From the final exams for the two semester introductory economics course run by Frank Taussig and A. Piatt Andrew in 1904-05 we see (among other things) that John Stuart Mill provided the backbone of theory and that there was room for a compare and contrast question regarding a liberal market economy vs a socialist economy.
________________________
Course Enrollment
Economics 1. Professor [Frank W.] Taussig, Asst. Professor [Abram Piatt] Andrew, and Messrs. [Vanderveer] Custis, [James Alfred] Field, [Silas Wilder] Howland, [Selden Osgood] Martin, and [Chester Whitney] Wright. — Outlines of Economics.
Total 438: 10 Seniors, 84 Juniors, 232 Sophomores, 54 Freshmen, 58 Others.
Source: Harvard University. Report of the President of Harvard College, 1904-1905, p. 74.
________________________
ECONOMICS 1
Mid-year Examination, 1904-05
One question in each group may be omitted.
Arrange your answers strictly in the order of the questions
Give your reasons in all cases.
I
- Which among the following would you consider (1) “productive laborers,” (2) otherwise useful to society: actors, manufacturers of gambling implements, stock-brokers, landlords receiving and spending the rents of land.
- It has been laid down that,—
Capital is distinguished from non-capital by its nature, — it consists of machinery, materials, and other apparatus for production;
Capital is distinguished from non-capital by the intention of the owner in dealing with his wealth;
Capital, though the result of saving, is yet continually consumed.
Can you reconcile these propositions? If not, which do you consider sound? - “The laws and conditions of the production of wealth partake of the character of physical truths.” Is this true of the law stating the conditions under which the accumulation of capital takes place? of that stating the conditions under which production upon land takes place?
- Define briefly: value in use, value in exchange, utility, marginal utility, margin of cultivation, consumer’s rent.
- Can a person having a monopoly of a given commodity control its price at will? If so, how? If not, why not?
- “An individual speculator cannot gain by a rise in price of his own creating . . . when there is neither at the time nor afterwards any cause for a rise of prices except his own proceedings.”
On what reasoning does this statement of Mill’s rest? Does the practice of dealings for future delivery (“futures”) affect the reasoning.
II
- What is the difference between a wages-fund and a wages-flow? Which seems to you the better mode of describing the influences that act on the general rate of wages?
- “The expectations of profit, therefore, in different employments, cannot long continue very different: they tend to a common average.”
“It is true that, to persons with the same amount of original means, there is more chance of making a large fortune in some employments than in others.”
“Gross profit varies greatly from individual to individual, and can scarcely be in any two cases the same.”
Can these statements of Mill’s be reconciled? - Is the return from capital sunk in the soil to be regarded as rent or interest? Is the return from urban real estate to be regarded as rent or interest? Is the return on corporate securities (stocks and bonds) to be regarded as rent or interest?
- How will a rise in the rate of interest affect the selling value of land? that of securities yielding a fixed income?
- “But it is impossible for anyone to study political economy, even as at present taught, or to think at all upon the production and distribution of wealth, without seeing that property in land differs essentially from property in things of human production, and that it has no warrant in abstract justice.” Henry George.
Do you think this statement true in view of what you have learned in this course? Consider both your reading and the lectures. - What would become of interest, rent, business profits, in a socialist state? what if there were an all-embracing régime of coöperative production?
Source: Harvard University Archives. Harvard University. Mid-year Examinations, 1852-1943. Box 7, Bound Volume: Examination Papers, Mid-Years 1904-05.
________________________
ECONOMICS 1
Year-end Examination, 1904-05
Omit one question from each group.
I
- What is meant by the equilibrium of demand and supply? How is it secured?
- Suppose there were a general rise in wages: could capitalists, by charging higher prices for their goods, prevent profits from falling?
Suppose a rise of wages in a particular trade: could the capitalists in that trade, by charging higher prices, keep their profits from falling? - Under what head — wages, rent, interest, profits — would you class the remuneration of (1) an apothecary; (2) a city merchant who owns the building in which he carries on his business; (3) an author who receives copyright payments on books which he has written; (4) a stockholder in a company which owns a lucrative patent?
- Is land capital? Are buildings capital? Are the skill and capacity of a workman — such as a trained engineer or a great inventor — to be regarded as capital?
II
- What would be the effect on the price of beef if a high protective tariff were levied on the import of hides?
- Which of the economic advantages and disadvantages of combination, in the broad sense, result from (a) pooling, (b) merger in a single corporation, (c) monopoly?
- President Roosevelt in a recent message said that our tariff “duties must never be reduced below the point that will cover the difference between the labor cost here and abroad.” Discuss this statement.
- Suppose that a country which manufactures only enough to supply half the home market, and which has a large export trade in wheat, imposes a uniform import duty of 50% on all commodities. What will be the effect on the nominal and the real wages of agricultural laborers, absolutely, and as compared with wages in manufacturing industries?
III
- How do you explain the fact that there is less than 1/10 as much silver in a dime as in a silver dollar? Is there any reason why this should be so?
- Explain briefly:—
(a) Deposit.
(b) Suffolk Bank system.
(c) Clearing House certificate.
(d) Post-note.
(e) Discount.
(f) Reserve city.
(g) Central reserve city.
(h) Asset currency.
- Secretary Shaw has said “Without claiming that the national banking act is perfect or that our currency system is free from objection I think that the world joins us in the verdict that it is the best system known to man.”
Discuss this statement, comparing the American system as regards security and elasticity with those of England and Germany. - If a national bank examiner should discover the following to be the account of a bank in Boston to what would he object:
| Capital | 200,000 | Loans | 733,000 |
| Surplus | 24,000 | U.S. Bonds | 75,000 |
| Undivided profits | 43,000 | Other assets | 42,000 |
| Notes | 78,000 | Deposits in U.S. Treas. | 3,500 |
| Deposits | 745,000 | Deposits in other banks | 150,000 |
| Clearing House certificate | 14,000 | ||
| Coin & legal tender notes | 72,500 | ||
| 1,090,000 | 1,090,000 |
Would his objections differ at all if the bank were located in Cambridge?
Source: Harvard University Archives. Harvard University, Examination Papers 1873-1915. Box 7, Bound volume: Examination Papers, 1904-05; Papers Set for Final Examinations in History, Government, Economics,…,Music in Harvard College (June, 1905), pp. 21-23.
Image Sources: Frank W. Taussig (Original black and white image from of Frank William Taussig from a cabinet card photograph, 1895, at the Harvard University Archives HUP); Abram Piatt Andrews (Picture from ca. 1909 used in a magazine article about Andrew’s appointment to the directorship of the U. S. Mint. Hoover Institution Archives. A. Piatt Andrew Papers, Box 51). Images colorized by Economics in the Rear-view Mirror.