of capital.” — Marshall.
    Why? or why not?
  7. Do you believe Walker’s discussion of the theory of wages has promoted the better understanding of the causes affecting the welfare of laborers? If so, how? If not, why not?
  8. “The extra gains which any producer or dealer obtains through superior talents for business, or superior business arrangements, are very much a similar kind [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 . . . . assimilate the possessor of the advantage to a receiver of rent.” Mill.
    Wherein does Walker’s doctrine differ from this?

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1898-99.
ECONOMICS 2.
[Final. 1899.]

Arrange your answers strictly in the order of the questions.

I.

Three questions from this group.

  1. J. S. Mill’s contributions to economic theory, and his position as regards the development of theory.
  2. “Cost of production” and “expenses of production”: what Marshall designates by these phrases; whether he believes that “expenses” measure “cost”; and how far Cairnes and Mill believed “expenses” to measure “cost.”
  3. It has been said that the wages-fund doctrine grew out of the industrial conditions of England during the Napoleonic wars, — capital having then been accumulated to such an extent as to enable employers to pay their laborers by the month, week, or day, without waiting for the marketing of the product. It has been said also that its general acceptance was favored by the fact that it afforded a complete justification, as to wages, for the existing order of things. — Give your opinion as to the historical accuracy of these statements as to the origin and the ready acceptance of the doctrine.
  4. Marshall’s conclusions on the relation of cost and of utility to the value of a commodity, —

(a) for long periods, if it be subject to the law of constant returns;
(b) for short periods, if it be subject to the law of constant returns;
(c) for long periods, if it be subject to the law of increasing returns.

Which among these conclusions has been heretofore most dwelt on by economists? and which is applicable to the greatest range of phenomena?

 

II.

Three questions from this group.

  1. Explain “consumers’ rent” (or “surplus,”) “producers’ rent,” “savers’ rent,” “quasi-rent”; and consider how far any or all of these conceptions are analogous to the traditional one of “economic rent.”
  2. The effect on consumers’ rent of a tax on a commodity subject to the law of diminishing returns; and the mode in which the reasoning would be affected according as the commodity were tobacco or diamonds.
  3. Admitting that interest is the reward of “abstinence,” does it follow that the rate of interest is a measure of the “abstinence” undergone by the several receivers of interest? Why or why not?
  4. The rent of rare natural abilities may be regarded as a specially important element in the income of business men, so long as we consider them as individuals. In relation to normal value, the earnings even of rare abilities are, as we have seen, to be regarded rather as a quasi rent than as a rent proper.” Is the rent of rare abilities specially important in the case of business men? if so, why? and why not to be regarded as rent in relation to normal value?

 

III.

Two questions in this group.

  1. “ The instructed man of today desires that the world generally and all other countries should have a full circulation, while he would like for his own country, if that were possible, a trifle less than its distributive share of that supply, so that it may be a good country to buy in and not a very good country to sell in. He desires to have prices everywhere sustained, in order that trade may be good. He would like, if that were possible, to have prices in his own country permanently lower, though only a shade lower, than anywhere else, in order that his countrymen may get the largest share of that trade.’ Walker
    Would you agree?
  2. Your conclusion as to whether in general a régime of falling prices is a cause of depression and an obstacle to prosperity; and whether the actual fall in prices during the past generation has had ill effects of this sort.
  3. The compensatory action of bimetallism, in regard to the ratio between the metals, and in regard to their stability in value: is it made out in either way? in both ways?

_______________________

Course Description and Enrollment
1899-1900

For Undergraduates and Graduates:—

[Economics] 2. Professor Taussig. — Economic Theory in the Nineteenth Century. Lectures and discussions (3 hours); required reading.

Total 65: 8 Graduates, 17 Seniors, 27 Juniors, 3 Sophomores, 1 Freshman, 9 Others.

Source:   Harvard University, Annual Reports of the President and Treasurer of Harvard College, 1899-1900, p. 69.

_______________________

1899-1900.
ECONOMICS 2.
[Mid-Year. 1900.]

