Economics in the Rear-view Mirror’s scribe-curator is now back in action to provide four examinations (two mid-year and two final exams) from the two political economy courses taught at Harvard by Charles F. Dunbar during the 1876-77 academic year.
It is really great to be back transcribing and curating!
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Political Economy Courses
Elective Studies, 1876-77.
Prof. Dunbar. Philosophy 5. Political Economy.
— J. S. Mill’s Political Economy. — Bagehot’s Lombard Street. — Lectures on the Financial Legislation of the United States.
Number of students: 1 Graduate, 30 Seniors, 64 Juniors, 7 Sophomores, 2 Unmatriculated.
Number of sections: 2
Exercises per week for students: 3
Exercises per week for instructors: 6
Prof. Dunbar. Philosophy 6. Advanced Political Economy.
— Cairnes’s Leading Principles of Political Economy. — McKean’s Condensation of Carey’s Social Science. — Lectures.
Number of students: 2 Graduates, 22 Seniors
Number of sections: 1
Exercises per week for students: 3
Exercises per week for instructors: 3
Source: Harvard University. Report of the President of Harvard College 1876-77, p. 49.
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PHILOSOPHY 5.
Mid-Year Examination
February, 1877
[In answering the questions do not change their order.]
- Why is the distinction between labor for the supply of productive and for the supply of unproductive consumption, more important than that between productive and unproductive labor?
- What is the ground for saying that “every increase of capital is capable of giving additional employment to industry, and this without assignable limit”?
- How does the existence of the banking system facilitate the equalization of profits in different employments?
- How far is the doctrine of rent, or of the value of land, affected, if it be shown that in the actual occupation of the earth the best lands are the last to be cultivated?
- What is the ground for saying that rent is not a part of the cost of production, the fact being that the farmer is obliged to take account of it as one of his expenses?
- On what does the cost of labor depend?
- Is there any commodity of which the change of supply must be actual as well as possible, in order that its value may be made to conform to its cost of production?
- Why does the durability of the precious metals give steadiness to their value?
- Criticise Mr. Mill’s statement that when there are successive emissions of inconvertible paper it will drive out the metallic money previously in circulation, “that is, if paper be issued of as low a denomination as the lowest coin; if not, as much will remain as convenience requires for the smallest payments.”
- How would a currency of convertible paper compare in steadiness of value with one of inconvertible paper which was of fixed amount?
- Explain the statement that it is “not general taxation but differential taxation,” that affects values and prices.
- Explain the disproportionate pressure on the Bank of England as compared with other banks, during a financial panic.
- What are the advantages and disadvantages of the “many-reserve” system, and how does American experience affect Mr. Bagehot’s reasoning on the matter?
- The following is the account of the Bank of England (given in millions and tenths of millions) for May 9, 1866: –
Issue Department.
| Notes issued, |
£27.3 |
Gov’t debt and securities, |
£15.0 |
|
____ |
Coin and bullion, |
£12.3 |
|
|
£27.3 |
£27.3 |
Banking Department.
|
Capital, |
£14.5 |
Government securities, |
£10.9 |
|
Rest, |
£ 3.2 |
Other securities, |
£20.8 |
| Public deposits, |
£ 5.8 |
Reserve, |
£ 5.8 |
| Private deposits, |
£13.5 |
||
| Seven-day bills, |
£ 0.5 |
____ |
|
|
£37.5 |
£37.5 |
The panic reached its height and the Act of 1844 was suspended on the 12th; in the next three weeks the Bank increased its loans by thirteen millions, and five millions were drawn out by depositors. What changes must therefore be made in the above account? What changes would have been necessary if depositors had drawn seven millions instead of five?
Source: Harvard University Archives. Harvard University. Mid-year examinations, 1852-1943. Box 1, Folder “Mid-year examinations, 1876-1877”.
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PHILOSOPHY 5.
Final Examination
May, 1877
[Do not change the order of the questions.
A number marked with an asterisk may be substituted for the same number not so marked.]
- To what extent is it true that “wages (meaning of course money wages) vary with the price of food, rising when it rises, and falling when it falls”?
- “Even a general rise of wages, when it involves a real increase in the cost of labor, does in some degree influence values.” How?
