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Harvard. Final Exam Questions for “The Corporation and its Regulation”, 1935

 

 

While the Harvard archives collection of printed final examinations has a few serious gaps and is sometimes incomplete (especially with respect to the mid-year exams for year-long courses), it is truly a great resource, especially when the exams get paired to the corresponding syllabus/reading-list found elsewhere in the archives. I’m am now roughly a third of the way in matching exams to course syllabi/reading-lists that I have already posted. Once I catch up, I’ll be posting the combinations regularly from thereon out.

Today takes us back to the extremely popular (in the mid-1930s) Harvard course co-taught by Messrs. Crum, Mason, and Chamberlin on the corporation and its regulation. It is interesting to note that Henry Simons’ pamphlet “A Positive Program for Laissez-Faire” (1934) while not be included in the reading list was important enough to account for 50% of the examination (Q. 1) below. 

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Final Examination
The Corporation and its Regulation

Professors William Leonard Crum, Edward Sagendorph Mason, and Edward Hastings Chamberlin

1934-35
HARVARD UNIVERSITY

ECONOMICS 4a1

1. Note: Allow about an hour and a half for this question. Discuss any two of the following proposals:

A recently published programme for a liberal economic policy proposes in part:

  1. That no corporation which engages in the manufacture or merchandising of commodities or services shall own any securities of any other such corporation.
  2. That corporations may issue securities only in a small number of simple forms prescribed by law, and that no single corporation may employ more than two (or three) of the different forms.
  3. That investment corporations (including holding companies) shall hold stock in operating companies without voting rights, and shall be prohibited from exercising influence over such companies with respect to management.

2. Write on any three of the following:

  1. “The Securities Act is merely an attempt to make the corporation lawyer and financier the scapegoats of the depression.” Discuss.
  2. “It is not possible in a modern corporation to discover who performs the entrepreneurial function, nor to apply to a modern corporation any theory of profits based on the assumption that individual proprietorships and partnerships are the typical forms of business enterprise.” Discuss.
  3. Distinguish between earned and capital surplus. What is the importance of the distinction? In what various ways may a capital surplus arise? Discuss the declaration of dividends out of surplus.
  4. “One of the largest textile mills in the United States found itself in 1932 with $2,000,000 cash, no bonds, and hardly any current obligations. Its stock was quoted at $30 a share, though the corporation had nearly $35 in net quick assets. Accordingly, it purchased some of its own shares. Obviously, by whatever course of reasoning we proceed, this was of advantage not only to the corporation, because it reduced the number of shares upon which it must pay dividends in order to maintain its investment credit, but also to the great body of stockholders, because it increased the available equity of each share. We may add that it was of advantage to the individual shareholder who was forced to sell his shares, in that it increased the number of purchasers.” Discuss.

 

Final. [February] 1935.

Source: Harvard University Archives. Harvard University. Examination Papers—Finals, 1935 (HUC 7000.28, 77 of 284).

Image Source: Crum, Mason and Chamberlin from Harvard Album 1934.