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

 

  1. “That high wages make high prices, is a popular and widely-spread opinion. The whole amount of error involved in this proposition can only be seen thoroughly when we come to the theory of money.”
    “It is another common notion that high prices make high wages; because the producers or dealers, being better off, can afford to pay more to their labourers.”
    What would Cairnes say was the “amount of error” in the opinions here stated by Mill?
  2. “What was Cairnes’s answer to the question put by him: “Are these grounds for a separate theory of international trade?”
  3. Suppose country A to have to remit regularly a tribute to country B: trace the effects on imports and exports, on the usual rates of foreign exchange, on the level of prices in the two countries.
  4. Is Cairnes’s reasoning as to the effect which trade unions may exercise on wages consistent with his reasoning as to “a certain proportion of the sums invested, which must go to the payment of wages”?
  5. (a) “The tiller of the soil must abide in faith of a harvest, through months of ploughing, sowing, and cultivating; and his industry is only possible as food has been stored up from the crop of the previous year . . . To the extent of a year’s subsistence, then, it is necessary that some one should stand ready to make advances to the wage-laborer out of the products of past industry. All sums so advanced came out of capital.”
    (b) ”But how largely, in fact, are wages advanced out of capital?. . . In some exceptional industries [e.g. transportation companies] it happens that the employer realizes on his product in a shorter time than once a week, so that the labourer 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) “In new countries . . . the wages of labor are paid only partially out of capital . . . A collection of accounts from the books of farmers in different sections before 1851 shows the hands charged with advances of the most miscellaneous character. Yet in general the amount of such advances does not exceed one third, and it rarely reaches one half, of the stipulated wages of the year. Now it is idle to speak of wages thus paid as coming out of capital. At the time these contracts were made the wealth which was to pay those wages was not in existence.”
    Consider whether an advance from capital, or the absence of an advance, is made out in the cases here described by Walker.
  6. How far you regard wages and other incomes as predetermined, — i.e. determined by causes that have operated in the past; and how far your conclusion is affected by the saving and investment of a part of current money income.
  7. Your conclusion as to what share in distribution is “residual” (a) over short periods, (b) over long periods.
  8. Is the doctrine of a rigid and predetermined wages-fund set forth by Ricardo? by Mill?
  9. The “laissez-faire” and “natural rights” theory at the hands of Adam Smith, of Bastiat, of John Stuart Mill.

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1899-1900.
ECONOMICS 2.
[Final. 1900.]

Arrange your answers strictly in the order of the questions.

  1. a) “The analysis of consumer’s surplus, or rent, gives definite expression to familiar notions, but introduces to new subtlety.”
    Explain.
    b) Consider qualifications to be borne in mind in measuring consumer’s surplus; and give your conclusion as to helpfulness of the doctrine thus qualified.
  2. “When we speak of the national dividend, or distributable net income of the whole nation, as divided into the shares of land, labour, capital, we must be clear as to what things we are including, and what things we are excluding . . . The labour and capital of the country, acting on its natural resources, produce annually a certain net aggregate of commodities, material and immaterial, including services of all kinds. This is the true net annual income, or revenue, of the country; or, the national dividend.”
    “It is to be understood that the share of the national dividend, which any particular class receives during the year, consists either of things that were made during the year, or the equivalents of those things. For many of the things made, or partly made, during the year are likely to remain in the possession of capitalists and undertakers of industry and to be added to the stock of capital; while in return they, directly or indirectly, hand over to the working classes some things that had been made in previous years.“
    Consider as to these passages, (1) their relation to the doctrine of total utility and consumer’s rent, (2) whether you would accede to either statement, or to both.
  3. Define monopoly revenue; and consider the effect on monopoly and on the prices of the monopolized article of (1) a tax proportional to monopoly revenue, (2) a tax fixed in total amount, (3) a tax proportional to quantity produced.
  4. “We might reasonably dispute whether it is the upper blade of a pair of scissors or the lower that cuts a piece of paper, as whether value is governed by utility or cost of production. It is true that when one blade is held still, and the cutting is effected by moving the other, we may say with careless brevity that the cutting is done by the second; but the statement is not strictly accurate, and is to be excused only so long as it claims to be merely a popular and not a strictly scientific account of what actually happens.” Explain; and consider whether Mill or Cairnes would have accepted this conclusion.

5, 6, 7 (answer separately, or as one question, at your pleasure).

Rent and quasi-rent;
Producer’s rent and saver’s rent;
Producer’s rent and business profits, —

wherein like, wherein unlike; with a consideration of the helpfulness of the distinctions for the solution of economic problems.

  1. Compare the conclusions of Mill, Cairnes, Marshall, as to the causes of the differences in remuneration in different social strata.
  2. Suppose France, Germany, and the United States had not legislated as they did in 1873-75, what would have been, in your opinion, the course of the price of silver?

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

Image Source:   The Harvard Portfolio.  Volume VI, Class of 1895.