- What is the meaning of the statement that “it is not a difference in the absolute cost of production, which determines the interchanges [of commodities between countries], but a difference in the comparative cost.”
- How was the exchange of commodities with other countries be affected by an improvement which lowers the cost of production of some article which the country already exports?
4. *Explain both branches of the statement that “they are in the right to maintain that taxes on imports are partly paid by foreigners; but they are mistaken when they say, that it is by the foreign producer.”
- If a country has a large regular product of gold, what will be the natural effect on the rate charged for bills of exchange upon foreign countries, and why?
- If both the capital and population of the country are increasing, what will be the effect on wages, profits, and rent, respectively? Give the reasons.
6. *Why do improvements which cheapen the production of luxuries have less effect than those which cheaper the necessaries of life, in retarding the decline of profits towards the minimum?
- What is the ground for saying that a tax on what is properly called rent falls wholly on the landlord in the long run?
- Is a tax on the value of unimproved property (as e.g. vacant land) consistent with Adam Smith’s first canon of taxation? Give your reasons.
- The following is the account of the Bank of England for November 11, 1857:—
Issue Department.
| Notes issued, | £21.1 | Gov’t debt and securities, | £14.5 |
| ____ | Coin and bullion, | £ 6.6 | |
| £21.1 | £21.1 |
Banking Department.
| Capital, | £14.5 | Government securities, | £ 9.4 |
| Rest, | £ 3.4 | Other securities, | £26.1 |
| Public deposits, | £ 5.3 | Reserve, | £ 1.5 |
| Private deposits, | £12.9 | ||
| Seven-day bills, | £ 0.9 | ____ | |
| £37.0 | £37.0 |
In the next two weeks five millions were lent to individuals and three millions of deposits were drawn out. Show the changes in the account and the effect on the limit fixed by the act of 1844.
-
- What was the date of the last suspension of specie payments in the United States? Explain the circumstances which led to it.
- Show what influences besides improving credit made the sale of 5-20’s easy in 1863, although it had been nearly impossible in 1862.
- Explain the plan on which the national banks are established; show its points of resemblance, if any, to the plan of the Bank of England; and state the purposes for which the deposits of bonds and the reserves are required.
- Describe the action which Congress has taken on the subject of currency since the financial crisis of 1873.
Source: Harvard University Archives. Harvard University. Final examinations, 1853-2001. Box 2, Folder “Final examinations, 1876-1877”.
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PHILOSOPHY 6.
Mid-year Examination
February, 1877
[In answering the questions do not change their order.]
-
- How far are prices determined by Reciprocal International Demand, Reciprocal Domestic Demand, and Cost of Production, respectively? Is any change to be made in Cairnes’s statement that “an alteration in the reciprocal demand of two trading nations will act upon the price, not of any commodity in particular, but of every commodity which enters into the trade?”
- What is Cairnes’s reply to Mill’s statement that the portion of supply which is reserved for future sale forms no part of the supply which determines market price? How does Cairnes define supply and demand as affecting market price?
- In the general cheapening of manufacturers, resulting from modern improvements, which is cheapened most, the consumption of the masses or the consumption of the rich?
- How does the following statement of the wages-fund doctrine compare with Cairnes’s statement of it?
“The wages-fund, therefore, may be greater or less at another time, but at the time taken it is definite. The amount of it cannot be increased by force of law or of public opinion, or through sympathy and compassion on the part of employers, or as the result of appeals or efforts on the part of the working classes.” (Walker, “The Wages Question,” p. 138.) - It is said in answer to Cairnes’s argument for coöperation, that laborers can now bring profits to reinforce wages, by means of the savings banks. What answer is to be made to this?
- What is the connection between general wages and foreign trade, as illustrated by the case of the Australian colony, Victoria?
- What were Cairnes’s reasons for expecting in 1873 that before many years the balance of trade would become permanently “favorable” to the United States?
- “If the high rates of industrial remuneration in America be only evidence of a low cost of production, how is the fact to be explained, that the people of the United States are unable to compete in neutral markets, in the sale of certain important wares, with England and other European countries?”
- What is the inconsistency between the common definition of the cost of production and the doctrine of international values? How is the inconsistency to be remedied?
- Compare Carey’s doctrine of Value with Mill’s.
- “Diminution in the value of capital,” says Carey, “is attended by diminution in the proportion of labor given for its use by those who, unable to purchase, desire to hire it. Had the first axe been exclusive property of one of our colonists, he would have demanded more than half the wood that could be cut, in return for its use… His neighbor would find it to his advantage to give three-fourths of the product for use of the axe… The arrival of the ship having given them better axes at a smaller cost, would not give, nor could the other demand so large a proportion as before … In the fourteenth century, when a week’s labor would command only 7½d. in silver, the owner of a pound of that metal could demand as compensation for its use a much larger proportion than now, when the laborer can obtain that quantity in a little more than a fortnight.”
What is the fallacy in this reasoning? - Criticize the following statements : –
“Ricardo’s system is based upon the assumed fact, that in the beginning of cultivation, when population is small and land abundant, the richest soils alone are cultivated… If it can be shown that, in every country and at every age, the order of events has been direct opposition to what it is supposed by Mr. Ricardo to have been, then must his theory be abandoned as wholly destitute of foundation.” - It is also assumed that if our paper currency is brought to equality of value with gold, no further withdrawal of paper will be necessary. Can this be taken for granted? Can the gold now in the Treasury or in the Pacific States, or any of it, be regarded as a provision for specie resumption?
Source: Harvard University Archives. Harvard University. Mid-year examinations, 1852-1943. Box 1, Folder “Mid-year examinations, 1876-1877”.
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PHILOSOPHY 6.
Final Examination
May, 1877
-
- What is the reason “that’s so little impression has been made on the rate of wages and profits” by the immense industrial progress of recent times?
- Criticise the following extract from Walker’s “Wages Question,” p. 198: –
“Instead of asserting, as Prof. Cairnes has done, the practical isolation of certain great groups, with the entire freedom of movement within these groups, I believe that a fuller study of industrial society will establish the conviction that nowhere is mobility perfect, theoretically or even practically, and nowhere is there entire immobility of labor; that all classes and conditions of men are appreciably affected by the force of competition; but that, on the other hand, the force of competition, which nowhere becomes nil, even for practical purposes, ranges from a very high to very low degree of efficiency, according to national temperament, according to peculiarities of personal character and circumstance, according to the laws and institutions of the community, and according to natural or geographical influences.”
-
- It is laid down that high general wages do not hinder a country from exchanging with others. Trace the course of a trade, opened between two countries one of which has higher general wages and higher prices for all commodities adapted to foreign commerce than the other, and show the application of the principle first stated.
- What is meant by saying that a nation is interested, not in having its prices high or low, but in having its gold cheap?
- Examine the question whether a nation which has an unfavorable balance of trade can maintain specie payments?
- What is Mr. Carey’s doctrine as to the prices of raw materials and finished goods respectively, and the reason for it? How does he answer the question, “must not improved cultivation tend to cheapen corn, as improvements in the mode of conversion tend to cheapen cloth?”
- Compare Mr. Carey’s doctrine as to the distribution between capital and labor with the proposition laid down by Ricardo and Mill, that profits tend to decline in consequence of an increasing cost of labor.
- Discuss the following:—
“The use of bank-notes tends, we are told, to promote the expulsion of gold. Were this so, it would be in opposition to the great general law in virtue of which all commodities tend to, and not from, the places where their utility is greatest…The check and the bank-note stimulate the import [of the precious metals], as is proved by the fact, that for a century past, they have flowed towards Britain, where such notes were most in use.” - What is likely to be the effect of the attempt of Ohio and Illinois to make the subsidiary silver a legal tender without limit, supposing their constitutional power to do so to be granted?
- What are the distinguishing characteristics of the land-reforms undertaken in the last century in France, Prussia, and Russia, respectively?
- Of these six, — Adam Smith, Sir James Stewart, Quesnay, J.-B. Say, Ricardo, Sismondi, — take three, giving dates, relations to each other, and doctrines or discussions for which they are best known.
- Show the contributions of Ricardo, Mill, and Cairnes, respectively, to the full development of the doctrine of international values.
Source: Harvard University Archives. Harvard University. Final examinations, 1853-2001. Box 2, Folder “Final examinations, 1876-1877”.
Image Source: Charles F. Dunbar in E. H. Jackson and R. W. Hunter (eds.), Portraits of the Harvard Faculty (Boston, 1892).